Reducing Mismanagement: GAO Recommendations for Improving the SBA (House Small Business Committee hearing, March 6, 2024)

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The printed record of a House Committee on Small Business hearing, Small Business Committee Document Number 118–043, titled Reducing Mismanagement: GAO Recommendations for Improving the SBA, held March 6, 2024 in the 118th Congress. The committee met at 10:02 a.m. in Room 2360 of the Rayburn House Office Building with Chairman Roger Williams presiding, and adjourned at 11:14 a.m. Opening statements come from Hon. Roger Williams and Hon. Nydia Velázquez. The single witness is Courtney LaFountain, Acting Director, Financial Markets and Community Investments at the U.S. Government Accountability Office, accompanied by Johana Ayers of the same office. The appendix holds her prepared statement and questions from Hon. LaLota to GAO with GAO's responses.

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“Reducing Mismanagement: GAO Recommendations for Improving the SBA (House Small Business Committee hearing, March 6, 2024).” Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/reducing-mismanagement-gao-recommendations-for-improving-the-sba-house-5cd7664242/, SHA-256 064563c2e941b48854bef739b228b6e12d5b787918de0e1e0b88f83019c225c6.

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REDUCING MISMANAGEMENT: GAO
RECOMMENDATIONS FOR IMPROVING THE SBA

HEARING
BEFORE THE

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

HEARING HELD
MARCH 6, 2024

Small Business Committee Document Number 118–043
Available via the GPO Website: www.govinfo.gov

U.S. GOVERNMENT PUBLISHING OFFICE
54–983 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
CELESTE MALOY, Utah
NYDIA VELÁZQUEZ, New York, Ranking Member
JARED GOLDEN, Maine
KWEISI MFUME, Maryland
DEAN PHILLIPS, Minnesota
GREG LANDSMAN, Ohio
MARIE GLUESENKAMP PEREZ, Washington
SHRI THANEDAR, Michigan
MORGAN MCGARVEY, Kentucky
HILLARY SCHOLTEN, 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. Roger Williams ................................................................................................ 1
Hon. Nydia Velázquez ............................................................................................. 2

WITNESSES
Ms. Courtney LaFountain, Acting Director, Financial Markets and Commu-
nity Investments, U.S. Government Accountability Office, Washington, DC,
accompanied by Ms. Johana Ayers, Managing Director, Forensic Audits,
and Investigative Services, U.S. Government Accountability Office, Wash-
ington, DC ............................................................................................................. 4

APPENDIX
Prepared Statement:
Ms. Courtney LaFountain, Acting Director, Financial Markets and Com-
munity Investments, U.S. Government Accountability Office, Wash-
ington, DC ..................................................................................................... 21
Questions and Answers for the Record:
Questions from Hon. LaLota to GAO and Responses from GAO ................. 42
Additional Material for the Record:
None.

(III)
REDUCING MISMANAGEMENT: GAO REC-
OMMENDATIONS FOR IMPROVING THE SBA

WEDNESDAY, MARCH 6, 2024

HOUSE OF REPRESENTATIVES,
COMMITTEE ON SMALL BUSINESS,
Washington, DC.
The Committee met, pursuant to call, at 10:02 a.m., in Room
2360, Rayburn House Office Building, Hon. Roger Williams [chair-
man of the Committee] presiding.
Present: Williams, Meuser, Alford, Crane, Maloy, Velázquez,
McGarvey, Scholten, Thanedar, and Davids.
Chairman WILLIAMS. Before we get started I would like to rec-
ognize Congressman Mr. McGarvey from the great state of Ken-
tucky to lead us in the prayer and the pledge. Stand please.
Mr. MCGARVEY. Our Father we thank you for allowing us to
gather here today. And ask that you be with us as we seek to serve
the people in the way that you see fit with mercy, justice, with
compassion for all. Amen.
Chairman WILLIAMS. Amen.
Mr. MCGARVEY. I pledge allegiance to the Flag of the United
States of America, and to the Republic for which it stands, one na-
tion, under God, indivisible, with liberty and justice for all.
Chairman WILLIAMS. Good morning, everyone. I now call the
Committee on Small Business to order. Without objection, the
Chair is authorized to declare the recess of the Committee at any
time. I now recognize myself for an opening statement.
Welcome to today’s hearing, which will focus on examining the
Government Accountability Office’s recommendations for reducing
mismanagement at the SBA. I would like to start off by thanking
our witnesses for joining us today, thank you very much, and your
attendance is greatly appreciated and we value your input we will
receive.
The SBA was thrust in the national spotlight during the COVID-
19 pandemic. They took an oversized role in the delivery of pan-
demic assistance when American entrepreneurs were in great need.
Now that that pandemic is over we have been seeing all the after
action reports on how the agency did during those stressful days.
Unfortunately, the inspector general and other government watch-
dogs discovered there were hundreds of billions of taxpayer dollars
stolen by fraudsters. It became abundantly clear to this Committee,
that the COVID-19 pandemic broke the SBA, and it is time to open
the hood and fix what has failed American taxpayers.
At the start of each Congress, the GAO releases a high-risk list
of programs with significant problems that have high vulnerability
(1)
2

to waste, fraud, abuse, and mismanagement, unfortunately the
SBA still has many outstanding recommendations on this list that
we are going it to hear about in more detail this morning.
It is imperative that this Committee evaluates not just how the
SBA handled the previous pandemic, but also, what role they
should play in the future. So given their poor track record with de-
tecting fraud on the front end, I am very skeptical that this agency
should ever be charged with delivering such quantities of taxpayer
dollars ever again. Additionally, since we were so much fraud that
we saw that took place, I would hope that more of the GAO’s rec-
ommendations would have been completed by now, since many of
them discuss the integrity and the fraud controls within the pro-
grams. The SBA’s inability to address the open GAO recommenda-
tions is a concern over its ability to aid our nation’s job creators.
When businesses have operational issue changes are quickly made
to ensure it does not happen again.
This same entrepreneur spirit does not seem to exist at this
agency which seems to be weighed down by slow-moving bureauc-
racy. So look no further than the agency’s work from home policy.
Even though the Biden administration’s been pushing hard to get
employees back in the offices, the SBA is still only utilizing around
10 percent of their office space. This is not only a slap in the face
to small business owners that get dressed and go to work every
day, but also undoubtedly reducing the quality of work from people
who might be able to focus on walking their dog or doing laundry
than helping an entrepreneur in need.
It is my hope that today’s conversation can point us in the right
direction regarding what needs to change at the SBA. Our Commit-
tee’s job is to be main street’s voice at the table and we will con-
tinue to do our best on their behalf.
I now would like to recognize—once again, thank our witnesses
for being here with us and I am very much looking forward to our
conversation.
And with that, I yield to our distinguished Ranking Member
from New York, Ms. Velázquez.
Ms. VELÁZQUEZ. Thank you, Chairman Williams, and thanks
to our witnesses for your willingness to testify before our Com-
mittee today. I always look forward to hearing testimony from
GAO, because the information provided is fact-based, nonpartisan,
and focused on improving government services.
Today, I hope we can set aside partisanship, learn more about
your findings and discuss ways to improve the delivery of services
to small businesses. Beginning with the pandemic relief programs,
SBA executed 14 years of lending in 14 days, to help keep small
businesses afloat during the pandemic. These programs helped mil-
lions of businesses across the country. Unsurprisingly, there were
bumps in the road with the implementation of these new programs.
We have learned through reports that the potential fraud ranges
from $36 billion to $200 billion.
While we may never know the full extent of that fraud, we do
know for certain that the majority of that fraud took place in the
first 9 months of the pandemic. We took that seriously then, which
is why this Committee held a number of oversight hearings. Due
to the work of GAO and the IG we were able to put internal con-
3

trols in place to prevent fraud in the PPP and EIDL programs. And
let me tell you, it wasn’t easy.
Congress and our nonpartisan agencies like GAO and the IG had
an incredibly difficult time getting basic information from the
Trump administration and the agency was less than forthcoming
with documentation and access to data.
When Administrator Guzman was confirmed, that all changed.
In testimony before the Committee on April 20, 2021, GAO testified
that the new administration was more forthcoming with informa-
tion. GAO’s May 15, 2023, letter to SBA which delineates priority
open recommendations validates Administrator Guzman’s commit-
ment to implementing GAO’s recommendations. In fact, their 4-
year implementation rate was 100 percent for the past 3 years,
well above the 77 percent rate government wide. I hope to learn
more about the agency’s progress in implementing the remaining
36 open recommendations, which include 10 priority recommenda-
tions.
In 2021, and at the beginning of the 117th Congress, SBA was
added to GAO’s high-risk list due to its mishandling of the pan-
demic relief program. Hearing more about SBA’s progress in ad-
dressing the areas that left the agency susceptible to fraud will be
useful. Looking to the future, I hope to hear GAO’s perspective on
SBA efforts to stand up the Fraud Risk Management Board to pre-
vent fraud and other challenges facing the agency.
GAO’s priority recommendations can offer a blueprint for the
Committee’s oversight work. Through hard work and a true com-
mitment to bipartisanship, we can confront these challenges to-
gether and improve the effectiveness of the SBA.
Thank you, Mr. Chairman. I yield back.
Chairman WILLIAMS. Yields back.
I will now introduce our witnesses. Our first witness here with
us today is Dr. Courtney LaFountain. Dr. LaFountain is the acting
director of financial markets in community investments at the U.S.
Government Accountability Office right here in Washington, D.C.
At the GAO she has launched the emerging risk task force to sup-
port the agency’s ability to provide Congress with reliable, high-
quality information and emerging risks.
She also had led teams that examine the effects of the U.S. Gov-
ernment’s pandemic response, and has been instrumental in the
GAO’s work on financial market resilience and stability, social safe-
ty net program design and public finance.
Prior to working at the GAO Dr. LaFountain was an assistant
professor at the University of Texas in Arlington. That is in my dis-
trict. Home of the Mavericks.
Ms. LAFOUNTAIN. That is right.
Chairman WILLIAMS. And Dr. LaFountain earned a bachelor of
arts degree in mathematics from Washington University in St.
Louis, and went on to earn her Ph.D. in economics also from Wash-
ington University. She is recipient of the 2022 Arthur S. Flemming
award recognizing outstanding federal employees. I thank you for
joining us today and we look forward to our conversation.
Our next witness here with us today is Johana Ayers. Ms. Ayers
is the managing director of the forensic audits and investigative
service team at the U.S. Government Accountability Office here in
4

Washington, D.C. At the GAO, Ms. Ayers leads and oversees efforts
to provide Congress with high quality forensic audits and investiga-
tion fraud, waste, and abuse, other special investigations and secu-
rity vulnerability assessments. Prior to being named managing di-
rector, Ms. Ayers served as director in GAO’s defense capabilities
and management team. Ms. Ayers earned her bachelor of arts de-
gree in international relations and affairs from the American Uni-
versity and went on to earn her master of arts in international re-
lations and affairs from George Washington University. Thank you
for joining us today and we look forward to the conversation we are
going to have.
And before we recognize the witnesses, I would like to remind
them that their whole testimony is restricted to 5 minutes in
length. If you see the light turn red in front of you it means your
5 minutes have concluded and you should wrap up your testimony.
And periodically you may, if you go over you will hear this, and
that is to remind you to wind it up, okay?
I now recognize Dr. LaFountain for her 5-minute opening re-
marks.
STATEMENT OF DR. COURTNEY LAFOUNTAIN, ACTING DIREC-
TOR, U.S. GOVERNMENT ACCOUNTABILITY OFFICE, FINAN-
CIAL MARKETS AND COMMUNITY INVESTMENTS, ACCOM-
PANIED BY JOHANA AYERS, MANAGING DIRECTOR, U.S. GOV-
ERNMENT ACCOUNTABILITY OFFICE, FORENSIC AUDITS,
AND INVESTIGATIVE SERVICES

STATEMENT OF DR. COURTNEY LAFOUNTAIN
Ms. LAFOUNTAIN. Thank you, Chairman Williams, Ranking
Member Velázquez, and Members of the Committee. Thank you for
the opportunity to discuss GAO’s work on Small Business Adminis-
tration programs.
SBA’s mission is to help Americans start, build, and grow busi-
nesses and help communities recover from disasters. Based on our
work, I would like to highlight three areas where SBA can improve
program management and more effectively meet that mission in
the future.
The first area, as you have alluded to, is SBA’s pandemic relief
programs. SBA quickly set up programs to respond to the unprece-
dented economic shock of the pandemic, and altogether, it made or
guaranteed more than $1 trillion in loans and grants and assisted
more than 10 million small businesses.
However, quick loan approvals came at the expense of oversight
and Fraud Risk Management, especially early in the pandemic.
Our work uncovered a number of weaknesses, such as reliance on
inefficient pay and chase approaches instead of up-front prevention
of fraud and other improper payments. These early decisions also
affected the reliability of SBA’s financial reporting, and its inde-
pendent financial auditor has repeatedly identified weaknesses and
its ability to support the numbers on its balance sheet.
Where SBA has addressed our recommendations, it has signifi-
cantly strengthened oversight and management of fraud risks. For
example, it put controls in place to prevent funding for potentially
fraudulent or ineligible applications, and monitor forgiveness of
5

certain loans. As a of fiscal year 2023, we estimated that taking
these steps saved the government at least $12 billion.
So, we think SBA should keep going. It should continue to build
out data analytics for preventing and detecting fraud and fully ad-
dresses the weaknesses in its financial statements. With a robust
system of internal controls and Fraud Risk Management, SBA will
be better placed to support small businesses in future emergencies,
and in normal operations while also ensuring that taxpayer dollars
are going where they should.
The second area I will highlight is SBA’s disaster loan program,
which offers low-interest loans to small businesses and households
after disaster. For example, SBA made over $7 billion in loans to
those affected by hurricanes Harvey, Irma, and Maria in 2017.
Our reviews of this program uncovered obstacles to those pro-
viding and obtaining disaster recovery assistance. We found that
SBA struggled to operate effectively after the 2017 hurricanes
where the power was out, or the phone lines were down, and espe-
cially in rural areas. We also found issues with clear communica-
tion and an uneven playing field for accessing federal disaster as-
sistance in general.
So, SBA has made a start here. It has improved disaster-specific
action planning and started looking at its operating risks. But we
would urge SBA to take further action. We recommended that SBA
review its lending standards and see if it can reduce barriers while
still managing its credit risk.
We also think SBA should continue working with other federal
agencies to level the playing field for access to disaster assistance.
These steps can improve how communities recover in the future.
The last area I will highlight cuts across multiple SBA activities.
Our reviews of SBA’s 8(a) program, its oversight of small business
research programs, and its efforts to support veteran-owned small
businesses all revealed that SBA wasn’t providing required reports
to Congress in a timely or complete manner. These reports contain
key data elements describing program participation and funding
amounts and various outcomes, and fully addressing our rec-
ommendations in this area would improve SBA’s capacity to deliver
reports on time, completely, and provide information needed for ef-
fective oversight for small business programs.
So, this concludes my opening remarks. Thank you again for the
opportunity to speak here today. And my colleague and I would be
glad to take your questions.
Chairman WILLIAMS. Thank you. And we will now move to the
Member questions under the 5-minute rule we talked about. I rec-
ognize myself now for 5 minutes.
The COVID-19 pandemic showed some serious weaknesses with-
in the SBA which we have already heard. The agency’s inspector
general estimates there was over $200 billion in fraudulent pan-
demic dollars stolen by criminals. This is unacceptable and it is a
high number, and I am proud of the creative solutions coming out
of this Committee to get some of these funds returned to the tax-
payers. However, I don’t want everything we do to be backwards
looking. If there is ever another time where the SBA needs to de-
liver funds quickly, I am extremely concerned that they have yet
6

to institute the proper guardrails to prevent and detect fraud with-
in these programs.
So, the GAO has also highlighted some outstanding concerns on
this issue. So, I am going to open the floor to either one of you,
both of you: What is the single most important fraud control meas-
ure that the SBA could implement to fix the remaining
vulnerabilities. Johana?
Ms. AYERS. So thank you for that question. I think the key con-
trol that SBA does need to put in place is what you alluded to, and
that is, focusing on prevention. So if I could ask for one thing for
SBA to do, it is to end the reliance on self-certification. And I will
take a second to make a pitch for data analytics so that SBA can
appropriately screen applications as they come in, flag those that
look suspicious, and quickly take actions to resolve them. And if
the fraudster does happen to receive money, have those analytics
in place so that SBA can readily detect when fraud has occurred.
But the number one thing would be to end self-certification.
Chairman WILLIAMS. You want to add to that?
Ms. LAFOUNTAIN. No, nothing to add, sir.
Chairman WILLIAMS. Okay. All right.
Ms. LAFOUNTAIN. Thank you.
Chairman WILLIAMS. So, one of the high-risk recommendations
has been identified as a major issue for the agency is their weak-
ness in the audited financial statements. For any small business
owner, complete and accurate financial statements are necessary to
stay in business. They have to be able to track all the money com-
ing in and out of their businesses. So can, again, either of you dis-
cuss in greater detail some of why this recommendation remains on
the SBA’s priority list and what the agency has yet to do to it.
Ms. LAFOUNTAIN. So, this is a really important issue that you
are raising. As you mentioned, to operate effectively and efficiently
as possible, we need to understand the, you know, status of the bal-
ance sheet, what is happening in SBA. So, what SBA’s financial
auditors found were a number of material weaknesses related to
the pandemic relief programs, that basically boiled down to a lack
of documentation and being able to just support where the num-
bers on its balance sheet came from. There are a lot of details to
dig into there but that is the main issue.
Some driving factors that led to this situation were the, you
know, the speed and the size and the newness of the programs, but
what we see here is a real opportunity for SBA to address the
weaknesses in its internal controls around these programs so that,
you know, going forward, they will have a stronger financial man-
agement system.
Chairman WILLIAMS. Just do what they are told, that always
works.
I have a little time left here, can either of you summarize a re-
cent GAO report on the SBIR programs so this Committee can en-
sure it is receiving all the pertinent information on the program be-
fore it expires in a few years.
Ms. LAFOUNTAIN. So, this is another important issue, the
small business research programs. So, SBA’s role in the Small
Business Innovation Research is an oversight role, and kind of a
central body for communicating and policymaking, and then also
7

producing a report to Congress on various outcomes related to the
Small Business Research Programs. Some of the challenges we
have highlighted with those programs are staffing at SBA, and re-
source constraints, but also, there’s a lot of variety in the federal
agencies from whom SBA is trying to collect information. But we
think there is some opportunities here for SBA to improve that
process, to fully document, you know, a plan and some policies and
procedures to improving the timeliness with which it can produce
that information.
Chairman WILLIAMS. Well, they require so much from the bor-
rower. They probably need to do the same thing they require the
borrower to do; fill the right paperwork out and fill all the blanks
in and do what they are asked to do.
I now recognize the Ranking Member for 5 minutes of questions.
Ms. VELÁZQUEZ. Thank you, Mr. Chairman. Administrator
Guzman has said that she takes GAO’s recommendations seriously.
In your view, is SBA cooperating with ongoing audits and working
to implement the open recommendations in a timely manner?
Ms. LAFOUNTAIN. So, there is a couple of indicators we can
look at to shed some light on SBA’s responsiveness and get a sense
of how seriously they are taking GAO’s recommendations. One is
their 4-year implementation rate. In the past few years that has
been high at 100 percent, I think for the past 3 years. And then
for a handful of years prior to that, it was mostly at or higher than
the government average of about 77 percent. So, they are on the
high end of the distribution there.
Ms. VELÁZQUEZ. Thank you.
Ms. Ayers, could you share your experience with the current ad-
ministration, and then discuss the difficulties you face in obtaining
PPP and EIDL data from the previous administration?
Ms. AYERS. Yes, thank you for that question. I think I will an-
swer it in a little bit reverse order. So throughout 2020, as SBA
was designing and implementing the pandemic relief programs, we
did, as you alluded to in your statement, encounter significant chal-
lenges and delays in receiving the data and documentation that we
needed to help support congressional oversight of these programs.
And those delays and challenges certainly hindered accountability
and transparency in those programs.
In 2021, we did start to receive large volumes of the data and
documentation that we needed for oversight of those particular pro-
grams. And I think on the whole, we have continued to see coopera-
tion and responsiveness from SBA officials at all levels in response
to our request, not only on the pandemic relief programs, but
across the range of programs that SBA is responsible for.
Ms. VELÁZQUEZ. Thank you, thank you.
Ms. Ayers, in 2015 GAO developed a Fraud Risk Framework to
help agencies manage their risk both in normal operations and in
emergencies. In 2016, the Fraud Reduction and Data Analytics Act
required the Office of Management and Budget to incorporate these
leading practices into guidelines for agencies. What steps did the
Trump administration’s SBA take to implement these practices?
Ms. AYERS. So unfortunately between 2015 when we released
the Fraud Risk Framework and its leading practices, and 2020, at
the start of the pandemic, SBA had not taken action to implement
8

the various controls outlined in the Fraud Risk Framework for pre-
venting, detecting and responding to fraud in a strategic manner.
And as a result, when the pandemic began, SBA was not well-posi-
tioned to manage the heightened fraud risk that emerged.
Ms. VELÁZQUEZ. Would you say that if these practices were in
place could some of that fraud have been prevented?
Ms. AYERS. Yes.
Ms. VELÁZQUEZ. Okay. What steps has the Biden SBA under
the leadership of Administrator Guzman taken to implement this
recommendation?
Ms. AYERS. SBA has taken a number of actions that are in
alignment with the Fraud Risk Framework. For example, it has
designated an entity to lead its antifraud efforts, the Fraud Risk
Management Board. It has also begun conducting fraud risk as-
sessments in alignment with leading practices. And it has also de-
veloped antifraud strategies for some of programs, and that can
serve as a blueprint for going forward.
Ms. VELÁZQUEZ. Thank you. Are there areas where SBA can
improve?
Ms. AYERS. I certainly think there is always room for improve-
ment. I think in the fraud risk management space, specifically
what SBA has done to date does represent important steps for-
ward. But SBA needs to build on those in terms of broadening
across the range of programs that SBA is responsible for admin-
istering, and then ensuring that Fraud Risk Management culture
is engrained throughout the agency. From not only the adminis-
trator, but to the lowest-level employee and also to the contractors
and service providers that SBA works with.
Ms. VELÁZQUEZ. Thank you. In the fiscal year 2024 budget,
President Biden recommended $47 million for the Office of Inspec-
tor General. Unfortunately, we have been operating under a con-
tinuing resolution that provides level funding. How does under-
funding the inspector general hinder their ability to recover fraudu-
lent money?
Ms. AYERS. So I believe IG Ware has testified before this Com-
mittee on the importance of his office receiving full funding so that
it can carry out the necessary investigations and audits, not only
related to the pandemic relief programs and the fraud that oc-
curred there, but across the range of SBA programs.
Ms. VELÁZQUEZ. Thank you. I yield back.
Chairman WILLIAMS. Lady yields back.
I now recognize Representative Crane from the great State of Ar-
izona for 5 minutes.
Mr. CRANE. Thank you, Mr. Chairman and thank you for hold-
ing this hearing today. So am I correct that there was about $200
billion worth of fraud that we have—that we have calculated with
the PPP loans? Is that correct?
Ms. AYERS. So the SBA inspector general has estimated that
fraud in the PPP and COVID-19 EIDL programs was $200 billion,
yes.
Mr. CRANE. Okay. Are we going after any of that money? Is the
SBA going after any of that trying to recuperate any of it?
Ms. AYERS. So I will start off by saying the SBA OIG under In-
spector Ware’s direction has an aggressive effort to conduct inves-
9

tigations and refer cases for prosecution. SBA has also taken steps
to review previously approved loans under the pandemic relief pro-
grams and to flag those that are potentially fraudulent and refer
those to the SBA OIG for further investigation.
Mr. CRANE. Ms. Ayers, you said that one of the things you’d rec-
ommend in a future crisis is prevention mechanisms. Is that cor-
rect?
Ms. AYERS. Yes.
Mr. CRANE. To make sure that vetting was done on the front
end?
Ms. AYERS. Yes.
Mr. CRANE. Is that correct?
Ms. AYERS. Yes.
Mr. CRANE. Do you think that that is happening right now at
the SBA?
Ms. AYERS. So in terms of pandemic relief programs. Obviously
at this point, the funds have been distributed and we did see nu-
merous indicators early in the pandemic that the proper vetting
was not being done. And as a result, fraudsters did get money that
they should not have.
Mr. CRANE. That is not the question I asked, ma’am.
Ms. AYERS. In terms of the current programs——
Mr. CRANE. Yeah, has anybody been fired, ma’am, to your
knowledge?
Ms. AYERS. Not to my knowledge, no.
Mr. CRANE. So why would any of these prevention mechanisms
be put in place if nobody’s been held accountable?
Ms. AYERS. We have seen, based on our discussions as well as
information that SBA has provided to us, we do see several indica-
tions that preventative measures are being put in place and that
SBA has an understanding that these measures do need to be in
place, you know, not only looking back at the pandemic relief pro-
grams, but also looking towards, for example, the regular programs
it has such as the 7(a) and the regular EIDL program. So they are
recognizing the importance of having preventative controls put in
place.
Mr. CRANE. Okay. So you are saying that they are putting
measures in place, but still, you acknowledge that nobody yet has
been held accountable at SBA. Is that accurate?
Ms. AYERS. I would say, again, to my knowledge, I am not
aware of anyone being fired.
Mr. CRANE. Do you think that is a problem, Ms. Ayers? I mean,
we are talking about $200 billion, right?
Ms. AYERS. Yes. I believe what was experienced at SBA was a
systemic issue. As I discussed previously, there were not, across
the agency, a range of mechanisms that had been put in place to
manage the fraud risk. So it really very much was a systemic issue
as opposed to the fault of one or two individuals.
Mr. CRANE. Thank you. Is it true that SBA only utilizes about
10 percent of their office space? Either one of you.
Ms. LAFOUNTAIN. I am not aware that we have looked at that.
Mr. CRANE. Okay. All right, moving on.
10

Can you repeat the issues you found with SBA’s failure to sup-
port our veteran business community? I think that was you, Ms.
LaFountain.
Ms. LAFOUNTAIN. Thank you. So, this recent work identified
two issues: One is that SBA is required by statute to give special
consideration in its lending programs to veteran-owned small busi-
nesses.
Mr. CRANE. Are they doing that, ma’am?
Ms. LAFOUNTAIN. They pointed to some areas where they—
where veterans are benefiting from some of their lending programs,
but they couldn’t point to how SBA is giving them special consider-
ation, no.
Mr. CRANE. So by statute, they are required to do that and they
are not doing that?
Ms. LAFOUNTAIN. That’s right.
Mr. CRANE. Why do you think that is, ma’am? Do you think this
current administrator doesn’t care about veterans or statute? If you
had to take a guess, why aren’t they, by statute, doing what they
are supposed to to help veteran small business owners?
Ms. LAFOUNTAIN. That is an important question. When we had
talked to them, they cited a lack of awareness. And so one thing
that we would look SBA to do to remedy this situation is put poli-
cies and procedures in place so that doesn’t happen in the future.
Mr. CRANE. A lack of awareness?
Ms. LAFOUNTAIN. Yes, sir.
Mr. CRANE. I yield back.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Representative Davids from the great State of
Kansas for 5 minutes.
Ms. DAVIDS. Thank you, Chairman Williams. And thank you to
you and the Ranking Member both for holding this hearing today.
Thank you to our witnesses from the Government Accountability
Office. I definitely appreciate the work that you all do. I just want
to touch on a couple of things here.
In August of 2022, GAO published a report on Tribal economic
development. And since coming to Congress, I have definitely been
diligently working to improve access to capital and entrepreneur-
ship opportunities in general for Native communities. And I, of
course, am very excited and thrilled that we just passed out of the
House my bill to improve the Office of Native American Affairs at
the Small Business Administration. And actually, I got the chance
to work with my colleague, Mr. Crane, on that bill. So with that
in mind, I am curious if you could speak to the recommendation
that you made regarding SBA and the analysis to improve their
Tribal economic development assistance, and what progress you’ve
seen made to date or additional issues that I need to be aware of?
Ms. LAFOUNTAIN. I apologize, I do not know those details. So,
we would be glad to connect with our experts and follow up with
you on those topics.
Ms. DAVIDS. Okay. Thank you. We will also follow up with prob-
ably some additional written questions to get into more specifics.
We don’t get a ton of time with 5 minutes here.
So the second thing I was hoping to touch on is GAO’s review
of the disaster recovery activities that happen at—at various agen-
11

cies and at SBA specifically. I know that your office recently re-
leased a report about the SBA disaster assistance in rural commu-
nities. And certainly in Kansas, we are absolutely facing a number
of unique challenges. On the eastern side of the State, folks are
often hit with severe storms and flooding that can have just a dev-
astating impact on our entrepreneurs. And then on the western
side of the State we are dealing with drought and, you know, that
is threatening crop yields and this sort of thing, which we are see-
ing rising costs at grocery stores.
So I am just curious if you have a chance to expand on your rec-
ommendations that you made to SBA regarding the disaster assist-
ance outreach, and then the challenges that that program is facing
with regard to the rural communities that they are trying to serve.
Ms. LAFOUNTAIN. So, this is a really important issue. So one
thing we observed in our work on the disaster loan program is that
SBA doesn’t have—doesn’t fully have a grasp on some of its oper-
ating risks for doing business in areas after a disaster, like, phys-
ically, in areas after a disaster, especially in rural areas it can run
into things like downed power lines or poor cell phone service that
can just inhibit its ability to deliver the services that its providing
or that it should be providing. So, one thing we have recommended
is that they take a look at their operational risks and come up with
plans for mitigating those risks, including in rural areas.
Ms. DAVIDS. Did you want to add anything?
All right, thank you so much. And we will follow up with a few
written questions regarding a Tribal economic development activi-
ties. Thank you and I yield back.
Chairman WILLIAMS. Yields back.
I now recognize Representative Meuser from the great State of
Pennsylvania for 5 minutes.
Mr. MEUSER. Thank you very much, Mr. Chairman. I appre-
ciate being here. Thank you to or witnesses very much.
So I want to continue with the Chairman again speaking about
earlier related to fraud issues, billions and billions from, as you
well know EIDL and the PPP, and not assigning any blame, but
we certainly want to avoid this in the future. So what is the GAO
looking at? What have you determined? What have you assessed,
and have you offered any—I apologize I haven’t seen them—writ-
ten ideas for solutions to keep this from happening again in the fu-
ture?
Ms. AYERS. Yes, thank you for that question. So we have a body
of work going back to, you know, the early days of the pandemic
where we made a number of recommendations to SBA to enhance
controls related to the various pandemic relief programs. And many
of those recommendations are tied to our Fraud Risk Framework
that we issued in 2015 that outlines leading practices for managing
fraud risk. And as I previously noted, prior to the pandemic, SBA
had not been acting on those leading practices. I am very pleased
that in recent years, SBA has started taking action to implement
those leading practices. And going forward, as we think about fu-
ture programs, SBA needs to continue implementing the leading
practices from the Fraud Risk Framework so that it is better posi-
tioned to manage its fraud risk during normal times, and certainly
during emergencies when risks are heightened.
12

Mr. MEUSER. So I said I am not assigning blame, you are kind
of assigning blame to the previous SBA. And if you look at the
numbers, there was just as much fraud in the PPP and the EIDL
from this administration as the previous administration. So what
has been done? Back to my question. Okay, if you write a paper,
that is wonderful. That is a wonderful bureaucratic action to take,
was that followed up, was there any improvements actually done,
such as new IT systems? New procedures? Bringing in people from
the private sector? Credit card companies that are so much better
at detecting and keeping fraud, because it’s their money that they
are losing? It is not, you know, the American taxpayer dollars
which sometimes doesn’t get the respect that it deserves. Okay,
does the GAO actually do anything besides write reports?
Ms. AYERS. So we have evaluated the actions that SBA did take
to address fraud as it emerged during the pandemic, and we did
find that the controls that were added such as data analytics, en-
hanced screening of applications as they came in, and then doing
post award reviews did help prevent fraud and help more readily
detect it.
I do think it is fair to say based on our work as well as the work
of the inspector general that while there was progress made, there
were, at times, plans that SBA put into place that weren’t always
followed. For example, SBA, for a period of time, had not been run-
ning applications through Treasury’s Do Not Pay system to flag
people—applicants—with potential problems. SBA then began run-
ning applications through the Do Not Pay system. But in some
cases, for reasons that are not necessarily clear to us or the IG they
made decisions not to run all of the applications through that por-
tal.
Mr. MEUSER. Thank you. Could we see some of the ideas and
the plan that you have to improve? Do you have that in outline
form or, in some way, an action plan for minimizing fraud?
Ms. AYERS. So we have outlined the steps that we think SBA
does need to take and that is outlined in the Fraud Risk Frame-
work. It is up to SBA to develop that action plan to see how it will
carry it out. And we have seen action plans that SBA has devel-
oped related to Fraud Risk Management and we will continue to
follow up with them to see the status of the implementation, to
make sure that it isn’t just a plan on the shelf gathering dust, but
it is resulting in real change.
Mr. MEUSER. That is great. I yield back, Mr. Chairman.
Chairman WILLIAMS. The gentleman yields back. And we are
going to kind of go into a little mini second round here, we haven’t
asked all of our questions.
This Committee has been investigating the SBA’s Community
Navigator’s pilot program. Now this program essentially is a dupli-
cative of existing SBA programs such as Small Business Develop-
ment Centers. However, it is much less effective. This leads to a
waste of taxpayers’ dollars. So, can you all discuss how the GAO
is looking at this program and what you are finding?
Ms. LAFOUNTAIN. So, these are important issues that you are
raising and we do have ongoing work looking at the Community
Navigator program. Because it is ongoing work, we don’t have any
13

findings to share at this time, but we would be glad to when that
work is completed.
Chairman WILLIAMS. When do you think it will be completed?
Ms. LAFOUNTAIN. I think our goal is to complete it later this
fall but let me double-check that detail.
Chairman WILLIAMS. Yeah, we need to follow through so we
can see what you have found, okay?
All right. Next go back to Congressman Meuser for his second
round of questions——
Mr. MEUSER. Thank you again, Mr. Chairman. Thanks again
for being with us.
So during a GAO review, agencies seem to, don’t know for sure,
appease the GAO recommendation, and turn around and revert
back to the old ways of implementing the recommendations in an
inadequate manner. It is imperative that, in this case, the SBA,
commits to addressing the GAO’s concerns in a lasting and effec-
tive way. However, audits of internal SBA controls and processes
paint a picture that the agency struggles with developing such ade-
quate processes that protect taxpayer dollars. With that in mind,
how does the GAO look at the long-term effectiveness of the SBA’s
actions in closing out these recommendations, and how can that
improve?
Ms. LAFOUNTAIN. So, this is another important issue that you
are raising. We do have a robust recommendation follow-up proce-
dure. As agencies are trying to address our recommendations, we
are applying the same scrutiny and evidentiary standards and pro-
fessional skepticism that we apply when we write the original re-
ports. After a recommendation has been closed, then we rely on
working with our congressional partners to see if additional follow
up needs to happen, and we need to open another audit.
Mr. MEUSER. Okay. You don’t have an easy job, I can see that,
but it can also be an extremely important job that can really make
a difference.
Let me ask you if I can about the Community Navigator. Is this
a point of focus for the GAO? Are you aware of some of the discrep-
ancies and problems that some small businesses have brought to
our attention regarding not being part of a targeted group, and
therefore not receiving some of the benefits or access? Is this some-
thing that your—something you are looking at?
Ms. LAFOUNTAIN. So, we do have ongoing work looking at the
Community Navigator program. And like I said, because it is ongo-
ing work, we don’t have findings yet to share with you, but you are
raising some important issues and we—you know, we would be
glad to work with the Committee to look into them further.
Mr. MEUSER. Great, yeah. My understanding is it is very im-
portant and it probably doesn’t need a lot to necessarily improve
in the manner it was designed to perform.
We—I will just ask, is the SBA prepared, in your view, the next
major national disaster in dealing with the various responsibilities
they have in such a situation?
Ms. AYERS. I certainly think it is fair to say that they are better
prepared today than they were in 2020. But I do think there is
more action that they can and should take. This includes imple-
menting our open recommendations related to Fraud Risk Manage-
14

ment generally, and then also the recommendations we have re-
lated to the disaster programs, as well as recommendations from
the inspector general. So there are actions that they should contin-
ually be taking to improve and be better prepared in this area.
Mr. MEUSER. Okay. Do you have a team at the GAO that fo-
cuses on, or a couple of people anyway, that focuses on the SBA
exclusively?
Ms. LAFOUNTAIN. So, the Financial Markets and Community
Investment Team where I am currently situated, we do a lot of re-
views of various SBA programs. But other teams across the agency
have also looked at what SBA is doing, and yeah, in various as-
pects of its operations.
Mr. MEUSER. Can you point to one area that you got involved,
showed them how it could be improved and it actually did get im-
proved?
Ms. LAFOUNTAIN. An area that springs to mind is the over-
sight of the PPP and EIDL programs. We had some recommenda-
tions for them to develop and implement an oversight plan, and
they did that.
Mr. MEUSER. Okay. Thank you. I yield back, Mr. Chairman.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Representative Scholten from the great State of
Michigan for 5 minutes.
Ms. SCHOLTEN. Thank you so much, Mr. Chair. Thank you to
our witnesses for being here today. Though our numbers might be
a little bit sparse, your testimony is critical for the work that we
do every single day.
One positive trend I observed is that the SBA’s 4-year implemen-
tation rate for GAO recommendations since 2021 is 100 percent. It
is no surprise that the SBA met their goals under the leadership
of Administrator Guzman who I have had the pleasure of hosting
twice now in our district, as well as in conjunction with a visit by
Vice President Harris just a couple weeks ago. This question is for
both Dr. LaFountain and Ms. Ayers: With Administrator Guzman
coming to testify in the next couple of weeks, what component of
what we have discussed here today would you like us to share with
the Administrator?
Ms. LAFOUNTAIN. I can start. I think what is really important
is for SBA to keep going where it has made significant progress
and addressing our recommendations related to the pandemic relief
programs, so there is more work to be done, and we would like to
see them move forward there. And also, move forward with the
work they are doing on the disaster loan program, and leveling out
the playing field for disaster recovery assistance.
Ms. AYERS. And I would simply add to that that we hope and
expect that SBA continues to broaden and deepen its Fraud Risk
Management efforts across the agency implementing the lessons
learned and the experiences that it had during the pandemic so
that it continues to be better positioned for the next disaster as
well as its everyday operations.
Ms. SCHOLTEN. So continuing to keep going on the programs
that are successful and that are delivering, but also broadening
and deepening areas of need. What elements do you think are es-
15

sential from us as Members of Congress to ensure that those things
can happen?
Ms. AYERS. Well, I think events like today’s hearing and the
continued oversight. And the one aspect I would mention is that
stressing to agencies like SBA that it is not just enough to deliver
the funds quickly. I know at various times, that is the appropriate
focus, but it also needs to be stressed that when you are delivering
funds quickly, it is not an either/or. You can manage fraud risk;
you can protect taxpayer interest while also delivering funds quick-
ly. And that is the message that I believe SBA is starting to under-
stand in a way it did not before. But I think that pressure and that
message needs to stay on SBA, as well as any number of other fed-
eral agencies.
Ms. SCHOLTEN. Yeah. Thank you. Anything to add on that?
Ms. LAFOUNTAIN. I would just add that there are some themes
in our recommendations that we highlighted today. And so not just
focusing on addressing a single recommendation for a single pro-
gram. But if there are lessons learned that can have positive
spillovers across the agency, that seems like a great opportunity.
Ms. SCHOLTEN. Yeah. My second question, the SBA’s delivered
over $1 trillion to small businesses through economic relief pro-
grams during the pandemic, as we have talked about. Part of this
Committee’s role is to exercise oversight. You referenced that in
your response, Ms. Ayers, of the SBA and ensuring the agency is
being a good steward of those taxpayers’ hard-earned dollars. If
there were to be another crisis, like the pandemic in 2020, is the
SBA better prepared to handle it today than it was 4 years ago?
And is it in any better position to combat fraud?
Ms. AYERS. I would say yes to both questions.
Ms. SCHOLTEN. What specifically do you think puts it in that
position?
Ms. AYERS. So SBA has, in the last couple of years, taken ac-
tions that implement controls for better managing fraud risk to
prevent, detect, and respond to fraud in a strategic way. It had
been either not paying sufficient attention to fraud or handling it
in an ad hoc manner. It is now better positioned to do so strategi-
cally and that is, again, where I believe it does need to broaden and
deepen those efforts across the range of programs. It may be a com-
pletely different program that is called on next time to provide as-
sistance and relief. And that program needs to build on what SBA
has done to date and not start over, as we saw PPP and COVID
EIDL having to do.
Ms. SCHOLTEN. Yeah, that is very helpful. Thank you very
much. I yield back.
Chairman WILLIAMS. Lady yields back.
And I now recognize Representative Maloy from the great State
of Utah for 5 minutes.
Ms. MALOY. Thank you, Mr. Chairman. Thank you both for
being here. One of the nice things about being a really new Mem-
ber of Congress is I get to go last on these things and back clean
up. So I get to ask the fun questions.
I read through the report and I read through the materials for
the hearing and some of the things that GAO’s finding in your re-
port are very upsetting. And I know that you are part of the execu-
16

tive branch and you have a responsibility for making sure that the
SBA is accountable, but we as the legislative branch also have a
responsibility to hold the executive branch accountable and clean
up waste, fraud, and abuse. And it looks like you are working with
us to do that, and I appreciate that. But one of the things I noticed
is that these SBA programs are failing to help some of the groups
they are supposed to help, like Veterans, Women Owned Small
Businesses, or WOSBs, and rural areas in the wake of disasters.
Rep. Scholten, who just asked questions, and I have a bill to try
to address some of the loopholes in the WOSB program and make
it cleaner, more accountable and more transparent. I want more ac-
countability, you want more accountability. What have you not had
a chance to talk about today that this Committee, or Congress can
do, to help make SBA more accountable, more transparent and
make sure the dollars we are spending are actually helping small
businesses in America?
Ms. LAFOUNTAIN. Well, a thing that springs to mind, and
thank you for the question, is having a hearing like this where we
get to talk about how the issues that we are finding at SBA, how
they have an effect, again where they have made progress, but
where they really need to keep going.
Ms. MALOY. So we have your report, is there anything other
than your report that we can use to help make sure that happens?
Ms. LAFOUNTAIN. It is a great question. In addition to the re-
port we have provided, we have—we would welcome or actually we
would welcome talking to you all about what your interests and
priorities are and seeing where we can do work on those topics. Ac-
tually, that would probably be my answer to that question. Thank
you.
Ms. MALOY. Okay. Thank you. I am going to have my staff
reach out, because I would like to work with you on how we can
make these programs work better for veterans, women-owned
small businesses, and rural communities. Those are really impor-
tant constituencies for me. Ms. Ayers?
Ms. AYERS. So I would echo what my colleague said. And, while
the focus of my work has largely been on fraud and Fraud Risk
Management, the programs you mentioned are ones that, you
know, we can talk to you about as well through that lens. And so,
we are here to support you as a legislative body, and in fact, I will
mention that we actually are part of the legislative branch our-
selves.
Ms. MALOY. Thank you for that correction.
Ms. AYERS. And we are happy to support you and your col-
leagues in your oversight role in a nonpartisan, non-ideological,
fact-based way. And so, yes, we have the reports that we issue, but
we also have a wealth of knowledge and expertise that goes behind
that. And we are always happy to meet with you or your staff to
discuss issues of interest.
Ms. MALOY. Okay, I am going to have any staff reach out to you
as well because I am also interested in reducing fraud. I mean,
that is something that is nonpartisan that we all want to get under
control so work with us on that, let’s come up with some ideas to
close these loopholes and accountability.
With that, Mr. Chairman, I yield back the remainder of my time.
17

Chairman WILLIAMS. Yields back.
I now recognize Representative Thanedar from Michigan, the
great State of Michigan for 5 minutes.
Mr. THANEDAR. I think I am going to pass.
Chairman WILLIAMS. Okay. I next recognize Representative
Alford from the great State of Missouri for 5 minutes.
Mr. ALFORD. Thank you, Mr. Chair, I appreciate it. Thank you
for our witnesses being here today. This is a very important meet-
ing. You know, one of the core duties of Congress, I don’t have to
tell you, is to conduct oversight of the executive branch. We have
to make sure that the agencies are using their budget sufficiently
to complete their duties for the American people. A key tool of Con-
gress center oversight of the executive branch is the Government
Accountability Office, an independent nonpartisan government
agency with the legislative branch.
Right now, the SBA has a staggering 41 open recommendations
from the GAO leading to the conclusion on the high-risk list. One
glaring recommendation the SBA has not adopted is to meet re-
porting requirements in a timely manner. And right now, many of
the SBA’s Veterans’ business outreach centers are not submitting
their quarterly or yearly reports, and the SBA does not even have
a process to make sure it happens.
Another major problem is the SBA’s minimal return-to-work pol-
icy. When we tried to visit the Small Business Administration just
down the street here to conduct congressional oversight, our re-
quest was repeatedly denied. Sitting Members of Congress were not
allowed in the building. This is why we introduced the Congres-
sional Access to Bureaucratic Office, or the CABO Act. The CABO
Act would require any agency headquarters to allow sitting Mem-
bers of Congress and their staff in their buildings.
As a result of introducing the CABO Act, we were finally allowed
in, and led a delegation with Chairman Williams to the SBA and
met with the Administrator Guzman. We were later told, however,
that the administration had condensed the staff to two floors that
we were allowed on to make it appear that the workplaces were ac-
tive, and it still looked meager. Rows and rows of empty desks.
Look, we need bureaucrats to get back to work. It is time, COVID
is over. Let’s get back to work for the American people.
Dr. LaFountain, how often do you work from home or phone it
in?
Ms. LAFOUNTAIN. I make sure I am in the office——
Mr. ALFORD. Why is that?
Ms. LAFOUNTAIN.—as needed.
Mr. ALFORD. Why do you feel a need to be in the office?
Ms. LAFOUNTAIN. So, this question about telework and work
from home is actually—it is a really important issue. There is a lot
of open questions about the effect of telework.
Mr. ALFORD. Just answer the question, why do you feel a need
to be in the office?
Ms. LAFOUNTAIN. I—for some of my work tasks it is good to
be in person——
Mr. ALFORD. Why?
Ms. LAFOUNTAIN.—to interact with my colleagues in person.
18

Mr. ALFORD. To interact, to build camaraderie, to get things
done. Ms. Ayers, how about you?
Ms. AYERS. Yes, I similarly am in the office as needed for in-
person meetings. And with my colleagues to help build culture and
camaraderie.
Mr. ALFORD. Culture and camaraderie. You know the federal
government operates more than half a billion square feet of offices
space. It has cost taxpayers $7 billion to operate. According to a
September 2023 study, 17 of the 24 federal agencies uses an esti-
mated average of 25 percent or less of their capacity. The SBA is
estimated at 10 percent of their office space. This is a waste of tax-
payer money. Down at the Department of Ag, 2 million square feet,
they won’t let us in either. We are getting in there. They have
about 11 percent of the people showing up for work.
This is my schedule today. I am running ragged but I’m here
working for the American people earning my pay, 16 appointments
I have today. I can’t do this from home. Why are people in the fed-
eral government not at their desk working for the American peo-
ple? Doctor.
Ms. LAFOUNTAIN. So, we have looked at the effects of telework
and work-from-home policies in a recent report. And its—the ef-
fects of telework are really uncertain on productivity.
Mr. ALFORD. Well, if it is uncertain, then let’s go with what we
know works, get them back to the office. Let’s start this community
of workers together so we can have this camaraderie and collective
thought and practice and get something done. Why are we waiting
on studies to figure out if this works as continued telehealth—
telework?
Ms. LAFOUNTAIN. You are raising some really important and
timely issues, and we would be glad to work with you to find a way
to look into this further.
Mr. ALFORD. Well, thank you. I know that is a bit of a rant.
But I am really upset that we even had to file this act that sitting
Members of Congress cannot go down to the offices that we have
oversight. And then when we get down there, it is staged to make
it look like an act of workforce is down there. I look forward to Ad-
ministrator Guzman coming here and answering some of these
questions. Thank you for being here. I appreciate your service to
our nation. With that, I yield back, Mr. Chairman.
Chairman WILLIAMS. The gentleman yields back. I now recog-
nize Representative Thanedar from the great State of Michigan for
5 minutes.
Mr. THANEDAR. Thank you, Chairman. I appreciate your con-
sideration here. I appreciate both your organization and how bipar-
tisan it is. And in this partisan environment, it is refreshing to see
that. You know, I am a small business owner. I have owned small
businesses for 25 years, and I have had some really good luck with
SBA, able to get things like 504 loan programs so that can help my
business succeed.
I also had some frustrations with the red tape and the paper-
work and getting things approved. What immediate steps can SBA
take, in your mind? Maybe give me two, three things that they
could do to improve its effectiveness and ability to serve the busi-
ness community?
19

Ms. LAFOUNTAIN. So, one perspective on this based on our re-
cent work is that SBA could improve its capacity to turn in some
of its required reports in a timely manner. There are some themes
there where SBA has, for a variety of reasons, faced some obstacles
providing outcome information about its programs. And we think
that if it addresses our recommendations in this area, it would pro-
vide more information to Congress and others who want to effec-
tively oversee how its programs are performing.
Mr. THANEDAR. Thank you. And, particularly, I represent De-
troit, Michigan, a 78 percent African American city, we have some
amazing entrepreneurs very, very successful. But many of my
small businesses are struggling. They are struggling. They don’t
have the time to go through the paperwork and be able to access
SBA services. Often, they are unaware of what is available. Now,
SBA has indicated they want to work with your organization. But
are there any else where there is disagreement between your orga-
nization and SBA, and if so, what are those?
Ms. LAFOUNTAIN. So, SBA has generally agreed with the rec-
ommendations that we have made, particularly, the ones we have
highlighted today. Yeah, there may be a detail here and there that
they push back. However, we have found that they are willing to
take steps to address our recommendations and are doing that.
Yeah.
Mr. THANEDAR. Any disagreement? Is there total agreement,
100 percent, or can you identify any areas where you are strug-
gling?
Ms. LAFOUNTAIN. I think what I would say here is that some
of the things we have asked SBA to do are not easy. And the rec-
ommendations will take time to address, and may need some sus-
tained attention. So as an example, we have asked SBA to work
with other agencies on improving access to federal disaster assist-
ance. And that, you know, looking to see, is the playing field un-
even? Do you have the right data and analytics to look into this
issue? If you find a gap, do you have the right structures in place
to address it? And that is a big thing to do. It is also an extremely
important thing to do. So, we understand that it takes time to ad-
dress the issues we have raised, but we see them—we do see them
trying.
Mr. THANEDAR. All right. Thank you. And in terms of—under
the Biden administration, I see there is a lot more—Latino owner-
ship has increased. African American ownership of small busi-
nesses have increased. We have seen more women-owned busi-
nesses flourishing. But we still need to do more to help, especially
the Black and Brown community in terms of, you know, being able
to—their ability to achieve the American Dream. What specific
steps would you recommend to SBA to help improve access for the
minority businessowners?
Ms. LAFOUNTAIN. So here I will just say that you are raising
some really important questions, and we would love an opportunity
to work with you and the Committee to look into them further.
Mr. THANEDAR. All right. Thank you, and my time is up.
Chairman WILLIAMS. The gentleman yields back. And I would
like to thank our witnesses today for your testimony and for ap-
pearing before us.
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Without objection, the Members have five legislative days to sub-
mit additional materials and written questions for the witnesses to
the Chair, which will be forwarded to the witnesses. I ask the wit-
nesses to please respond promptly. And if there is no further busi-
ness, without objection, the Committee is adjourned.
[Whereupon, at 11:14 a.m., the Committee was adjourned.]
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