Oversight of the SBA's Office of Entrepreneurial Development (House Small Business Committee hearing, November 14, 2023)

Summary

The printed record of a House Committee on Small Business hearing, Small Business Committee Document Number 118-030, titled Oversight of the SBA's Office of Entrepreneurial Development, held November 14, 2023 in the 118th Congress. Representative Beth Van Duyne presides at the start, with opening statements by Van Duyne, Chairman Roger Williams and Ranking Member Nydia Velázquez. The witness is Mark Madrid, Associate Administrator of the SBA Office of Entrepreneurial Development, and the appendix holds his prepared statement, questions and answers for the record, and material from the Bipartisan Policy Center. Van Duyne says the hearing is meant to continue a dialogue on reaching the largest number of small businesses with SBA resources.

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“Oversight of the SBA's Office of Entrepreneurial Development (House Small Business Committee hearing, November 14, 2023).” Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/oversight-of-the-sba-s-office-of-entrepreneurial-development-house-sma-5d74028ee5/, SHA-256 858c623e2ba45f6cb74e16bf90be4ecf4022ae7b2cd44f01cd14cc25f150ae20.

Full text

OVERSIGHT OF THE SBA’S OFFICE OF
ENTREPRENEURIAL DEVELOPMENT

HEARING
BEFORE THE

COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION

HEARING HELD
NOVEMBER 14, 2023

Small Business Committee Document Number 118–030
Available via the GPO Website: www.govinfo.gov

U.S. GOVERNMENT PUBLISHING OFFICE
54–086 WASHINGTON : 2024
HOUSE COMMITTEE ON SMALL BUSINESS
ROGER WILLIAMS, Texas, Chairman
BLAINE LUETKEMEYER, Missouri
PETE STAUBER, Minnesota
DAN MEUSER, Pennsylvania
BETH VAN DUYNE, Texas
MARIA SALAZAR, Florida
TRACEY MANN, Kansas
JAKE ELLZEY, Texas
MARC MOLINARO, New York
MARK ALFORD, Missouri
ELI CRANE, Arizona
AARON BEAN, Florida
WESLEY HUNT, Texas
NICK LALOTA, New York
NYDIA VELÁZQUEZ, New York, Ranking Member
JARED GOLDEN, Maine
KWEISI MFUME, Maryland
DEAN PHILLIPS, Minnesota
GREG LANDSMAN, Ohio
MORGAN MCGARVEY, Kentucky
MARIE GLUESENKAMP PEREZ, Washington
HILLARY SCHOLTEN, Michigan
SHRI THANEDAR, Michigan
JUDY CHU, California
SHARICE DAVIDS, Kansas
CHRIS PAPPAS, New Hampshire

BEN JOHNSON, Majority Staff Director
MELISSA JUNG, Minority Staff Director

(II)
CONTENTS
OPENING STATEMENTS
Page
Hon. Beth Van Duyne ............................................................................................. 1
Hon. Roger Williams ................................................................................................ 12
Hon. Nydia Velázquez ............................................................................................. 3

WITNESS
Mr. Mark Madrid, Associate Administrator, Office of Entrepreneurial Devel-
opment, United States Small Business Administration, Washington, DC ...... 4

APPENDIX
Prepared Statement:
Mr. Mark Madrid, Associate Administrator, Office of Entrepreneurial
Development, United States Small Business Administration, Wash-
ington, DC ..................................................................................................... 25
Questions and Answers for the Record:
Questions from Hon. Nydia Velázquez to Mr. Mark Madrid and Answers
from Mr. Mark Madrid ................................................................................. 30
Additional Material for the Record:
Bipartisan Policy Center Action ...................................................................... 39

(III)
OVERSIGHT OF THE SBA’S OFFICE OF
ENTREPRENEURIAL DEVELOPMENT

TUESDAY, NOVEMBER 14, 2023

HOUSE OF REPRESENTATIVES,
COMMITTEE ON SMALL BUSINESS,
Washington, DC.
The Committee met, pursuant to call, at 10:03 a.m., in Room
2360, Rayburn House Office Building, Hon. Roger Williams [chair-
man of the Committee] presiding.
Present: Representatives Williams, Stauber, Meuser, Van Duyne,
Mann, Ellzey, Crane, Bean, LaLota, Velázquez, Golden, Landsman,
McGarvey, Gluesenkamp Perez, Scholten, Thanedar, Davids, and
Pappas.
Ms. VAN DUYNE. [Presiding.] We are going to go ahead and get
started.
I recognize the gentleman from Florida, Aaron Bean, to lead us
in the Pledge and a prayer.
Mr. BEAN. Thank you very much, Madam Chair.
A very good morning, Small Business Committee. Let’s go to the
Lord in prayer.
Heavenly Father, we are just truly grateful for the blessings of
liberty and choosing our own way. We know, Lord, that it is not
easy to have freedom, and we ask for wisdom and courage to do
great things that we can just continue to live in a great country.
We ask that those winds of freedom continue to blow around the
world. We are with the people in Israel that are still suffering from
just horrendous attacks, and so we are with them, and hostages
and families. And we are grateful for those that help defend that
freedom, and have defended that freedom, and will defend that
freedom. So all this we ask in your name. Amen.
Join me in the Pledge, ladies and gentlemen. And here we go.
I pledge allegiance to the flag of the United States of America.
And to the Republic for which it stands, one nation under God, in-
divisible, with liberty and justice for all.
Ms. VAN DUYNE. I now call the Committee on Small Business
to order. And without objection, the Chair is authorized to declare
a recess of the Committee at any time.
I now recognize myself for an opening statement.
First, I want to thank our witness, Associate Administrator Ma-
drid, for joining us today. I hope this hearing will continue a pro-
ductive dialogue on how we can ensure SBA resources are being
used to reach the largest amount of small businesses across our
country.
(1)
2

Owning your own small business is one of the most rewarding
careers in America. And you get to put your time and effort into
something that you are passionate about and fulfill a need in the
marketplace.
We all know that to be a successful small business owner you do
not need government assistance. However, for some people that do
not know where to begin their entrepreneurial journey the SBA can
help. Through a network of resource partners, the SBA offers as-
sistance to businesses in all stages of their life cycle. Whether it
is a small business owner that is unsure about which lending prod-
uct would be best suited for their business or someone looking to
hire additional workers from local community colleges, the SBA
has resources that can be utilized.
Since we are spending taxpayer dollars on providing these re-
sources to entrepreneurs, it is our duty to make sure that these
programs are operating effectively and efficiently. Unfortunately,
we have seen the SBA stray away from the programs that have a
known track record of success.
For example, in 2021, the Small Business Development Center
assisted over 306,000 clients, costing roughly $400 per client. Dur-
ing the same period, the Community Navigator Program assisted
16,312 clients, costing more than $7,000 per business helped. The
metrics of these two programs speak for themselves. One of these
programs is simply not worth the money.
However, in President Biden’s 2024 budget request, the SBA
wants to take funds away from the SBDC and give it to the Com-
munity Navigator Program. As with any taxpayer-funded program,
money should be allocated toward what we know works, and this
Committee has focused on spotlighting duplicative or wasteful pro-
grams within the SBA.
Outside of just the Community Navigator Program, I hope today
we can learn more about the general structure of many of the other
entrepreneurial development programs offered by the agency. I
want to know how the programming being offered by small busi-
ness development centers, women’s business centers, SCORE Pro-
gram, and regional innovation clusters are serving different needs.
We see multiple OIG reports highlighting the duplicative nature
of some of these programs, and it is our duty to evaluate how these
resources could be best tailored to service our nation’s small busi-
nesses.
Additionally, we must ensure that the services being offered to
small businesses are relevant to their current needs. The last few
years we have consistently heard from small businesses that infla-
tion, regulations, and worker shortages have been a main concern,
and I am eager to hear today how the SBA resource partners are
advising our nation’s small businesses on how to deal with those
various challenges.
As a Committee, we remain focused on putting Main Street
America first.
Associate Administrator Madrid, I want to thank you again for
being here with us today. And I am looking forward to today’s con-
versation.
With that, I yield to our distinguished Ranking Member from
New York, Ms. Velázquez.
3

I now recognize the distinguished Ranking Member for her open-
ing remarks.
Ms. VELÁZQUEZ. Thank you, Madam Chair.
America’s 33 million small businesses are the foundation of our
nation’s economy. They account for two-thirds of new jobs and have
powered our post-pandemic recovery.
Launching a small business though is not for the faint of heart.
When it comes to turning a great idea into a thriving business, en-
trepreneurs can face a number of challenges. To assist entre-
preneurs, SBA offers a range of free or low-cost entrepreneurial
counseling and training services. The services are delivered
through the small business development centers, women business
centers, and SCORE. They counsel approximately 1 million small
business owners every year.
Entrepreneurial development initiatives have proven to be a
great return on investment. Studies have shown that small busi-
nesses receiving 3 or more hours of counseling have higher survival
rates than firms that do not receive assistance.
Unfortunately, these services are only reaching a small fraction
of our nation’s small businesses and certain communities can be
left behind.
A recent report by the Office of Advocacy confirms that large and
persistent racial disparities in business ownership and outcomes
have existed for some time in the United States and are well
known. Only 5 percent of Blacks and 8 percent of Latino owned
small businesses compare to more than 10 percent of non-Latino
Whites. Moreover, Black and Latino owned businesses have lower
average sales and hire fewer employees.
A well-known challenge for women, minority, and rural entre-
preneurs is lack of access to capital and mentorship.
Today, I hope to learn what your office is doing to address these
challenges and increase counseling to communities that need it
most. I would also like to know what is working well and what
needs to be improved at the Office of Entrepreneurial Development.
It will be helpful to hear your views on the pending legislation such
as the SBDC Improvements Act of 2023, the Women’s Business
Centers Improvement Act of 2023, and the SCORE for Small Busi-
ness Act. These bills easily passed the House in each of the last
two Congresses.
My democratic colleagues and I are fully committed to serving
America’s entrepreneurs and providing resources that put them in
the best position to survive and thrive. My hope is that we will be
able to reauthorize these programs and provide adequate levels of
funding. With that said, we are days away from a potential repub-
lican government shutdown, and small businesses deserve to know
that the SBA will be open for business.
Welcome, Mr. Madrid. I look forward to hearing your testimony.
And with that, Madam Chair, I yield back. Thank you.
Ms. VAN DUYNE. I will now introduce our witness, Mr. Mark
Madrid.
Mr. Madrid is the associate administrator for the Office of Entre-
preneurial Development at the Small Business Administration lo-
cated here in Washington, D.C. The Office of Entrepreneurial De-
velopment helps educate entrepreneurs on how to start and grow
4

their businesses through a network of resource partners. Prior to
serving at the SBA, Mr. Madrid served as the CEO of Latino Busi-
ness Action Network, a national 501(c)(3) organization. He was
named the 2019 Silicon Valley Nonprofit CEO of the Year by the
Silicon Valley Business Journal. He also serves on the Board of
Trustees for Scholarship America and is an honorary colonel of the
U.S. Army and Jefferson Award recipient. Mr. Madrid attended the
University of Texas at Austin for undergrad and later earned his
master’s degree in nonprofit administration from the University of
Notre Dame.
Mr. Madrid, thank you for joining us today for this important
hearing, and we look forward to the conversation ahead.
Mr. MADRID. Good morning, Madam Chair and——
Ms. VAN DUYNE. But before recognizing the witness I would
like to remind you that you have got 5 minutes for your comments.
And if you see the red light turn on it means that your 5 minutes
have concluded and you just need to wrap up your testimony.
I now recognize Mr. Madrid for his 5 minute opening remarks.

STATEMENT OF MARK MADRID, ASSOCIATE ADMINISTRATOR,
OFFICE OF ENTREPRENEURIAL DEVELOPMENT, U.S. SMALL
BUSINESS ADMINISTRATION
Mr. MADRID. Good morning, Madam Chair, Ranking Member
Velázquez, and distinguished Members of the Committee. Thank
you for the invitation to discuss the SBA Office of Entrepreneurial
Development (OED).
I came to the Small Business Administration from the private
and nonprofit sectors, and I have seen firsthand the way that pub-
lic-private sector partnerships can benefit our small businesses.
Prior to SBA, I led the Stanford University Latino Entrepreneur-
ship Initiative/Latino Business Action Network. And as a proud
Texan and the son of a small business owner, I previously served
as CEO of the Greater Austin Hispanic Chamber of Commerce and
COO of the Houston Hispanic Chamber of Commerce. Since 2021,
I have been privileged to lead the OED, the SBA’s technical assist-
ance arm on the ground that helps our small businesses access
training, counseling, and other resources. Under Administrator
Guzman’s leadership, OED has made great progress in working to
help small business owners grow through a customer-centric and
technology-forward approach.
Our goal is to nurture long-term relationships enduring through
respective business lifecycles.
The U.S. economy continues to experience a record small busi-
ness boom with more than 14 million new small businesses applica-
tions since January 2021. More Americans are starting small busi-
nesses than ever before—acts of hope as President Biden called
them in the State of the Union Address.
SBA OED leads the THRIVE Emerging Leaders Reimagined Pro-
gram, which provides executive-level training designed to accel-
erate growth of small businesses. More than 8,000 small businesses
have graduated from this initiative since 2008, supporting nearly
$1 billion in new financing and over $4 billion in government con-
tracting.
5

SBA amplifies its reach through a network of resource partners,
the largest of which is the SBDC Program, which are affiliated
with state universities, economic development agencies, and other
partners, have notable reach via 63 Lead Centers and nearly 900
Service Centers. The SBDC network counseled over 306,000 clients
in fiscal year 2022 and helped them start over 20,000 new small
businesses and obtain over $7.8 billion in capital.
Our nation’s record small business boom is being led by women,
particularly women of color. In fiscal year 2022, WBCs, our wom-
en’s business centers served more than 84,000 clients with a range
of services from counseling, business planning, capital readiness,
and government contracting. This led to more than 2,800 new busi-
ness starts and over 8,350 loans. Under this administration we
have tripled the number of WBCs at historically Black colleges and
universities, Hispanic-serving institutions, and other MSIs.
Another critical partner during this record small business boom
is SCORE. Celebrating its 60th anniversary next year, SCORE pro-
vides free mentoring, personalized coaching, and education to our
small businesses from volunteer experts who have a demonstrated
track record and distinguished knowledge. With more than 10,000
volunteers across 50 states, Puerto Rico, and U.S. territories,
SCORE served more than 322,000 unique clients in fiscal year
2022 alone. Importantly, SCORE has also expanded their reach to
ensure that underserved entrepreneurs have access to services.
And finally, I highlight the impact of Community Navigators. In
the first 18 months of the program, Community Navigators served
nearly 29,000 unique clients and helped them access $249 million
in approved funding. More than 294,000 individuals attended a
training session hosted by Community Navigators and service pro-
vided 175,000 hours of training and counseling services.
In closing, I am energized to lead OED with our delivery of crit-
ical and timely services for our resilient and diverse U.S. small
businesses. With Administrator Guzman’s whole-of-SBA approach,
we will continue to increase entrepreneurial and capital readiness
support for America’s small businesses. Just as my dad and mom
built a Texas Panhandle welding business from the ground up in
the Texas Panhandle, our nation’s small businesses are building
and serving as the backbone of our economy every single day. Per-
sonally, I have never met a more resilient group than our U.S.
small business owners no matter how small they are, what they
look like, where they come from, or where they operate. It is truly
the highest honor imaginable serving them.
It is an honor to appear before you today and thank you very
much.
Ms. VAN DUYNE. Thank you very much.
We will now move to the Member questions under the 5 minute
rule, and I will recognize myself for 5 minutes.
Mr. Madrid, recently the Office of Small Business Development
Centers published a final rule for the SBDC Program which allows
private business data to be shared with the government. This rule
also gives the SBA administrator the discretion to share data about
companies who have sought assistance from an SBDC with other
federal agencies and state governments.
6

Mr. Madrid, looking at the public comments for this rule there
were about 50 for the proposed privacy change. Of the 50 com-
ments received, how many SBDCs have expressed support for this
expanded privacy regulation?
Mr. MADRID. Thank you, Madam Chair, for the question.
This is about oversight when it comes to privacy. We have clari-
fied what this could mean in terms of a state or federal entity audit
if they are doing business with the SBDCs, which is the case be-
yond the federal government working and the SBA working with
the SBDCs. In terms of the public comments and the SBDC regs,
over 75 percent of the comments were approved but there is this
position on privacy.
Ms. VAN DUYNE. So for the 50 that had questions with privacy
how many expressed concern of the 50 that you received?
Mr. MADRID. To be complete and accurate I would have to get
back to you through our Office of SBDCs.
Ms. VAN DUYNE. About, percentagewise?
Mr. MADRID. About 75 percent of the comments from the
SBDCs were approved.
Ms. VAN DUYNE. How many expressed concerns for the regula-
tion?
Mr. MADRID. There were concerns about privacy as you men-
tioned. And we——
Ms. VAN DUYNE. Do you know what percentage——
Mr. MADRID. I don’t know the percentage. I would have to get
back to you on that——
Ms. VAN DUYNE. Okay. That would be great.
Mr. MADRID.—to be complete and accurate.
Ms. VAN DUYNE. So can you tell me which state government
or federal agencies have ever requested information data from the
SBA regrading companies that use its SBDC services?
Mr. MADRID. To my knowledge, I do not have any knowledge
of that. This is more of oversight.
Ms. VAN DUYNE. So can you help me understand then, if we
have never had a request, then what is the need for this rule? Be-
cause if it has never been asked for then why move forward with
another burden when businesses are already struggling to stay
afloat?
Mr. MADRID. Madam Chair, we share your views in terms of
the importance of privacy, and we protect privacy voraciously in
terms of FISMA standards and also encryption of data. In this
case, we just wanted to improve actually the safeguards of privacy
in the case of a federal or state agency auditing a center which
we——
Ms. VAN DUYNE. But to your knowledge it has not happened,
so why the need for the bill, for the additional regulation?
Mr. MADRID. We just want ot make sure that we are, you know,
oversight is something that is important to the American taxpayer
dollar, it is important to the public, so this is about oversight.
Ms. VAN DUYNE. Okay. So there are so many more things that
we could be doing. It seems like you have a solution but there is
no problem.
7

So how can the Committee be sure that the SBA will not share
client data with other agencies or state governments as a tool to
get around constitutional subpoena and warrant requirements?
Mr. MADRID. We take privacy seriously. As mentioned pre-
viously, we are FISMA compliant. We encrypt the data, whether it
is at storage or rest. The SBDC regulations by the way have not
been updated since 1995. So we are also bringing them up to code
because we had temporary band-aids when it came to 2 CFR re-
quirements which are, in layman’s term, grantmaking require-
ments that have been updated 17 times since 1995. So that was
also a measure to update this, to bring them up to code from the
Small Business Act.
Ms. VAN DUYNE. So we are updating the tools that would be
in place that could protect data from being taken by unauthorized
users but we do not have it yet?
Mr. MADRID. Representative, what I was referring to was the
2 CFR guidelines. This aspect is one——
Ms. VAN DUYNE. Well, you just said that they are outdated.
Mr. MADRID. The regs are updated.
Ms. VAN DUYNE. But the technology is already in place and
ready to go?
Mr. MADRID. I am sorry; I am not sure if I am understanding
the question.
Ms. VAN DUYNE. What specific tools are you talking about that
are in place to ensure that this data would not have unauthorized
access?
Mr. MADRID. Sure. I am talking about encryption through our
Office of CIO.
Ms. VAN DUYNE. Okay.
Mr. MADRID. And also our FISMA standard compliance.
Ms. VAN DUYNE. Okay. So all of that is already in place?
Mr. MADRID. Yes, Representative.
Ms. VAN DUYNE. So nothing needs to be updated?
Mr. MADRID. The technology to protect our data is in place,
Representative.
Ms. VAN DUYNE. Have we had any issues with SBA and access
being given when it is not supposed to be or information being sent
out when it was not supposed to be?
Mr. MADRID. Madam Chair, I am not aware of a situation but
I could get back to you.
Ms. VAN DUYNE. That would be great.
Mr. MADRID. I want to be complete and accurate.
Ms. VAN DUYNE. That would be great. We are aware of several
situations where information has been shared when it was not sup-
posed to be. And if you could find out more information I would
really appreciate it.
Mr. MADRID. Absolutely.
Ms. VAN DUYNE. So I now recognize the Ranking Member for
5 minutes of questions.
Mr. MADRID. Thank you.
Ms. VELÁZQUEZ. Thank you, Madam Chair.
Mr. Madrid, resource partners provide training to 1 million small
businesses every year, which is a small fraction of the 33 million
small businesses nationwide. What steps have you taken to in-
8

crease the awareness of these services, particularly in underrep-
resented and rural communities?
Mr. MADRID. Ranking Member, thank you for the question.
There are several things that we have embarked upon. One was
an ad campaign that generated almost $1.9 billion generated hits
to our website, including 5.4 million new users. In addition, we
have increased our multilingual services, so there are more pages
that are translated in languages besides English, as well as with
the Community Navigator Pilot Program, 70 percent of those cli-
ents said they have not done business with the SBA in the last 5
years.
And lastly, we have increased our WBC footprint in historically
and Black universities, HBCUs and MSIs and HSIs. And SBDCs
have increased their footprint over 10 percent with MSIs.
Ms. VELÁZQUEZ. Okay, thank you.
Well, I am glad to hear that you are conducting an outreach cam-
paign, especially to underrepresented communities.
In your previous appearance before the Committee, you testified
that SBA was migrating to EDMIS-Next Generation to increase its
data collection capabilities. Can you update us on that progress?
Mr. MADRID. Thank you for the question.
Our updated and modernized technology goes live on November
20. It is Project Nexus. And what the system is going to do, it is
going to be more accurate. It is going to cost less. And it is going
to provide more capabilities both on the back end at the Office of
Entrepreneurial Development, as well as with our stakeholders.
And notably, they have been involved with us every step of the
way. So America’s SBDC, the Association of Women’s Business
Centers and SCORE, we have had over 25 meetings about this
project.
Ms. VELÁZQUEZ. What can you tell us about this new system?
How will the new system increase SBA reporting capabilities and
allow the agency to better assess the quality of the counseling serv-
ices?
Mr. MADRID. Well, the technology—thank you for the ques-
tion—is going to improve the speed of information, the accuracy.
The EDMIS system, although we appreciated it, we had to keep
customizing it. We had to graduate from EDMIS to EDMIS-NG,
Next Generation. So this provides more of a long-term solution that
will sustain the reporting over time and the growing concern of the
SBA, the agency.
Ms. VELÁZQUEZ. Can you share more information about SBA’s
creation of a data collection working group and how it has im-
proved the process for collecting information with the updated sys-
tem?
Mr. MADRID. Yes. In terms of Form 641, we had a data collec-
tion group. We met over 25 times. And that included our OED
leadership. It included our IT manager and representation from the
leadership of SBDCs, WBCs, and SCORE. So over 25 meetings in
the spirit of collaboration, just like with the Nexus platform.
Ms. VELÁZQUEZ. Timely reimbursement for grant payments is
vital for the resource partners, particularly women’s business cen-
ters. Have you experienced any delays? And if yes, what were the
9

reasons for those delays and what steps have you taken to improve
the process?
Mr. MADRID. Thank you for the question.
Payment reimbursement is very important to us. In full trans-
parency, we have had some staff turnover in terms of grants man-
agement specialist staff. So what we are doing is we are in the
final stages of interviewing a selection of grant management spe-
cialists. We are also excited in the deputy role that we have some-
body that the room knows well, that has solid grant management
experience. So we are looking forward to making sure that pay-
ments are reimbursed on a timely basis.
The other item of note is that we also are working with our wom-
en’s business centers and the Association of Women’s Business
Centers in terms of training. So we had recently a training session
called How to Submit an Error Free Financial Report. That is
going to be important because WBCs of different sizes, new en-
trants, will need that training.
Ms. VELÁZQUEZ. Okay. How would a potential government
shutdown affect reimbursement for the resource partners?
Mr. MADRID. Thank you.
We would have furloughed staff. So the payments could be re-
quested but could not be processed. And they would not be paid.
Ms. VELÁZQUEZ. Thank you.
I yield back.
Ms. VAN DUYNE. Thank you, Ms. Velázquez.
I now recognize the gentleman from Pennsylvania, Mr. Meuser,
for 5 minutes.
Mr. MEUSER. Thank you, Madam Chairwoman, very much.
And Mr. Madrid, thanks for being with us.
So somewhat succinctly, can you tell me what your office does for
small business?
Mr. MADRID. Absolutely. So we have three major offices. The
Office of SBDCs that oversees our small business development cen-
ters, Office of Women’s Business Ownership that oversees our
WBCs, our women’s business centers; our Office of Entrepreneur-
ship Education oversees SCORE, the Community Navigator Pilot
Program; our online tools, as well as online components like Ascent
and other government contracting curriculums; our THRIVE Pro-
gram, which is our executive level series for small businesses
across the country; and our efforts with Rural Affairs as well and
cybersecurity.
Mr. MEUSER. Okay. And your background, you were in the fi-
nancial sector, JPMorgan; is that correct?
Mr. MADRID. That is right. I was in the financial sector and
then pivoted in 2009 in the middle of the Great Recession to sup-
porting small businesses on the ground. That is where I have been
ever since.
Mr. MEUSER. Right. With the Latino Bureau of Commerce?
Mr. MADRID. I was at the Greater Austin Hispanic Chamber of
Commerce.
Mr. MEUSER. That is great. We work with them quite a bit.
So what challenges—you must talk with entrepreneurs quite a
bit—what challenges over the last year or two have they expressed
to you that is helpful for you to help them?
10

Mr. MADRID. Absolutely. Thank you for the question.
I am from a small business as mentioned. And from a rural place
in the Texas Panhandle, Friona, Texas. So I have traveled over 30
states since I was appointed in February 2021. So here are the
issues that I have been hearing from South Carolina to Texas to
Florida to Boise, Idaho, and other places, Sioux Falls, South Da-
kota, is workforce development is an issue. Certainly, access to cap-
ital is an issue. People are trying to realize how to diversify their
businesses in current environments.
Mr. MEUSER. They did not mention inflation and energy costs?
Mr. MADRID. Well, certainly global inflation is an issue.
Mr. MEUSER. How the guardians 29:18xx are being squeezed
and how difficult it is to stay in business and how they are working
far longer hours? Because I could go talk to 50 small businesses in
my district because I am from the business world as well, and
every single one of them will tell me that. It is just interesting that
you do not mention that.
Mr. MADRID. Well, I hear a series of issues from our small busi-
ness owners, and our office is here to support them. So I am fortu-
nate to be with these networks that we oversee, including our edu-
cational programs.
Mr. MEUSER. Okay. Yeah, but we need reality. We do not need
etiology; do you not agree?
So let me ask you this. The Congressional Budget Office, you are
basically slashing SCORE and small business and the SBDCs
which have proven effective by 40 percent cut to SCORE, 13 per-
cent cut to SBDC, pretty sizable reductions and yet you are pour-
ing it on for the Community Navigator Program, which is suspect
for various reasons, particularly since the CBO has stated that it
started less than 500 businesses, which is not bad but at a rate of
$7,355 per client, while the SBDC assisted 306,000 clients at a cost
of $457. So I would just think the ROI for one is far better than
the idea that you just like one over the other. Or is there a busi-
ness reason why you are making that decision?
Mr. MADRID. Representative, every American deserves a chance
at small business, and I think we can all agree upon that. So if
there was $249 million——
Mr. MEUSER. Every American does not deserve taxpayer dollars
that get wasted.
Mr. MADRID. The small businesses supported by the likes of the
Institute for Veterans and Military Families, the National Urban
League, the U.S. Hispanic Chamber, the U.S. Black Chambers,
they are mustard seeds. Seventy percent of the Community Navi-
gator clients had not done business with the SBA in the last 5
years. So the evolving nature of entrepreneurship is changing and
I should know. I have been supporting small businesses on the
ground for the last 15 years.
Mr. MEUSER. You are in the position. You get to make the deci-
sions but we get to provide the oversight and those numbers are
accurate. So please just keep that in mind. Right? SBDCs through-
out Pennsylvania anyway do very well and my understanding is
the Community Navigator Program is not doing all that well and
yet that is where you are allocating far more funds and actually
removing them from an area that has proven effective. So that is
11

a concern to me. So I just want you to know that. And I think it
is a concern to this Committee.
I have got limited time. Just on the women’s business centers,
I understand that there was a recommendation by the IG to re-
cover more than 800,000 probably spent funds from the program.
I am out of time so perhaps you can provide the Committee with
a copy of the plan to recoup some of that funding if that is some-
thing you are working on.
I yield back, Madam Chair.
Ms. VAN DUYNE. Thank you very much, Mr. Meuser.
I now recognize the gentleman from Maine, Mr. Golden, for 5
minutes.
Mr. GOLDEN. Thank you.
I am going to stick with small business development centers for
a little bit.
The Community Navigator Program was set up through I believe
the American Rescue Plan and is a pilot program. My under-
standing was that the Committee never really viewed this as an ef-
fort to supplant our traditional programs like SBDCs or women-
owned small business centers or the vet centers. But the budget re-
quest seems to suggest that is the way the administration looks at
it. You are almost dollar for dollar cutting into SCORE and SBDCs
in order to increase funding for the Navigator Program. Is there a
reason why you have gone that route?
Mr. MADRID. First and foremost, condolences for Lewiston, and
thank you for your leadership.
When it comes, Representative, to the Community Navigator
Pilot Program, we do not look at it as a competition with the re-
source partners. In fact, some of the SBDCs are Community Navi-
gators. Most notably, a week and a half ago we heard from the
Springfield, Ohio SBDC and in their own words they said we have
been able to expand our footprint and work with people beyond see-
ing them at galas and annual events. We are actually deepening
and leveling the playing field here so the footprint is nonduplica-
tive. And in terms of your question, we do not look at it as one in
favor of the other. We look at supporting and wraparound services
for the entire entrepreneurial community that includes under-
served communities that we need to frankly support.
Mr. GOLDEN. Thank you.
I want to ask what the administration’s position is on the SBDC
Improvement Act of 2023, which would help SBDCs better market
their services. I am sure you have heard plenty of testimony or
seen data around the gaps around awareness of some of these pro-
grams and statutorily, SBDCs are not even allowed to market their
existence to their potential clientele. So this bill would address
that. Is that something the administration has taken a look at and
is there a position of support or opposition?
Mr. MADRID. Representative, thank you for the question. We
know you have been working on that for a while.
Our office of SBDC and leadership does not have a problem with
the language per se on the marketing but there are some 2 CFR
requirements that we need to look at. As well, we appreciate the
collection working group portion of the bill so our commitment is
12

to continue to work with you on that. So thank you very much for
your efforts.
Mr. GOLDEN. Thank you.
And let me just kind of put out there looking ahead to the next
budget request, I personally would like to see full funding re-
quested at the previous level for SBDCs and SCORE. I mean,
SCORE in particular is, I think, a great program, a proven pro-
gram that works and has a lot of uptake in Maine. So it would be
a shame to see any reductions in funding or staffing in Maine and
I am sure that is true elsewhere.
Mr. MADRID. I am thinking of that Maine retailer that I visited
in Portland, Maine, that said she could not have done it without
a SCORE mentor. So thank you very much for that reference.
Mr. GOLDEN. I yield back.
Ms. VAN DUYNE. Thank you very much, Mr. Golden.
Votes have been called so the Committee will now take a brief
recess subject to the call of the Chair. We will resume shortly after
votes conclude.
[Recess]
Chairman WILLIAMS. Okay. I now call the Committee on Small
Business back to order.
And I recognize myself for 5 minutes.
Members on both sides of the aisle already expressed concerns
regarding the duplication of the Community Navigator Program
with SBDCs. However, the duplication does not stop there. The Of-
fice of Entrepreneurial Development is currently operating two on-
line programs. One is called the Learning Center; the other called
Ascent. Both of these platforms provide substantially similar infor-
mation. In total, these two programs are funded at $13 million an-
nually. This seems like a very high price to keep two online re-
sources operational when they provide substantially similar infor-
mation.
So again, Mr. Madrid, good to see you. Good to have a Texan
looking at me.
Why does your office keep both of these websites active when it
appears they could easily be combined to reduce costs and increase
efficiency?
Mr. MADRID. Chairman Williams, great to be with you.
In terms of fiscal year 2024, $4.5 million is projected for the
THRIVE Program, which is our executive style program that trains
800 entrepreneurs per year, and also our online content that you
mentioned, Chairman Williams, which includes the online Learning
Center, which is more about startups, and then the Ascent Pro-
gram, which is a series of journeys that include government con-
tracting curriculum. So that is $4.5 million that is projected for all
those programs together.
Chairman WILLIAMS. On top of the $100 million originally au-
thorized for the Community Navigator program, the SBA provided
an additional $75 million to set up a call center so the program
could conduct outreach. However, given the low performance of the
Community Navigator Program, it seems again like this is another
waste of taxpayer dollars.
So Mr. Madrid, how many calls did this call center receive? And
was the $75 million used on anything else?
13

Mr. MADRID. Chairman Williams, thank you for the question.
So the $75 million was also used for an ad campaign that the Of-
fice of Entrepreneurial Development was responsible for. With that
ad campaign there was 1.9 billion impressions and over 5.4 million
new users to our website. And so I can account for the ad campaign
that included also actual small business owners, not actors, that
were seen all across the country.
Chairman WILLIAMS. Okay. In my time remaining, as a small
business owner myself with 52 years—still am, it will be 53 next
week—I understand the importance of showing up in person to
work every day. Customer service depends on in-person inter-
actions and working from home is not a reality for many small
business owners who must decide between staying home or staying
in business.
In September, the Biden administration announced a new policy
requiring employees to only show up to the office 4 days during a
pay period. This means the taxpayer dollars are going to waste as
federal office buildings sit empty for more than half of the month.
The SBA works for the American people and we need to ensure the
agency is showing up for our nation’s entrepreneurs.
So Mr. Madrid, quickly, how is the Office of Entrepreneurial De-
velopment complying with this new guidance? And how often is
your staff in person?
Mr. MADRID. Chairman Williams, thank you for the question.
So right now, SBA leaders and managers are reporting to the of-
fice 5 days per pay period. And starting in January of 2024, all
headquarter personnel will be reporting 4 days per pay period. So
we are following that guidance. And part of that is because of
union negotiations. I, myself, with 45 FTEs, over 50 percent are
collective bargaining employees.
Chairman WILLIAMS. But why can they not work every day,
like I do, like everybody does, comes to work? In my business, the
car business, people work every single day. They have no choice to
not come to work or not.
Mr. MADRID. Chairman Williams, our folks are working every
day. I admire my SBA colleagues and so their work continues.
Chairman WILLIAMS. But if they are not there, you cannot see
them working.
Mr. MADRID. We have meetings all the time, virtual meetings,
and I value, by the way, an in-person experience. When I am not
on the road I am in the office, and so we continue to follow the
guidance set forth by the agency.
Chairman WILLIAMS. But let me ask you this. You grew up in
an environment—I know where you are from—work is everything;
right? You did not take days off; you took days on. Why can that
not be the norm with the SBA? I mean, why cannot everybody just
work?
Mr. MADRID. We are working every day. I can assure you of
that. I see my employees regularly, whether it is in the office or
remotely, so I look forward to seeing them in person following the
guidance that we have.
Chairman WILLIAMS. But back home in your town people do
not take 3 days. They do not work 3 days. They do not work 4 days.
14

They work every day. And it should be the same up here. So we
will talk some more about that.
Next, I want to recognize Representative Davids from the great
state of Kansas, for 5 minutes.
Ms. DAVIDS. Thank you, Chairman. And thank you, Associate
Administrator Madrid, for appearing before the Committee today.
Mr. Madrid, in your opening testimony you touched on the im-
portance of the Small Business Administration’s Women’s Business
Center Program. And the success of, in my opinion, the success of
the women’s business centers and that program cannot be over-
stated. Across the country there are 160 women’s business centers
offering business counseling, training, technical assistance, men-
toring, and so much more to our nation’s entrepreneurs.
Each year these centers serve more than 80,000 clients. They
help launch thousands of new businesses and leverage hundreds of
millions of dollars in capital. And certainly, the Kansas City Wom-
en’s Business Center is no different. It is headquartered in the
Kansas Third District. I get to represent them and they reached
more than 800 clients last year.
And I just want to kind of touch on that. With the help of the
Association of Women’s Business Centers, every single state has a
small but committed staff that is dedicated to ensuring that the en-
trepreneurs that they serve can thrive no matter where they live.
And I do think that it is time that Congress help unleash that pro-
gram in a more robust way.
And to that end I have introduced the bipartisan Women’s Busi-
ness Centers Improvement Act multiple times since I came to Con-
gress. And this is in my view a vital piece of legislation that has
passed the House with overwhelming bipartisan support multiple
times and it does a number of things including creating an accredi-
tation process for the women’s business centers; increases oversight
of the program to ensure that we are not seeing waste, fraud, and
abuse; and it also strengthens the SBA’s relationship with the As-
sociation of Women’s Business Centers.
And then maybe finally, we also would see a cap on the grants
for women’s business centers increased which has not been done
since the program’s creation.
So am curious if, Mr. Madrid, if you could, kind of speak to that,
the support for women’s business centers barely changing since the
program’s inception and what you think the importance of and re-
authorization of this program can mean for our entrepreneurs
across the country.
Mr. MADRID. Thank you, Representative, for the question and
your strong support of women-owned businesses in your area, and
of course, across the country.
The small business boom that we are experiencing with 14 mil-
lion new business applications is being powered by women. And so
certainly we look forward to continuing to work with you on that.
Certainly, the accreditation items, the work with the Association of
Women’s Business Centers. And thank you to Corinne and her
team working together. I mean, we are working together at the bill
capacity to also look at exporting opportunities for the women’s
business center network. Certainly, the reporting requirements and
15

increasing the capacity we are all in favor of. So we look forward
to continuing to work with you on this.
Ms. DAVIDS. Yeah, of course, I want to continue to be sup-
portive and not only increase the level of funding because it has a
significant return on investment, but I am also wondering if you
could speak to a different portion of the bill that I have reintro-
duced. It creates a standardized process for establishing women’s
business centers and helps ensure important oversight measures
are included.
In 2021, the program was audited and the SBA was given 10 rec-
ommendations about how to improve the WBC program operation.
And I am curious if you could speak to the progress on those rec-
ommendations, where you are at, and if any are outstanding maybe
a timeline on what that looks like.
Mr. MADRID. Thank you, Representative.
So we have eight outstanding recommendations. There are five
that involve oversight and the completion of a SOP, a standard op-
erating procedure. We are excited that we have a deputy that has
deep grant management experience across the OED footprint. So
we look forward to closing these recommendations near the front
end of the calendar year of fiscal year 2024.
The three remaining recommendations have a timeline to be sat-
isfied or closed by the fall of 2024 that include recoupment of
funds. So we look forward to working with the IG, our internal IG,
and of course, the women’s business center network in closing them
in fiscal year 2024.
Ms. DAVIDS. Okay. Thank you. That is really helpful. And my
office will follow up about the timeline and make sure we are all
on the same page.
Thanks so much and I yield back, Chairman.
Mr. MADRID. Thank you.
Chairman WILLIAMS. The gentlelady yields back.
I now call on Representative Crane from the great state of Ari-
zona for 5 minutes.
Mr. CRANE. Thank you, Mr. Chairman. Thank you, Mr. Madrid,
for coming today.
I was looking over some of the requests from your organization.
Is it true that you all are seeking $10.2 million for SCORE in fiscal
year 2024, $121 million for SBDC, $27 million for WBC, $44.5 mil-
lion for other initiatives; is that correct?
Mr. MADRID. Representative, the values are correct for the
SBDC, the WBDCs and SCORE. That $44 million includes Commu-
nity Navigators and our educational programs like THRIVE and
our online educational content.
Mr. CRANE. So that is about $200 million; right?
Mr. MADRID. That is correct.
Mr. CRANE. All right. And where does that $200 million come
from?
Mr. MADRID. Where does that come from?
Mr. CRANE. Yeah. Who pays for it?
Mr. MADRID. Well, the American taxpayers pay for it and we
are excited about we have a lot of work to do to address the needs
of our evolving ecosystem of entrepreneurs.
Mr. CRANE. I understand. Hold on a second.
16

So $200 million that comes from the American taxpayer for these
programs right here.
Sir, do you have any idea how much national debt we have right
now?
Mr. MADRID. Representative, what I can tell you is the support
that we give for our small businesses that are——
Mr. CRANE. That is not what I asked.
Do you know what the national debt is right now?
Mr. MADRID. Sir, with all due respect, I know that there is
debt. What I am here to talk about is we are supporting our small
business owners through this footprint, through the $200 million
that you described.
Mr. CRANE. Okay. All right. So we have about $33 trillion in na-
tional debt right now. Any idea what the annual deficit is right
now? How much more money we are spending than we are taking
in annually?
Mr. MADRID. Well, I can tell you how we are supporting the
small businesses with this footprint.
Mr. CRANE. Okay.
Mr. MADRID. I would like to talk about that.
Mr. CRANE. All right. Now, I noticed you came in here and you
were championing the Biden economy. I am just going to give you
some stats on the Biden economy.
Real disposable income is down 8.3 percent. Homeownership af-
fordability down a whopping 35.2 percent. Credit card debt is up
35.5 percent. Monthly savings is down 81.7 percent. And some of
my other colleagues have also talked about some of the burdens
that small business owners are dealing with including inflation and
also worker shortage.
So I notice that you were not talking about any of those issues
when you were touting the Biden economy right now. Is there a
reason that you were not talking about any of those and how those
are impacting small business?
Mr. MADRID. Well, I did talk about—thank you for the question,
Representative. I did talk about how I visited over 30 states in the
last 3 years, and I did talk about how some small businesses have
talked to me about the rising prices, as well as supply chain
vulnerabilities, workforce development. I can go on and on about
the different businesses that I visited on the ground.
Mr. CRANE. Mr. Madrid, what do you think are the causes of
the rising inflation?
Mr. MADRID. I am not an economist so I cannot get very spe-
cific. I can tell you what the small businesses are telling me about
inflation and what we are doing to support them in terms of diver-
sifying their product lines, their revenue streams, their bottom
lines. We are looking into exporting, digitizing, government con-
tracting.
Mr. CRANE. Do you think you need to be an economist, Mr. Ma-
drid, to understand what the rising inflation and some of these eco-
nomic pressures are? Do you think it has anything to do with this
country and this government continuing to print more and more
money that we do not even have?
Mr. MADRID. Well, Representative, I am rooted in small busi-
ness like I am grounded in these boots. I grew up in a small busi-
17

ness in the rural country, in the rural part of the country in the
Texas Panhandle, and I hear their concerns every single day. I
have been supporting them for the last 15 years and will continue
to support them with the wonderful support that we have including
with people in this room and you all. We share that passion.
Mr. CRANE. Yeah. I am rooted in small business myself. I do not
need to be an economist to know that if you continually print
money that you do not have and then flood the economy with that
money it always increases inflation. And that is one of the biggest
drivers of inflation. It is one of the reasons that our small busi-
nesses are getting hammered.
So maybe if we care so much about small business we can actu-
ally look at the reality of the situation, quit being partisans, and
do something to help small businesses. And I know you guys are
trying to do something to help small business, but if you are not
even willing and able to look at some of the root causes of inflation
and some of the things that are crushing small business, the
chances of you guys solving and really helping on this issue, it is
pretty farfetched.
Thank you. I yield back.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Representative Gluesenkamp from the great
state of Washington for 5 minutes.
Ms. GLUESENKAMP PEREZ. Thank you, Mr. Chairman.
Mr. Madrid, thank you for being here with the Committee today,
and thank you for the work that you do.
So this Committee spends a lot of time talking about ways that
we can improve SBA programs, especially access to capital to make
them work better for real people trying to start or grow their own
businesses.
So I actually, before coming to Congress, applied for an SBA 504
loan for my auto repair shop, and it took a year to navigate that.
I actually do have a degree in economics and English is my first
language. And that entire year that I was applying for the 504
loan, I was watching commercial properties get snapped up, indus-
trial spaces getting turned into coffee shops and tattoo parlors and
things that, I mean, I like coffee, I like tattoos, but those are not
often durable family wage jobs. And I actually did find SCORE to
be helpful in navigating that process.
But the thing that I was thinking about was that people working
in SCORE and your partner organizations, like they are kind of the
boots on the ground of seeing what the hangups are, what the dif-
ficulties are, what is preventing small businesses from accessing
these programs effectively and efficiently. And I am wondering how
they are mutually informative. Like, are you getting information
back from your partner organizations about where the hangups
are, what the biggest challenges are? And how is that informing
and refining your processes?
Mr. MADRID. Thank you for the question and mentioning the
504 Program.
So some of the feedback that we have received is that our small
business owners need to know more about eligibility, whether it is
a microloan, their efforts with CDFIs, whether it is 7(a) or 504.
Sometimes we have to use repeat messaging as our friend in terms
18

of talking to some small business owners about the changes that
we have had with the 504. We do not want it to take a year is the
bottom line.
I just talked to a small business owner that has been in oper-
ation 30 years with some major bulk printing business out of Los
Angeles, a woman-owned business. And she said that the 504 loan
transformed not only her business but her family and her commu-
nity. But she had the wraparound support of going to our district
office.
Ms. GLUESENKAMP PEREZ. So do you have a mechanism in
place for your SCORE people, for them to come back and say to you
like here is a problem that we are seeing repeatedly?
Mr. MADRID. Yes. Absolutely. So we meet with all of our asso-
ciations regularly in terms of the OED leadership. I do as well. So
I meet with Bridget Weston. I meet with the America’s SBDC
Board, with the Association of Women’s Business Centers. So there
is that feedback loop.
Ms. GLUESENKAMP PEREZ. Okay. So what kinds of reforms
have come out of that feedback?
Mr. MADRID. With SCORE, for instance, I will talk about a cur-
rent example. In Hawaii, with Lahaina and what is happening
with our whole of SBA disaster recovery approach, SCORE came
back and said we are here on the ground. Kat Shepherd, who leads
our SCORE chapter, these are all volunteers in the West Coast.
She is based out of California. She said I am here on the ground
and I am ready to help.
We have got an enterprise system where mentors are available
nationwide. We learned what we could do in Vermont with the
Vermont floods, and we are ready to scale. So that was the feed-
back that we received from them in terms of wanting to be involved
and taking it to the next level.
With the SBDCs, with cybersecurity, we have teamed up in
terms of making sure that our small businesses understand the
navigation of AI, which is very difficult. What does that mean be-
yond a trending term? And with the WBCs and working with the
Association of Women’s Business Centers we learned we want to do
some more exporting. We actually want to understand not only pro-
curement readiness but also certification readiness which I have
procurement of bone marrow in terms of all that that takes some-
times and the support needed to get ready.
Ms. GLUESENKAMP PEREZ. So I represent southwest Wash-
ington, and we actually do not have a women’s business center in
my district. The nearest one is across the river in Portland and
they are shutting down. And you know, you guys are looking for
the next home. But I am wondering, in this time when my constitu-
ents are left without this service, how does your office prioritize
where those centers will be located? For instance, rural commu-
nities where we are often underserved and we are losing a lot of
our small businesses, how do you prioritize reaching into those
communities and establishing services there?
Mr. MADRID. Well, we go through a formal notice of finding op-
portunity process. In terms of rural America, I am from a rural
part of the country and grew up in a small business so rural affairs
and what we are doing at OED, I look forward to sharing with the
19

Committee what we are doing there in terms of with the USDA.
Also, financial literacy and FDIC and other endeavors that we have
planned.
Ms. GLUESENKAMP PEREZ. Okay. Thank you.
Mr. MADRID. Thank you.
Ms. GLUESENKAMP PEREZ. Mr. Chairman, I yield back.
Chairman WILLIAMS. Thank you.
I now recognize Rep. Stauber from Minnesota for 5 minutes.
Mr. STAUBER. Thank you very much. Thank you, Chairman,
Ranking Member, for holding the hearing today. And thank you to
Associate Administrator Madrid for taking time to help shed light
on this important topic.
My home state of Minnesota, rural, has a rich history of entre-
preneurship from the industries that established a foundation of
lumber and mining to emerging industries of technology and
healthcare. Minnesotans have always been known for their inge-
nuity and their willingness to take risks.
Entrepreneurs are the backbone of our economy as you know.
They are the innovators, job creators, and the driving force behind
economic growth. In Minnesota, small businesses account for over
99 percent of all businesses and employ over half of the workforce.
It is no exaggeration to say that the success of our economy is tied
to the success of our small business entrepreneurs.
The SBA OED has the opportunity to play a vital role in the de-
velopment of small businesses across the country by providing a
range of resources and programs necessary to grow. But in recent
years, many have said the programs offered are not effective and
waste taxpayer dollars.
Today we are here to talk about these duplicative programs and
the policies that further make the SBA inefficient.
The SBDC Program has proven to be successful in counseling
and training small businesses across the country. Yet, despite the
success, the Biden administration created the Community Navi-
gator Program to do the same thing. What is worse is this duplica-
tive program is lower performing and more inefficient. This is just
one example, Mr. Madrid, but investments in unneeded, wasteful,
and ineffective programs are a pattern with this administration.
So my question is, what is the need the SBA OED sees in extend-
ing the Community Navigator Program where we have SBDCs and
women business centers, SCORE?
Mr. MADRID. Thank you, Representative, for the question.
First and foremost, we value the work of all of our resource part-
ners, the SBDCs, women’s business centers, and SCORE. In terms
of Community Navigator Pilot Program, 70 percent of the clients
said that they had not done business with the SBA in the last 5
years. We consider these mustard seeds. Some of them are not
ready. They do not know what an SBDC is or women’s business
center.
We have seen nonduplication in terms of the SBDCs themselves,
in the women’s business centers that are either hubs or spokes.
Mr. STAUBER. Excuse me. You made me think of a question.
So if many of these businesses, you said 70 percent do not know
what SBDCs and WBCs. Whose fault is that?
Mr. MADRID. Thank you for the question.
20

I have been serving small businesses for the last 15 years and
as a chamber of commerce CEO, I was a spoke. And so learning
the small businesses, whether they were producing ties or res-
taurants, owners, whatever the case might be, they did not know
that there was a resource available. So it is not really anybody’s
fault. In some cases, people just do not know. They start enlivening
a passion. They want to open a small business like my father did.
But my father did not know that there was an SBA district office
or a resource partner. And what my father ended up doing was cre-
ating jobs there in the Abilene area. Also, San Angelo and the
Texas Panhandle. So these are mustard seeds that if they are nur-
tured grow into big, large trees. And the likes of businesses served
by the Institute of Veterans and Military Families, the National
Urban League, the U.S. Black Chambers, the U.S. Hispanic Cham-
bers, we should not turn our back on them because they are going
to reap reward not only with the $249 million of approved funding.
Mr. STAUBER. Mr. Madrid, I agree with you. We cannot turn
our back on the entrepreneurs and that is why I talk almost on a
weekly basis of the $320 billion of additional regulations put on
American small businesses. You cannot agree with that, can you?
Mr. MADRID. Can you be more specific?
Mr. STAUBER. Do you agree with an additional $320 billion on
American small businesses over the last 3 years under this admin-
istration? And by the way, these are not my numbers. These are
the administration’s numbers.
Mr. MADRID. Well, Representative, we believe in common sense
regulations. We work with our Office of Advocacy.
Mr. STAUBER. Mr. Madrid, this is a real simple question. Your
father as a small business owner. I was a small business owner for
almost 30 years. I just asked you a simple question. Three hundred
twenty billion. That is with a B. Three hundred twenty billion ad-
ditional dollars on American small businesses in the last 3 years.
These are not my numbers. These are the administration’s. As the
deputy administrator, you cannot agree with that, can you? Do you
agree with punishing our small businesses, especially coming out
of COVID?
Mr. MADRID. Representative, none of us believe in punishing
small businesses. So we continue to work with our Office of Advo-
cacy.
Mr. STAUBER. But here is the question. Mr. Madrid, I have a
few seconds. Can you answer the question? Is it good for American
small businesses to have $320 billion—that is with a B—additional
dollars put on them? Yes or no?
Mr. MADRID. Representative, we look forward to common sense
regulations and continue to work with our Office of Advocacy.
Mr. STAUBER. Mr. Madrid, I appreciate the political answer. I
will answer it for you. It is not good for American small businesses
to have $320 billion of additional regulations put on them. It is not
right. It is not fair. And I yield back.
Chairman WILLIAMS. The Chair now recognizes Rep. Scholten
from Michigan for 5 minutes.
Ms. SCHOLTEN. Thank you, Mr. Chair.
And Mr. Madrid, if you needed an additional 30 seconds or so to
respond I am happy to give that to you.
21

Mr. MADRID. Well, thank you, Representative. I just want to
speak to the fact that our—and I have lived this the last 15 years—
our entrepreneurship landscape is changing every single day. And
with the small business boom and 14 million new applications, we
need as much support as possible. And we want to create lifelong
customers at the SBA.
And I will close with this. A veteran from Upstate New York cre-
ated 10 jobs in East Syracuse. A business was closing down. And
he said, ‘‘I needed everything. I needed the district office, I needed
my SCORE mentor, and I needed my Navigator and my SBDC be-
cause they each provided me something different.’’ And he created
10 jobs.
Ms. SCHOLTEN. Yeah. Absolutely. We could not agree more. I
want to be on the record as saying we know that you are not out
to hurt small businesses and we are here to ensure that your agen-
cy has the tools and resources to provide those supports in the
most efficient and effective way possible.
I had the honor of welcoming the SBA administrator to my dis-
trict earlier this summer. We toured the Michigan Small Business
Development Center headquartered in my district at Grand Valley
State University, a real source of pride for us. She got to meet the
amazing staff that makes this incredible work possible.
We also had the opportunity to hear from SBDC clients that
shared the challenges that they are facing as business owners.
Truly a wide array of small businesses. Whether it was a Mexican
takeout restaurant, home healthcare service providers, or an en-
ergy-efficiency technology company, the message was the same.
The services that the SBDC provides are crucial.
My question for you is, knowing this importance, the fiscal year
2024 SBA budget requests funding cuts to the SBDC Program by
approximately 14 percent. Can you explain why the Biden adminis-
tration proposed to reduce funding for the SBDC Program? And
will you commit to supporting full funding for this important entre-
preneurial development program?
Mr. MADRID. Well, Representative, thank you for the question.
And certainly it is a great SBDC there in the state of Michigan
through their lead center and service centers.
This is not a competition between the SBDCs and the Navigators
or the SBDCs and the WBCs or SCORE. We look forward to you
all making your appropriations decisions and funding your prior-
ities. But I come back to the fact that we need as many resources
as possible for our small businesses that have different needs.
So I could share so many stories and I do not need a binder or
index cards or anything to tell you about how each one of these
partners has serviced a particular lane. And more broadly, how the
SBDCs themselves who are Navigators, including our Navigator,
the Florida International University SBDC, who happens to be our
Service Center of the Year, how they, themselves, have said that
this program has deepened their reach into their communities.
Ms. SCHOLTEN. Well, we agree that there are a wide array of
services needed, but in particular the 14 percent cut to the SBDC
is of particular note to a district like mine. And I am wondering
if you could just shed any more light on why the cut is there as
22

opposed to other areas. And if those are needed, why that was sug-
gested.
Mr. MADRID. Thank you, Representative.
We were looking at the entire ecosystem and making sure that
there is wraparound support for including the smallest of the small
businesses. As previously stated, some of the Community Navigator
is served by the U.S. Black Chambers and the National Urban
League, U.S. Hispanic Chamber, the Local Initiative Support Cor-
poration. Some of those businesses and the U.S. Pan-American
Chamber of Commerce as well, some of those businesses had not
been served by the ecosystem. And it was not somebody’s fault. It
is just that we need to put a focus on those businesses as well.
They should not be left behind. People with disabilities served by
the National Disability Institute as well.
Ms. SCHOLTEN. I could not agree with you more on that.
In my remaining time I want to just note one thing in particular
the SBDC is doing is a competition called Pitch Black, which is a
pitch competition for Black-owned businesses in West Michigan.
Supporting these minority entrepreneurs is a high priority of mine
as it is for the SBDC. What is your office doing ot make sure that
there is awareness of these types of programs that SBDCs in par-
ticular are providing?
Mr. MADRID. Absolutely. We love to share success stories from
the SBDCs, including their expanded footprint and MSIs and will
continue to do so. I have had the fortune of working for small busi-
nesses on the ground the last 15 years. And when I was in essence
a spoke, as the CEO of the Chamber of Commerce, depending on
the situation, I would refer people to the SBDC and other cases to
WBCs, but we will continue to share the impact of SBDCs proudly.
Ms. SCHOLTEN. We would appreciate that very much. Thank
you.
Mr. MADRID. Thank you.
Ms. SCHOLTEN. Mr. Chair, I yield back.
Chairman WILLIAMS. The gentlelady yields back.
I now recognize Representative Pappas from the great state of
New Hampshire for 5 minutes.
Mr. PAPPAS. Thank you very much, Mr. Chairman. And Mr.
Madrid, thanks very much for your leadership and your comments
here today about entrepreneurial development.
And I also want to explore some issues with SBDC and some con-
cerns that I have been hearing from my district.
One of the hallmarks of working with an SBDC is that every cli-
ent session is confidential. And client privacy is an SBA require-
ment. It is set in statute. It is something that our SBDC takes very
seriously in New Hampshire, and I hear about it from member
businesses that are working directly with them.
So privacy requirements help create a higher level of trust be-
tween the small businesses and the advisors. At SBDC, businesses
share detailed information obviously about their finances, their
growth strategies, new product or service ideas. They also share de-
mographic and business information with the SBDCs such as gen-
der, race, location, veteran and disability status. So protecting this
data is critically important now and will be more so in the future
as we see growing issues around cybersecurity.
23

So an issue of concern that I have heard recently is that pro-
tecting this client confidentiality may be in question. It is my un-
derstanding that there will be some new information that SBDCs
are required to upload through the new Nexus platform. There is
a concern that this information is paired with existing uploaded in-
formation and it could increase the likelihood that a client could be
identified. It is an issue that I am hearing about from businesses
in rural communities like mine in New Hampshire. So clients who
up until now have had the option to opt in to sharing data may
not want to sign up for advising if they are worried about their pri-
vacy being in question and not being protected.
So I am wondering if you could discuss this topic. I know it has
been addressed earlier in this session about protecting SBDC client
data in more detail and under what circumstances could the ad-
ministrator be allowed to share client data more broadly?
Mr. MADRID. Well, thank you for the question, Representative.
We take privacy seriously. In terms of the form dynamics that
you were talking about, we had over 25 meetings with our stake-
holders, including America’s SBDC leadership, the Association of
Women’s Business Centers and SCORE. When it comes to the de-
mographic information on the form they were a part of these meet-
ings. This is optional information so you could prefer not to state.
But what we have done is we have added demographic information
in terms of if you are a person with disabilities, if you are a vet-
eran or military spouse. Where I come from on the ground it is im-
portant to know thy audience. But that is optional.
I was at Gallaudet University recently with deaf and blind entre-
preneurs. And if you have not had a chance to go there I would rec-
ommend that you do. And those entrepreneurs said we want to be
heard. We will gladly state wherever we can that we have disabil-
ities because we do not want to be left behind. We do not want to
be turned away from any opportunity and we are creating jobs for
this country.
In terms of the specific times when we would be privy to PII or
privacy data they are very specific. It would be a court order. It
would be a case where an audit would be taking place for a federal
or state agency that is auditing the work of a center, so we believe
strongly in oversight so it is more about oversight than anything
else. So I hope I have addressed your questions about privacy.
Mr. PAPPAS. Well, I know that the statue states that under an
audit or a court order that SBDC can give up client data but I
know that the new rule allows the administrator to ‘‘consider such
disclosures necessary on a case by case basis.’’
So I am wondering if you can help us understand what that
means in terms of the administrator’s discretion here.
Mr. MADRID. Absolutely. The case by case basis is tied to the
audit of federal and state entities. So that is clearly defined in that
section when it comes to the audit.
Mr. PAPPAS. Well, I also want to add my voice to what Rep-
resentative Scholten said earlier about funding cuts that were pro-
posed to small business development centers. I want to reiterate
how important all the entrepreneurial development programs are
to small businesses in New Hampshire, including SBDC, which
supports thousands of businesses, helped them access tens of mil-
24

lions of dollars in capital with an overall economic impact in the
hundreds of millions of dollars, which makes a big difference in an
economy like ours.
Over the years, we have asked our small business development
centers to do more for their clients and communities, particularly
over the last few years. And given the pressures that our small
businesses face right now it just does not seem like the opportune
time to be cutting back or scaling back support for this critical pro-
gram. And so I am hoping that you will reassess this as we think
about funding for SBA moving forward and some of its programs.
I hope that SBDC will be funded at a very robust level.
I see my time is almost up. So thank you very much for your
comments here today. I look forward to working together to support
all of our small businesses. And with that I yield back.
Chairman WILLIAMS. Thank you. The gentleman yields back.
And I would like to thank our witness today for being here. God
bless Texas. I want to add that. And I want to thank you for your
testimony.
And without objection, Members have 5 legislative days to sub-
mit additional materials and written questions for the witness to
the Chair which will be forwarded to the witnesses. I would like
to ask the witness to please respond promptly if that happens.
Okay?
And if there is no further business, without objection the Com-
mittee is adjourned.
[Whereupon, at 11:57 a.m., the committee was adjourned.]
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