SBA's Entrepreneurial Development Programs (House Small Business Committee hearing, October 6, 2021)
Summary
The printed record of a House Committee on Small Business hearing, SBA's Entrepreneurial Development Programs, held October 6, 2021, Small Business Committee Document Number 117–035, printed in 2022. Chairwoman Nydia Velázquez and Ranking Member Blaine Luetkemeyer gave opening statements. The sole witness was Mark Madrid, Associate Administrator of the Office of Entrepreneurial Development (OED). The appendix carries Madrid's prepared statement and his answers to questions for the record from twelve members: Velázquez, Delgado, Phillips, Chu, Luetkemeyer, Hagedorn, Stauber, Meuser, Garbarino, Young Kim, Van Duyne and Donalds, followed by additional material from a CATO Policy Analysis and the Credit Union National Association.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
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“SBA's Entrepreneurial Development Programs (House Small Business Committee hearing, October 6, 2021).”
Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/sba-s-entrepreneurial-development-programs-house-small-business-commit-5d20270c1d/
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SBA’S ENTREPRENEURIAL DEVELOPMENT
PROGRAMS
HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
HEARING HELD
OCTOBER 6, 2021
Small Business Committee Document Number 117–035
Available via the GPO Website: www.govinfo.gov
U.S. GOVERNMENT PUBLISHING OFFICE
45–779 WASHINGTON : 2022
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HOUSE COMMITTEE ON SMALL BUSINESS
NYDIA VELÁZQUEZ, New York, Chairwoman
JARED GOLDEN, Maine
JASON CROW, Colorado
SHARICE DAVIDS, Kansas
KWEISI MFUME, Maryland
DEAN PHILLIPS, Minnesota
MARIE NEWMAN, Illinois
CAROLYN BOURDEAUX, Georgia
TROY CARTER, Louisiana
JUDY CHU, California
DWIGHT EVANS, Pennsylvania
ANTONIO DELGADO, New York
CHRISSY HOULAHAN, Pennsylvania
ANDY KIM, New Jersey
ANGIE CRAIG, Minnesota
BLAINE LUETKEMEYER, Missouri, Ranking Member
ROGER WILLIAMS, Texas
JIM HAGEDORN, Minnesota
PETE STAUBER, Minnesota
DAN MEUSER, Pennsylvania
CLAUDIA TENNEY, New York
ANDREW GARBARINO, New York
YOUNG KIM, California
BETH VAN DUYNE, Texas
BYRON DONALDS, Florida
MARIA SALAZAR, Florida
SCOTT FITZGERALD, Wisconsin
MELISSA JUNG, Majority Staff Director
ELLEN HARRINGTON, Majority Deputy Staff Director
DAVID PLANNING, Staff Director
(II)
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CONTENTS
OPENING STATEMENTS
Page
Hon. Nydia Velázquez ............................................................................................. 1
Hon. Blaine Luetkemeyer ....................................................................................... 2
WITNESS
Mr. Mark Madrid, Associate Administrator, Office of Entrepreneurial Devel-
opment (OED), United States Small Business Administration, Washington,
DC .......................................................................................................................... 4
APPENDIX
Prepared Statement:
Mr. Mark Madrid, Associate Administrator, Office of Entrepreneurial
Development (OED), United States Small Business Administration,
Washington, DC ............................................................................................ 35
Questions and Answers for the Record:
Questions from Hon. Velázquez and Answers from Mr. Madrid .................. 39
Questions from Hon. Delgado and Answers from Mr. Madrid ..................... 41
Questions from Hon. Phillips and Answers from Mr. Madrid ...................... 42
Question from Hon. Chu and Answer from Mr. Madrid ............................... 44
Questions from Hon. Luetkemeyer and Answers from Mr. Madrid ............. 45
Questions from Hon. Hagedorn and Answers from Mr. Madrid .................. 56
Questions from Hon. Stauber and Answers from Mr. Madrid ...................... 58
Questions from Hon. Meuser and Answers from Mr. Madrid ...................... 60
Questions from Hon. Garbarino and Answers from Mr. Madrid .................. 62
Questions from Hon. Young Kim and Answers from Mr. Madrid ................ 64
Questions from Hon. Van Duyne and Answers from Mr. Madrid ................ 65
Questions from Hon. Donalds and Answers from Mr. Madrid ..................... 66
Additional Material for the Record:
CATO Policy Analysis ...................................................................................... 67
CUNA - Credit Union National Association ................................................... 111
(III)
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SBA’S ENTREPRENEURIAL DEVELOPMENT
PROGRAMS
WEDNESDAY, OCTOBER 6, 2021
HOUSE OF REPRESENTATIVES,
COMMITTEE ON SMALL BUSINESS,
Washington, DC.
The committee met, pursuant to call, at 10:07 a.m., via Zoom,
Hon. Nydia Velázquez [chairwoman of the Committee] presiding.
Present: Representatives Velázquez, Golden, Crow, Davids,
Mfume, Phillips, Newman, Bourdeaux, Carter, Chu, Evans,
Delgado, Houlahan, Andy Kim, Craig, Luetkemeyer, Hagedorn,
Williams, Meuser, Tenney, Garbarino, Young Kim, Van Duyne,
Donalds, and Fitzgerald.
Chairwoman VELÁZQUEZ. Good morning. I call this hearing to
order.
Without objection, the Chair is authorized to declare a recess at
any time.
I would like to begin by noting some important requirements.
Standing House and Committee rules and practice will continue to
apply during hybrid proceedings. All Members are reminded that
they are expected to adhere to these standing rules including deco-
rum.
House regulations require Members to be visible through a video
connection throughout the proceeding, so please keep your cameras
on. Also, remember to remain muted until you are recognized to
minimize background noise. If you have to participate in another
proceeding, please exit this one and log back in later.
In the event a Member encounters technical issues that prevent
them from being recognized for their questioning, I will move to the
next available Member of the same party and will recognize that
Member at the next appropriate time slot provided they have re-
turned to the proceeding.
For those Members and staff physically present in the Com-
mittee room today, in accordance with the attending physician’s
most recent guidance, all Members and staff will be required to use
masks in the hearing room. Furthermore, all Members and staff
who have not been fully vaccinated must also maintain 6-foot social
distancing from others. With that said, Members will be allowed to
briefly remove their masks if they have been recognized to speak.
Today, our nation’s 30 million small businesses are the founda-
tion of the American economy. Small firms employ nearly half of
the private workforce, account for 44 percent of the economic activ-
ity, and export over $1 trillion in goods annually. It is hard to over-
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state the importance of small firms to the country’s economic well-
being.
Recognizing the structural importance of these firms and the
need for new business formation, the Small Business Administra-
tion offers a range of free or low-cost counseling and training serv-
ices to entrepreneurs. SBA relies on its resource partners to deliver
these services: Small Business Development Centers, Women Busi-
ness Development Centers, and SCORE.
These resource partners provide invaluable training to small
businesses all across America, from first-time entrepreneurs to sys-
tem business owners, these resource partners offer training to help
small firms succeed.
Resource partners have a profound impact on the small busi-
nesses that take advantage of their services.
A 2013 report from SBA found that small businesses that receive
3 or more hours of counseling have higher survival rates than firms
that receive less counseling.
We also witnessed the power of entrepreneurial development
training throughout the COVID crisis. Over the past 18 months,
SBA resource partners have helped small businesses navigate un-
chartered territory. From shifting business models to stay afloat, to
instituting health precautions to protect customers and employees,
these organizations have helped small firms overcome enormous
challenges.
The Office of Entrepreneurial Development (OED) at SBA over-
sees the programs and services that support the counseling and
training needs of small businesses. It is considered SBA’s technical
assistance arm with the resource partners located all across the
country.
OED has also been charged with implementing one of President
Biden’s top small business priorities, the new Community Navi-
gator Pilot Program. The new program will increase outreach to
underrepresented small businesses by partnering with trusted
voices in the community. I look forward to learning more about the
agency’s work to get this new program up and running.
I am also looking forward to learning more about what is work-
ing and what needs to be improved with the entrepreneurial devel-
opment programs. The Committee plans to reauthorize these pro-
grams in the coming months and SBA’s perspective is an important
part of this process.
In sum, the strength of our recovery is dependent on the well-
being of small businesses. That is why SBA’s entrepreneurial pro-
grams must be well-equipped to offer their services to small busi-
nesses in need.
I now yield to the Ranking Member for his opening statement,
Mr. Luetkemeyer.
Mr. LUETKEMEYER. Thank you, Madam Chair. And thank you
for calling this important hearing with Mr. Madrid, Associate Ad-
ministrator of the SBA Office of Entrepreneurial Development.
As Members of the Committee, it is crucial that we hear directly
from SBA officials on implementation and oversight of the SBA’s
programs. The success of our entrepreneurs determines the success
of our nation’s economy. Entrepreneurs are not only our nation’s
innovators and job creators, but they are also the key to advancing
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America’s economic opportunities. Unfortunately, entrepreneurs
continue to be hamstrung by the Democrats who are forcing
through increased government mandates, misguided entitlement
programs, and reckless spending.
For months, Democrats’ failed policies and unemployment incen-
tives have paid Americans to stay home and not go back to work
which has hindered economic growth for small businesses and our
communities. As reported in the August NFIB’s Small Business
Economic Survey, they have found that 50 percent of small busi-
ness owners have at least one unfilled job opening. This was a dis-
incentive for 8.4 million Americans who were unemployed in Au-
gust to stay off the job and on the sidelines while there were 10.5
million job openings across the country. This is obviously counter-
productive.
Additionally, staffing shortages and supply chain disruptions are
hindering business operations and limiting small businesses from
reaching their full potential. The NFIB Research Center’s Sep-
tember COVID-19 survey found that half of small business owners
reported supply chain disruptions significantly impacting their
business.
Main street USA continues to be left with the bill for President
Biden’s reckless tax and spend agenda. As inflation hits a 30-year
high, it is no surprise that a recent Goldman Sachs 10,000 Small
Businesses Survey found that 81 percent of small business owners
say inflationary pressures have increased since June. 84 percent
have seen an increase in operating costs, and 74 percent report in-
flationary pressures having negatively impacted their business’s fi-
nancial health.
As Republican leader of this Committee, I appreciate the re-
sources and training that the SBA’s Entrepreneurial Development
Resource Partners continue to provide to small businesses, espe-
cially as they recover from the COVID-19 pandemic. I also look for-
ward to learning more about these programs and how they are sup-
porting small businesses as they navigate the previously mentioned
government mandates, supply chain disruptions, labor shortages,
and inflationary pressures.
However, I remain concerned that taxpayer dollars are not being
used wisely after several Office of Inspector General reports found
that SBA did not provide effective oversight of both the SCORE
and Women’s Business Center programs. I am also concerned that
the Community Navigator Pilot Program is duplicative of current
resources. This program was signed into law in March, yet not a
single grant has been awarded and no services have been deployed
to assist small businesses to date. Instead of creating a new pro-
gram with new providers, I believe that resources would have been
better spent ramping up Small Business Development Centers and
existing resource partners. This should be thoroughly examined.
Beyond the SBA resources, numerous private sector partners, in-
cluding nonprofit organizations and companies, exist to advocate
for entrepreneurs, provide mentorship, increase awareness of finan-
cial opportunities, and offer support to innovators as they stand
and expand their businesses. The SBA programs must be examined
closely to ensure that duplication does not occur and that waste,
fraud, and abuse is prevented.
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Mr. Madrid, I thank you for being here today. I look forward to
working together on effective, economical, and efficient policies to
support entrepreneurs.
And with that, Madam Chair, I yield back.
Chairwoman VELÁZQUEZ. Thank you, Mr. Luetkemeyer. The
gentleman yields back.
I would like to take a moment to explain how this hearing will
proceed. Our witness will have 5 minutes to provide a statement
and each Committee Member will have 5 minutes for questions.
Please ensure that your microphone is on when you begin speaking
and that you return to mute when finished.
With that, I would like to introduce our witness. Our witness
today is Mr. Mark Madrid, Associate Administrator for the Small
Business Administration’s Office of Entrepreneurial Development.
Mr. Madrid is charged with leading the administration’s technical
assistance arm of the Small Business Administration. Before join-
ing the SBA, Mr. Madrid served as the CEO of the Latino Business
Action Network at Stanford University. In 2019, the Silicon Valley
Business Journal named him the Silicon Valley Non-profit CEO of
the Year. In addition, he is an honorary colonel of the U.S. Army
and a Jefferson Award recipient which recognizes individuals and
organizations for excellence in service at a national or international
scale. Quite an impressive resume.
Thank you for joining us today, Mr. Madrid, and you are recog-
nized for 5 minutes.
STATEMENT OF MARK MADRID, ASSOCIATE ADMINISTRATOR,
OFFICE OF ENTREPRENEURIAL DEVELOPMENT, UNITED
STATES SMALL BUSINESS ADMINISTRATION
Mr. MADRID. Good morning, Chairwoman Velázquez, Ranking
Member Luetkemeyer, and distinguished Members of the Com-
mittee. Thank you for the invitation, and I am energized to discuss
SBA’s Office of Entrepreneurial Development. Our mission is to
help small businesses start, grow, and compete in global markets
by providing quality training, counseling, and access to resources.
OED is SBA’s technical assistance arm.
Throughout my career, nothing has been more purposeful than
truly empathizing with and supporting small business owners. I
am a product of entrepreneurship.
Like many of our U.S. small business owners, my dad was unre-
lenting in changing the course of our family’s destiny as he built
a welding business in the Texas panhandle. We are proud of my
dad for his evolution from the cotton fields to being his own boss.
Mi Papa, my dad, died of COVID-19 and we almost lost my mom.
We are thankful to God that my mom survived. So I consider sup-
porting small businesses like my dad’s the honor of a lifetime and
I have a proven track record of doing so.
At OED, we oversee SBA’s network of resources partners, includ-
ing Small Business Development Centers, Women’s Business Cen-
ters, and SCORE. Additionally, our Office of Entrepreneurship
Education (OEE) spearheads our Electronic Learning Initiative and
the Community Navigator Pilot. Over the last 9 months, we have
made great strides in fighting the pandemic and recovering our
economy, achieving historic job growth for a new administration.
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However, we still have a long way to go, which is why President
Biden announced the COVID-19 Action Plan, a comprehensive na-
tional strategy to fight COVID-19 and to protect our economic re-
covery. At the SBA, we are honored to support these efforts, mak-
ing critical improvements to the COVID Economic Injury Disaster
Loan, streamlining forgiveness of small Paycheck Protection Pro-
gram funding of $150,000 or below, and launching the Community
Navigator Pilot.
Enacted by the American Rescue Plan Act of 2021, Navigator’s
goal is to strengthen outreach to our nation’s smallest businesses,
both in rural and urban America, particularly those owned by
women, veterans, and socially or economically disadvantaged indi-
viduals. This program will advance our reach of SBA services and
access to federal, state, and local resources by leveraging a national
network of hyper-local community navigators who, in the words of
Administrator Guzman, are ‘‘on the ground truly connecting,
empathizing, and tailoring solutions for our small businesses.’’
The Community Navigator Pilot is a $100 million competitive
grant funding opportunity. Alongside our Office of General Coun-
sel, our office is currently reviewing proposals and we look forward
to announcing the grant recipients this month.
Our combined efforts are more critical now given the urgent
state of recovery of our U.S. small businesses. Thus, in addition,
Navigator’s OED is laser focused on supporting our Resource Part-
ners. Supported by our Office of Small Business Development Cen-
ters, we are proud of our network of SBDCs for their tireless work
throughout the pandemic, including utilization of CARES Act fund-
ing to increase support of our small businesses over this past year
and a half. Between April and December 2020, SBDCs were able
to use CARES Act funding to support 592,000 small businesses.
Supported by our Office of Women’s Business Ownership
(OWBO), our 138 Women’s Business Centers support female entre-
preneurs through training, technical assistance, and providing ac-
cess to capital, credit, and federal contracting opportunities. These
hyper-local centers are more important than ever as women busi-
ness owners have been disproportionately impacted by the pan-
demic. We are proud that OWBO has launched 24 new WBCs this
year, including two in Puerto Rico and Tulsa.
Supported by our Office of Entrepreneurship Education and
SCORE, our nation’s largest network of volunteer business men-
tors, with over 250 local chapters and over 10,000 mentors nation-
wide, provide personalized mentorship to entrepreneurs across all
50 states and Puerto Rico. During the pandemic, the application of
mentorship became increasingly critical and SCORE made it acces-
sible through the creation of an online resilience HUB.
I close by stating OED priority to execute strong controls to en-
sure our programs have robust management and oversight. To un-
derscore this commitment, we have introduced a next generation
reporting system to monitor performance and accountability. This
is a very difficult time for America’s small businesses, and yet, they
continue to embody that grit and resilience and hope. And we look
forward, alongside your efforts, to support them every step of the
way.
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Thank you for this invitation. I am honored to be here and I look
forward to your questions. Thank you.
Chairwoman VELÁZQUEZ. Thank you, Mr. Madrid. My condo-
lences to you and your family.
I will begin by recognizing myself for 5 minutes.
SBA has been relying on an outdated legacy system, EDMIS, to
collect data on counseling and training programs. I understand
that SBA developed a performance reporting system to replace
EDMIS. To what extent has SBA implemented the system and how
has it increased operational reliability performance?
Mr. MADRID. Thank you, Chairwoman, for that question. We
are definitely leaning in to Administrator Guzman on Technology
Forward and that also applies to what you are referring to in terms
of we have had a migration from an EDMIS Legacy system to
EDMIS Next Generation which will increase our reporting capabili-
ties, efficiency, allow for real-time reporting of data and data acqui-
sition which will also increase our efficiency of human capital. With
the Community Navigator Pilot, we will have graduated to a new
system altogether that will increase these capabilities even further.
Chairwoman VELÁZQUEZ. Are all resource partners reporting
performance data in the system to date?
Mr. MADRID. That is right. Thank you, Congresswoman. In fact,
with the EDMIS Next General reporting system as of May there
was a 100 percent deployment across all resource partners—the
SBDCs, WBCs, and SCORE.
Chairwoman VELÁZQUEZ. Thank you.
In a recent hearing, we heard concerns from resource partners
about delays in notices of awards and grant reimbursement. I have
since learned that OED worked hard to address outstanding reim-
bursement. Why did the backlog occur and what can be done to
prevent it from happening again?
Mr. MADRID. Thank you, Chairwoman.
First and foremost, that is absolutely on target. We are com-
mitted to getting those timely reimbursements in place. There was
a little bit of a delay with the initial funding to disburse. Having
said that, we also experienced some delays frankly with the supply
of demands that were in the system with the pandemic but now
with graduation to our EDMIS NG system, we have also created
efficiencies within the teamwork. We have opened lines of commu-
nication. Those delays have been mitigated.
Chairwoman VELÁZQUEZ. Okay. Are you telling me that OED
needs additional support from the Committee to ensure funding is
disbursed on time or not?
Mr. MADRID. Well, thank you for that statement. We definitely
appreciate your support. You know, we are leveraging our re-
sources as Administrator Guzman has commissioned us to do. So
your ongoing support is appreciated. We have established new effi-
ciencies. We have opened lines of communication. And so thank you
for your ongoing support. It is very, very helpful to us and we are
reaping the rewards from it. Thank you.
Chairwoman VELÁZQUEZ. Thank you.
Let’s talk about the Community Navigator Pilot Program. It is
projected to begin disbursing grant awards in the coming weeks.
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Can you please tell us or give us an update on where SBA is in
the grantee selection and funding disbursement?
Mr. MADRID. Thank you, Chairwoman.
We are energized that the grantees will be awarded this month,
in October. We are in the third leg of our review process that spans
6 to 7 weeks. It was diligent, and as a frame of reference, we were
anticipating 200 to 250 proposals. We received over 650. That was
a product of our message getting out, making sure that we in-
creased our outreach plan to all communities. So we are excited
that we are in the third leg of this review process, which is a busi-
ness management review, alongside our Office of General Counsel.
And we will be announcing the grantees later this month in Octo-
ber.
Chairwoman VELÁZQUEZ. Can you please explain how the
Community Navigator Pilot Program will work with SBA’s resource
partners to provide counseling and training?
Mr. MADRID. Absolutely. The Community Navigator Pilot is a
hyper-local approach which is deploying community navigators that
know their local territories, their audiences, and most importantly,
the small business owners that truly connect with them in cul-
turally relevant ways. And so through these community navigators
and this national network, including the resource partners and any
organizations supporting small businesses, we have to support our
small businesses during recovery. The bottom line is, as reported
by our Office of Advocacy in the first quarter of 2020, Black-owned
businesses declined 41 percent, Hispanic declined 32 percent, Asian
American declined 26 percent, and Women business owners, active
business owners, declined 25 percent. So it is going to take this
consolidated effort, which is a coalition-building endeavor, and we
are committed to it.
Chairwoman VELÁZQUEZ. Thank you. Thank you very much.
My time has expired.
Now we recognize the Ranking Member, Mr. Luetkemeyer, for 5
minutes.
Mr. LUETKEMEYER. Thank you, Madam Chair.
Mr. Madrid, on May 4, 2021, the OIG released an audit of SBA’s
oversight of the Women’s Business Center program and found that
SBA did not provide effective oversight of the program. Specifically,
the SBA did not detect that WBCs had failed to remedy accounting
deficiencies identified during the mandated financial reviews. They
did not detect anything that the WBCs made improper budget
transfers. They did not detect that they had used federal funds for
unallowable costs. They did not detect reported unsupported
matching funds and program income earned. And they also failed
to submit accurate financial reports. Even more concerning, SBA
program officials detected significant noncompliance that war-
ranted removal of two WBCs from the program but did not take
action.
So the question, I guess, is how far along is SBA in resolving
OIG’s 10 recommendations? And have any of these WBCs been
closed in the last few weeks here?
Mr. MADRID. Thank you, Ranking Member, for your question.
The Office of Women’s Business Ownership is active in resolving
the recommendations from the IG. And so I can go over some of
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those with you now. Recommendation, there is one that has been
closed. There is one that is in negotiation in terms of our Office of
Women’s Business Ownership is finalizing discussions and receiv-
ing feedback from the OIG itself. Three recommendations have
final closeout dates of September 24, 2024 as they have financial
obligations on the part of WBCs that need to be regrouped and rec-
onciled if possible. So OIG has agreed to a date of September 24,
2024 for final action. And five recommendations have final target
dates associated with them for the end of this year, calendar year
2021, and these five recommendations overall relate to oversight,
compliance, and monitoring of the WBC program with specific con-
cerns regarding finance examination. On this front——
Mr. LUETKEMEYER. Thank you for that. But one of my con-
cerns is that, number one, we knew that at least two of these pro-
grams had problems to the extent that they should have been
closed and were not. So I guess my question to you on that is, why
not? What kind of action have you taken since then to rectify the
situations? Number two, even though you say that these rec-
ommendations were implemented, the IG report on a couple dif-
ferent occasions on different programs have said that the employ-
ees do not implement the rules. They do not follow the rules. Even
though the recommendations are put in place, the employees still
do not follow them. So what have you done to make sure that there
is a follow up on this to make sure that the employees actually fol-
low through on the recommendations? Because obviously, there is
no action been taken on the two that should have been closed,
which tells me that somebody is asleep at the switch. And if that
is going to happen, then who is going to actually push people to ac-
tually do the job because nobody is pushing people to do the job to
begin with on these two that we have shown do not work?
Mr. MADRID. Thank you, Ranking Member. I would like to re-
port that three WBCs have indeed been closed.
Mr. LUETKEMEYER. Good.
Mr. MADRID. So that is on the one front in terms of action.
On the second, there is an important, let’s say, advancement that
has occurred here at the Office of Entrepreneurial Development, is
that there is a strong relationship between the office itself and all
the offices of the department, including the Office of SBDCs, the
Office of Women’s Business Ownership, and our Office of Entrepre-
neurship Education. So there are open lines of communication. And
another action that has occurred in this administration, this lead-
ership, is we have a tracker for all OIG and GAO audits. So we
meet on those frequently and I concur with the head of Office of
Women’s Business Ownership every week. So I hope——
Mr. LUETKEMEYER. I support that. I support the Women’s
Business Centers. Do not get the wrong impression here. But by
the same token, my job is to provide the oversight of all of the pro-
grams, to make sure they are working properly. And if they are
not, number one, they are hurting the integrity of the program and
they are wasting taxpayer dollars. And if they are found to do that,
which you say they have now closed three, that is great. We need
to correct those things and fix them quickly.
And another thing is, again, I urge you to continue to follow up
to make sure that the personnel follow up and adhere to the rec-
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ommendations of the IG once they are implemented because what
is very concerning to me is that the report on a couple of other
issues here, EIDL program in particular, the employees were ignor-
ing the IG report and the recommendations that are set out. And
so they really do not do any good, even though they are in place,
they are still not doing any good because if they are not being im-
plemented and followed, we are still back to the same place doing
business the same way we always did. And so I would urge you to
look into that. And I am sure my time is about up.
And with that, Madam Chair, I yield back.
Chairwoman VELÁZQUEZ. The gentleman’s time has expired.
Now we recognize Mr. Golden, the gentleman from Maine.
Let me just say that, yes, Mr. Luetkemeyer, we all care about
protecting the program from fraud and abuse and taking corrective
steps. Many of those points that have been raised by the IG oc-
curred under the Trump administration. So far, this administration
has a track record on addressing those issues. With that, let me
recognize Mr. Golden.
Mr. LUETKEMEYER. Let me just respond to that, Madam
Chair. I appreciate that and I acknowledge that some of this was
done under the previous administration. It does not make it right.
It still needs to be cleaned up. And I think——
Chairwoman VELÁZQUEZ. But they are. They are, sir.
Mr. LUETKEMEYER. My concern though is that the IG report
also showed that the employees of SBA, the staff, was not following
up and adhering to the recommendations. That is the point I am
trying to make. We have got to make sure that if the recommenda-
tions are put in place that they are followed. The IG is trying to
do their job but if these recommendations are not followed, they are
worthless. We have accomplished nothing. So that is my point.
Thank you.
Chairwoman VELÁZQUEZ. Mr. Golden, you are recognized for 5
minutes.
Mr. Golden, you are muted.
Ms. Davids, you are recognized for 5 minutes, the gentlelady
from Kansas.
You are muted.
Ms. DAVIDS. Sorry. Thank you. Good morning.
I did not realize that Mr. Golden would be unavailable. Okay,
well, thank you so much. I appreciate, Chairwoman, you holding
this hearing.
SBA’s Entrepreneurial Development programs have been critical
resources for small businesses, for small business owners and en-
trepreneurs from before and during this pandemic. And our ED
partners, our Entrepreneurial Development partners have gone
above and beyond to provide small businesses across the country
with information, with assistance during this unprecedented public
health and economic crisis. In fact, the Kansas City Women’s Busi-
ness Center, which is based in and serves not just—it is based in
the Third District here in Kansas but it also serves a pretty wide
area here. And they helped over 600 clients last year. And helping
small business owners adjust to things like COVID safe workplaces
and navigating the various relief programs that we have heard a
little bit about this morning, it is part of the reason that last Con-
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gress the Women’s Business Center here helped me see that the
Women’s Business Centers Improvement Act was necessary. Reau-
thorizing the WBC program, increasing funding levels, increasing
the cap on individual center grants is an important priority for me.
A few months ago, the Subcommittee on Economic Growth, Tax,
and Capital Access held a hearing focused on women’s entrepre-
neurship where we discussed the importance of WBC programs for
entrepreneurs.
So Mr. Madrid, I was hoping to hear from you about how the
passage of a similar bill this Congress could expand the WBC pro-
gram and frankly, expand opportunities for female entrepreneurs.
Mr. MADRID. Thank you, Congresswoman, for that question.
Women’s entrepreneurship continues to be the fastest growing
segment in the U.S. They are contributing to the economy. They
are job creators. We all know that. We all know women business
owners. Thank you for that reflection about the Women’s Business
Center in Kansas City.
It is important to note that the Women’s Business Centers have
risen up to meet the occasion of the pandemic. I can tell you that
the network overall had almost $10,000 capital infusions. On the
ground, I have been on the road in Fort Dodge Iowa, I have been
on the ground in Milwaukie and Brooklyn and Nevada, that women
business owners were just instrumental in pandemic resourcing
and they are instrumental as we digitize. So the Women’s Business
Centers have been absolutely critical during the pandemic. They
continue to be critical for recovery. And when you have that stat
to reflect upon that in the first quarter of 2020, businesses owned
by women declined by 25 percent, you know, in our minds, one
business closing is one too many. And so we are going to continue
on the effort to increase the scope of the WBCs.
Ms. DAVIDS. Thank you for that. And I would just close, and I
will not take up the entire time, I just thank you for the work that
you all are doing over at SBA. It has been a long year and a half
and there has been a lot of pressure put on frankly everybody dur-
ing the pandemic. And I appreciate your efforts to continue to work
on those OIG issues that have been brought up and also to just
continue supporting our small business owners. We will talk to you
soon, hopefully. Thank you so much.
Madam Chair, I yield back.
Chairwoman VELÁZQUEZ. The gentlelady yields back.
Now, we recognize the gentleman from Texas, Mr. Williams, for
5 minutes.
Mr. WILLIAMS. Thank you, Madam Chair. And thank you,
Chairman, for being with us today.
I am an entrepreneur. I have been in business and still am 51
years. This is my 51st year in business. I employ hundreds of peo-
ple and it is challenging right now. And as you are aware, small
businesses across the country continue to face financial uncertainty
as we reemerge from the COVID-19 pandemic. Unfortunately, we
have not seen the necessary speed from the SBA that main street
America deserves after Congress has passed billions of dollars in
aid over the past year.
Now, as a prime example is the Shuttered Venue Operator
Grants program which I basically wrote which left music venues
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and movie theaters waiting for over 7 months until money was dis-
bursed and thousands of businesses did not survive the delays that
were caused by that. Now, I am concerned that the implementation
that you talked somewhat about this morning of the Community
Navigators Program is headed in a similar direction and this pro-
gram has been in the works since April of 2021 and still have not
seen any money from the SBA about the selection process. And I
just need to remind you, Small Business, unlike government em-
ployees, where government employees have salaries and guaran-
tees, small business owners, they are out every morning trying to
sell something. They are on commission. They need to bill. They
cannot have these delays. So we need to do better with that.
And you talk about how you support small business. Well, how
can you support small business when you support raising taxes and
raising regulations to small businesses? Can you answer me that?
Mr. MADRID. Thank you, Congressman, and the perspective of
that you bring as a business owner. Thank you very much.
In terms of SVOG, the Shuttered Venue Operators Grant, we
have issued decision on 97 percent of all initial 17,644 applications.
And $11 billion in grants have been awarded, $9.7 billion dis-
bursed.
In terms of your question on the Navigator Pilot and the timing,
just as a frame of reference, there was a hyper-local interest in
terms of the local institutions that wanted to be a part of this proc-
ess and apply. We had to extend the deadline for proposals that we
pushed forth the end of July and when we had 656 proposals come
in relative to the 200 to 250 that we were anticipating, we had to
make sure and instill a diligent oversight process and review proc-
ess. So we look forward to announcing those this week.
In terms of the tax question under the Build Back Better plan,
it is important for small businesses to know that no one earning
under $400,000 incur or experience a tax increase. And so I just
wanted to make sure and address your points.
Mr. WILLIAMS. I know that is what you all say but that is not
true. But we will move on.
The SBA has also shown an inability to track taxpayer dollars
in implementing some of these programs. With the EIDL program
alone, there has been an estimated $1.1 billion in potential fraud.
Since the Community Navigators program was allocated $100 mil-
lion, we must ensure that we do not repeat the mistakes of the
past and take the appropriate measures to prevent the waste of
taxpayers’ dollars.
So Mr. Madrid, can you talk about the measures that the SBA
has taken to detect fraud with the Community Navigators pro-
gram?
Mr. MADRID. Absolutely. Thank you, Congressman.
We are ensuring oversight in compliance is top of mind. We are
complying with quarterly reporting that will occur at the grantee
level, so that is going to be one way that we enforce compliance and
oversight. The technology that also is being deployed will increase
our accuracy and ensure our accuracy. It is real-time, so that is one
area that we will keep our eyes on very, very diligently. As well,
we are collaborating with our Office of Field Operations when it
comes to the spokes on the ground level. And so all that said, we
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have our mind to mitigate fraud, waste, and abuse, and also being
compliant to 2 CFR regulations. And also increasing our open line
of communications through our GAO and IG tracker that also in-
cludes internal controls. And that will definitely apply with the
Community Navigator Pilot immediately as it is launched. So
thank you for your question.
Mr. WILLIAMS. In the time that I have got left. Rural commu-
nities. I have a rural district that face unique challenges while re-
covering from the pandemic. So can you elaborate on how the SBA
is ensuring rural businesses have access to these programs and are
made aware, which is important, of the assistance that is avail-
able?
Mr. MADRID. Thank you, Congresswoman—Congressman.
Mr. WILLIAMS. Now you are calling me Congresswoman.
Mr. MADRID. No, Congressman.
Mr. WILLIAMS. Because of my hairdo?
Mr. MADRID. We have our Office of Rural Affairs and that is
being handled at our Office of Field Operations. Thank you for your
question on rural entrepreneurs.
Mr. WILLIAMS. Okay. Thank you very much. And just in sup-
porting small business, when you cut taxes it helps small business.
When you raise taxes, it really hurts small business. I yield back.
Chairwoman VELÁZQUEZ. The gentleman’s time has expired.
Now we recognize the gentleman from Maryland, Mr. Mfume, for
5 minutes.
Mr. MFUME. Thank you very much, Madam Chair. I want to
thank you and the Ranking Member for scheduling this hearing.
And thank the representatives here who have given written and
oral testimony.
The gentleman before me raised the issue of potential possible
fraud and abuse of the Navigators program. I want to just stay on
that program for a second and ask you, sir, if you would take a mo-
ment to talk about expressly the goals as stated of that particular
program. And then as juxtaposition give us on this Committee
some sense as to where you are meeting those goals.
Mr. MADRID. Thank you, Congressman, for the question on the
Community Navigator Pilot.
The bottom line is small businesses, the smallest of the small
were left behind of pandemic resources. And some have historically
been left behind. So our goal is to bridge that gap with the Commu-
nity Navigator Pilot. And that is deploying community navigators
that are culturally competent in terms of understanding their ter-
rain. I say let’s fight a ground war, not an air war meaning that
you are in touch with the ground. That you know exactly what
their small businesses are facing and that is including, of course,
in rural America. And so this effort here is a chance to build coali-
tions and in order to bridge that gap. In prior positions that I have
held supporting small businesses we used to say get to know the
bank before you need the money. In this instance it is get to know
the SBA before you need the SBA. Also, the Community Navigator
Pilot is ensuring access to federal, state, and local resources.
And what I would say as well is those that have not experienced
SBA for whatever reason including during the pandemic, we want
to introduce these small businesses to the SBA so they keep coming
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back, not only in the present and the future. And that is in line
with Administrator Guzman in terms of saying we have to to build
the customer-first environment, technology forward, and advancing
equity. That is exactly the goals that we will achieve with the Com-
munity Navigator Pilot. And that includes geographical diversity in
terms of service commitment. So thank you for your question.
Mr. MFUME. Well, how long has the program been operational?
Not conceptually but operational?
Mr. MADRID. Great question. Thank you very much for asking
it.
We will announce our grantees later this month in October and
then it starts a 2-year period of performance.
Mr. MFUME. And has SBA developed a matrix to be able to
measure? I agree with you on the issue of cultural competency, but
have you developed a matrix to be able to see where you actually
are in terms of success or lack of success? And what has been the
feedback back into the SBA from those businesses that you are
working with specifically?
Mr. MADRID. That is a great question. I can tell you that I have
been on the ground in rural America and Iowa and also talking to
tribal-owned businesses and Native American businesses in Ne-
vada. I also had the experience of talking to women entrepreneurs
in Brooklyn. And so I have talked to businesses that were eligible
and applied and received our pandemic resources, one or the other
or combined. I also talked to business owners who had not. And I
said, what would it take, what would it have taken for you to be
more engaged with us? Give us your feedback. And overall, it was
lack of navigation, that they had more questions. They did not un-
derstand a process. They needed help with the paperwork. They
did not have a scanner. They needed some tax codes in order for
document preparation. They needed translation services. So all
these issues here on the ground is what we are trying to resolve
with the pilot.
Mr. MFUME. And let me just ask if I might in the time that I
have left, first, an observation. Racial minorities primarily, ethnic
minorities secondarily, tend to be underrepresented in small busi-
nesses and small business programs. Can you tell me just what
sort of efforts the SBA has in place to provide counseling, training
assistance to those businesses who are doing everything they could
do but in oftentimes find themselves lacking, or excuse me, not
lacking but up against procedures and policies that make their job
more difficult? So whether it is capital standards or bonding re-
quirements or anything else?
Mr. MADRID. Thank you, Congressman.
We are definitely leaning in to Administrator Guzman. She says,
let’s bring silos amongst the units of the SBA so we are working
together. The OED, the Office of Entrepreneurial Development is
working with our government contracting and business develop-
ment unit. We are working with OFO in our district offices. We are
working with OII, Investment and Innovation on innovative
startups. So all that said is advancing equity is definitely central
and all our units working independently and collectively.
Mr. MFUME. Well, my time has expired but I am assuming you
have done that with that or are doing it with the Women’s Busi-
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ness Centers as well, and hopefully, we will get a chance to follow
up in a future hearing. But I may very well have some questions
directly to you following this.
I want to thank you. I want to thank the Chairman, and I yield
back any time I may have.
Chairwoman VELÁZQUEZ. The gentleman yields back. Now we
recognize the gentleman from Minnesota, Mr. Hagedorn, for 5 min-
utes.
Mr. HAGEDORN. Thank you, Madam Chair. I appreciate you
holding the hearing. Administrator, it is good to see you today.
I want to focus a little bit on the administration’s executive or-
ders on vaccinations and how it applies first to the SBA. The SBA
has many, of course, these small business development centers
across the country. In the state of Minnesota, five of them are lo-
cated in universities, different university systems in our state. And
if the administration comes along and says people have to be vac-
cinated that are covered contractors and yet they work in a univer-
sity system that may have different rules, how do you square that,
Administrator? What are they supposed to do?
Mr. MADRID. Thank you, Congressman.
As we continue to navigate COVID-19, the administrator has
made safety and security top of mind.
Mr. HAGEDORN. I do not need the lecture on that. What are
they supposed to do? What are the rules?
Mr. MADRID. Well, we are working directly with the Office of
OPM, frankly, and leaning into their advice and counsel. I can take
this back and we would be happy to answer any follow-up ques-
tions.
Mr. HAGEDORN. That is fine. That is fine, but I think a lot of
your people have asked you over the last many weeks what are the
rules and you have not even discussed it with them. You have
given the no guidance. And so, again, it looks like you have a policy
that you are just dumping out and then you will try to figure it
out later. That does not make a lot of sense.
Let’s move on to the one that President Biden has to force every
company over 100 employees to have their employees vaccinated.
First of all, we are in a situation in American where virtually,
every business, every entity is looking for work. And the idea that
we are going to go out of our way to fire people at this point in
time does not make a lot of sense with 10 million or so open jobs
and 8 million people still unemployed. Why the heck would we
want to do that, particularly when according to the science that I
have seen, whether you have a vaccination or not, you can still get
COVID and you can still transmit COVID. The vaccination does
not stop you from getting it. It just makes hopefully the end result
much better because it reacts and helps you get through it hope-
fully without death. So it seems like what has happened is the
president came out and said there is going to be this rule under
OSHA and then since then he has gotten on the phone with Amer-
ican Airlines and a bunch of other companies and used the pres-
sure of the federal government in order to get those entities to im-
plement his policy so it looks like everybody likes what he is doing
even though, of course, the federal government has a lot of over-
sight over these companies and sometimes can deliver money or
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not deliver money. And yet, who knows when this is coming out?
Who knows what the details would be? But I do not understand
where the administration is coming on this. Why is the president
and others so intent to get people fired and to push this issue when
it looks like the science is anybody can get COVID and anybody
can spread it whether you are vaccinated or not. Someone has got
to answer that question for me.
But if you could, since we are talking about small business, and
if you want to help small businesses, please deliver this message
to the administration. We have 80 people in Caledonia, Minnesota,
who are going to lose their jobs. Eighty good manufacturing jobs
down there because Rawlings Company and Major League Baseball
decided that they want to shut down that plant and move the vast
majority of those jobs to Communist China. Now, the people at that
plant, what they do is they make batting helmets for the Major
League baseball players and they make composite softball bats.
And the president of the United States, he has been out there
again. He has been calling all these companies, trying to get them
to implement his policy which is going to leave the people being
fired and less workforce in America. Here is an opportunity for the
administration to pick up the phone and call the commissioner of
baseball and say, look, let’s not be shipping our jobs to China. Let’s
keep our manufacturing jobs in the United States. And so I hope
you will deliver that message to the administration that they can
help save a small business and save jobs and it is very important
to the community that I represent down in Southeast Minnesota.
Lastly, the last thing you can take back to the administration is
they have it exactly backwards. Instead of trying to regulate every-
thing and every business and every person to go get a shot or not
get a shot or whatever, we should have a liability shield for busi-
nesses, for educational entities, and of course, medical care pro-
viders. So if people cannot just have a bunch of lawsuits and then
maybe these entities will not have to worry so much about whether
or not everybody that works for them has the shot. Again, I am
vaccinated. I think these decisions should be made between doctors
and patients, not with the federal government, politicians, or bu-
reaucrats leading the way, and certainly not the heavy hand of the
federal government.
With that, I will yield back. Thank you.
Chairwoman VELÁZQUEZ. The gentleman yields back.
Now we recognize the gentleman from Minnesota, Mr. Phillips,
for 5 minutes.
Mr. PHILLIPS. Thank you, Madam Chair. Greetings, Mr. Ma-
drid and colleagues.
In my past life as an entrepreneur, I engaged with a SCORE
mentor who shared memorable and really impactful counsel with
me that I have employed ever since in my business career. So I
really know firsthand how impactful these programs can be, par-
ticularly for those who lack the experience or the mentorship net-
works, particularly the access to capital that one needs to succeed
as an entrepreneur. And I also believe deeply that business can
and should be a means to an end, the end not being how much an
owner can accrue in success; rather, how much that owner can
share with those who made it possible. And I really believe strong-
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ly that building this kind of stakeholder capitalism into business
models is best done at early stages.
Earlier in another hearing, Mr. Rowe mentioned succession plan-
ning and transitioning businesses to employee-owned models as an
example of how SBDCs can engage in this work. So could you ex-
plain how OEP can maybe play a role in helping inspire more em-
ployee ownership at early stages of companies as they are seeking
counsel to establish themselves.
Mr. MADRID. Thank you, Congressman, on a very important
topic in terms of let’s talk about ESOPs, for instance. We are de-
lighted that the SBDC network in pockets of the county has intro-
duced webinars that approach this topic. In fact, there was an ulti-
mate linkage that occurred at OED and connecting the dots is very,
very important to us. And I will talk about SCORE here in a mo-
ment. But literally, I was talking to an 8(a) certified firm that is
a Native American business and I was talking to the two sisters
that opened the company Sister Sky that has been in operation for
20 years. And one of the sisters had her two daughters there. And
she said these two daughters are going to take over this family
business. I was able to then connect that with the ESOP training
happening with the SBDC. So that is critical. As well, you men-
tioned mentorship. I have very diligent experience and the last ex-
perience where I led a nonprofit focusing on the largest cluster of
scale Latinx firms in U.S. history is mentorship was the secret
sauce of what SCORE has offered during the pandemic and their
persistence through an online resilience HUB has been beneficial.
As well, the WBCs are also having trainings throughout on succes-
sion planning. So I think we have our bases covered on a very im-
portant topic.
Mr. PHILLIPS. I appreciate that. And a note to my colleagues.
I think Democrats and Republicans can agree that capitalism
works best when we have more ownership, not less, and if we can
bake some of these principles into early-stage businesses with in-
centives and counsel and mentorship, I think we are all better off
for it.
My second question, Mr. Madrid, is relative to the CARES Act.
Of course, it provided $25 million for SBDC and WBC associations
to create a centralized platform if you will for COVID-19 resources
and backend and training platforms for counselors. With funding
for those programs set to expire in April, forthcoming in 2020, how
do you categorize the success of that platform? And what were the
metrics for success? And how would OED like to see the platform
pivot perhaps to a post pandemic use?
Mr. MADRID. Thank you for that question, Congressman. The
Resource Partner Training Portal is definitely a coalition-building
endeavor, so we thank America’s SBDC and the Association of
Women’s Business Center for stewarding that particular platform.
The best way to talk about the platform and its success and poten-
tial for the future is that most recently when we rolled out EIDL
enhancements through the Office of Capital Access, we partnered
with the Resource Partner Training Portal and there was an appe-
tite frankly for that from the business advisors across the resource
partners, including SCORE and the VBOCs, the Veteran Business
Outreach Centers. We had a record attendance that was navigated
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through America’s SBDC and the Association of Women’s Business
Centers. And so those are the type of metrics that we want to cap-
ture. They have captured, of course, attendance, and so we just
need to keep pushing the metrics further. I was encouraged. I was
encouraged by the couple of events that we have held together and
more on the way if it continues.
Mr. PHILLIPS. I appreciate it, sir. With that, I yield back,
Madam Chair. Thank you.
Chairwoman VELÁZQUEZ. The gentleman yields back. Now, we
recognize the gentleman from Pennsylvania, Mr. Meuser, for 5
minutes.
Mr. MEUSER. Thank you very much, Madam Chairwoman. And
I thank the Ranking Member and my colleagues. And Adminis-
trator Madrid, good to see you.
Yes, I think the Small Business Development Centers have been
important throughout my district in Pennsylvania. In fact, I have
gotten to know a few. They certainly help facilitate the PPP loans
and they seem very excited and driven to assist and create out-
reach, so that is good. And I think that should continue. Many of
them are involved with schools where the centers are within my
district and it is a very positive thing.
The OIG report, that oversight has got to be taken very seri-
ously. I hear what the Chairwoman said, that it happened very
much in the previous administration. Fine. But we are just finding
out about it for the most part now. And we are really not hearing
it being taken completely seriously. We have met with the Inspec-
tor General and he is a great individual. I really appreciate him.
But it has got to be taken seriously.
My next question, Administrator Madrid, was intended to be
what are your needs to do your job better for our businesses. But
first, I think it is very important that you have a real good under-
standing of the needs of small business. And I say this because
even when we met with Administrator Guzman, I asked her about
taxes and her response was, ‘‘Hmm, we do not get into taxes. We
leave that for another department.’’ And that is not an advocate of
small business that does not understand the taxes. And what you
said a little while ago about under 400K is not accurate. Okay. But
first off, there is a tremendous amount of uncertainty that exists
with my small businesses throughout Pennsylvania, throughout the
great Commonwealth of Pennsylvania. Tax is just one of the issues.
Inflation. All right? All this monstrous spending that we want to
even trickle down on moving forward. Inflation is a big problem for
small business. Workforce availability, big problem. Supply chains,
that is other matters are getting into effect there. The energy costs.
Okay. That is a direct result of much of what is going on with the
Biden administration. If the reconciliation passes, utility costs are
going up. That affects everyone. Natural gas. You all want to tax
natural gas. More than half our small businesses get their energy
from natural gas. And homes. Thousands and thousands of home
costs are going to go up. So to say it is under 400K.
And then I am going to just give you a little bit of math here.
All right? A typical business with 40 to 50 employees that does rev-
enues of about $12 million has a net income of about 8 percent,
which is about a million dollars. If you reduce the 400,000 level,
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because you are looking to reduce in reconciliation, in the bill, the
20 percent small business deduction. Okay, 20 percent of 600K, the
difference between $1 million and 400K is 600. You take that 20
percent, that is $120,000. At the new rate of 40 percent, that is
about $50,000. That small business owner is probably paying him-
self $150,00, $180,000, maybe $220,000 for him and his family of
four. So not only will he have to pay $50,000 more in taxes, he will
probably let somebody go. That is what will probably happen. He
will try to do more with less and maybe invest in automation, but
you are also removing some of the cap gains or deductions. Not to
mention the capital gains increase. How does that not affect any-
body who makes $50,000 or more that looks to sell a stock because
their child is going to college? So to say it is not under 400K is a
complete inaccurate thing to say.
Stating that, I will now go back, because we need you all to advo-
cate for small business like your life depends upon it because the
small businesses’ lives do depend upon it. Okay, every day I hear
from them.
Now, I will go back. How can we help your department serve and
advocate for small businesses?
Mr. MADRID. Congressman, I would be happy and energized to
answer questions related to our programming and our purview in
terms of business counseling and training and education and so we
appreciate your support with those tenets of OED.
Mr. MEUSER. All right. Thank you.
Madam Chair, I yield back.
Chairwoman VELÁZQUEZ. The gentleman yields back.
Now we recognize the gentlelady from Georgia, Ms. Bourdeaux.
Ms. BOURDEAUX. Thank you, Chairwoman Velázquez and
Ranking Member Luetkemeyer, for holding today’s hearing. And
thank you to Associate Administrator Madrid for joining us today
and your employment work with the SBA.
The local SBDCs in my district have been extremely helpful re-
sources as my office ahs helped small businesses navigate the ef-
fects of the pandemic. I represent a rapidly growing company in
Gwinnett County where our population has grown by 20 percent
between 2010 and 2020. And much of this growth has come among
immigrant and first generation American communities moving into
our district. These are demographics that we know start businesses
at higher rates than the rest of the population. This means that
our SBDCs are serving a larger and more diverse population of
small business owners with the smaller allocation which accom-
panied our previous census results.
So my question is, it is very important to me and to small busi-
ness owners that these new census numbers ensure that we get
federal resources and get them to where they are most needed. So
I was curious. Now that we have entered fiscal year 2022, albeit
on a continuing resolution, when can SBA’s resource partners in
and around my district expect to see the implementation of the new
funding allocations based on the results of the 2020 census?
Mr. MADRID. Thank you, Congresswoman. Thank you for your
work in your area and experiencing that rise.
I can attest to the fact that our Office of SBDC leadership has
taken a look at the census. In fact, they reported to me most re-
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cently that that is happening and occurring. There is an open line
of communication with the SBDC network on that so we look for-
ward to adjusting those measures accordingly. And thank you for
your efforts and your statements related to immigrant-owned busi-
nesses, which they declined over 36 percent according to our Office
of Advocacy data for the first quarter of 2020. So as well, through
our Resource Partner Network, we have an inclusivity for all chal-
lenge that has been launched through that network. It started in
Northern California, and my first visit here officially at SBA was
in Fort Dodge, Iowa, where the Iowa SBDC invited me to be a part
of their launch of their Inclusivity for All Challenge. And that has
extended itself thanks to the SBC Network nationwide. So I hope
all that together that we are looking at making sure that the appli-
cable census figures do apply to allocations. Thank you for your
question.
Ms. BOURDEAUX. Great. Thank you so much. And inclusivity
and those kinds of initiatives we look forward to seeing that in my
community. We just have a lot of very, very diverse communities,
very entrepreneurial, and I want to make sure that they are get-
ting resources.
One of the other challenges we faced is making sure that these
very diverse communities are aware of the existence of the SBDCs,
the WBDCs, SCORE, the VBOCs, so I also wanted to know what
you are doing to promote awareness of these very important re-
sources across diverse communities, communities where English
may be a second language?
Mr. MADRID. Thank you for that question.
Inclusivity in diversity and outreach is definitely central with
Administrator Guzman’s leadership across the agency, across units,
and definitely here at the Office of Entrepreneurial development.
We have made measures to make more culturally linguistic options
available, including pandemic resourcing. We did the same when
we were rolling out the process of the Community Navigator Pilot.
We messaged the opportunity to minority chambers, regional eco-
nomic development organizations, to mayors, to states, to tribes. It
was a very successful endeavor in terms of building our ground
game. And I come back to having experience on the ground, fight-
ing a ground war, not an air war, meaning that you are connected
to the ground, know every part of the terrain. And so we were able
because of those efforts to receive triple the amount of proposals
than we were anticipating. So we will continue to make sure to lift
up the Inclusivity for All challenge with the Women’s Business
Center Network. Several new Women’s Business Centers have been
implanted in HBCU territory and also in rural areas. So that con-
tinues to be a focus as well. And SCORE has also stepped up with
their resilience and marketing efforts, including a Black-owned
business initiative. So I hope all those factors combined give you
a sense of confirmation of reinforcement. I appreciate your ques-
tion.
Ms. BOURDEAUX. Great. Well, thank you so much for your
work, and look forward to working with you more in the future to
try to continue to build that support network for our very diverse
community of small businesses.
Madam Chairwoman, I yield back.
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Chairwoman VELÁZQUEZ. The gentlelady yields back.
Now we recognize the gentleman from New York, Mr. Garbarino.
Mr. GARBARINO. Thank you, Chairwoman. And thank you,
Ranking Member, for hosting this hearing. I also want to thank
Mr. Madrid for being here.
Mr. Madrid, in your opening statement you said your mission is
to help small businesses to start, grow, and expand. According to
the NFIB’s latest COVID-19 survey, half of small employers report
supply chain disruptions and staffing are significantly impacting
their businesses. How is your office assisting small businesses in
overcoming these supply chain disruptions and staffing shortages?
Mr. MADRID. Thank you, Congressman. I can tell you that sup-
ply chain vulnerability is a scenario that is being addressed by our
Government Contracting Business Development. I would be happy
to take your questions back and get back to you on that to support
your questions.
Mr. GARBARINO. All right. Well, I mean, because I have friends
coming up to me now with little kids that are saying I am not
going to be able to get Christmas presents and a lot of businesses
in my district, I am sure most of my colleagues’ districts, do a ma-
jority of their business during the holidays. And if they do not have
products to sell, they will not be able to grow or expand or pay
their employees. So making sure supply chain issues are addressed
is huge. So I appreciate you getting back to me with answers, more
specific answers.
I also want to talk about inflation. A key metric measuring infla-
tion is at its highest rate since 1991, 30 years. How is your office
helping small businesses navigate the rising cost of goods? What
are you doing to educate them or to help them grow?
Mr. MADRID. Thank you for your question. The best way to cre-
ate durable economic growth over the long run that eases bottle-
necks and inflationary pressures is to increase the supply of goods
that consumers want to buy, improve the resiliency of our supply
chains, and reduce the cost of producing and getting goods to mar-
kets. So that is something that we look forward to working with
you. I do want our DCBD area to get back with you. I assure you
that I will get this question to you. I can tell you on the workforce
development front because the resource partners are doing skill
building scenarios across the network. So thank you for your ques-
tion, Congresswoman.
Mr. GARBARINO. All right. But I mean, I am just wondering,
what is the answer. If a business is calling, that you are dealing
with is calling up a restaurant and saying chicken wings. Chicken
wings prices have tripled. You know, I cannot sell chicken wings
for $16. What are you telling them? How are you telling them?
How are you advising? How is your department advising these
businesses that do not know what to do with the rising costs?
Mr. MADRID. Well, I would be happy to answer any questions
related to our programming at OED with our counseling and our
education and our training. I will tell you that I did meet a woman-
owned business in Iowa in a rural territory that had benefitted
from PPP and the Restaurant Revitalization Fund and she was
talking to me about the increased price of beef. And what she did
was she pivoted in terms of saying what else can we do? What are
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the alternatives? Can we cut down our costs and other endeavors?
We have kept our employees. So that is just one reflection I have
heard on the ground that was offered by herself, but she was frus-
trated with the rising cost of beef but she was looking for alter-
natives. And that is where the counseling, the skills building, the
digitizing efforts at the resource partner level really came to her
benefit.
Mr. GARBARINO. But, I mean, it is hard for a steakhouse to
pivot when its business is based on selling beef. So, I mean, that
is an issue. It is not easy for every business to pivot, especially
small businesses.
Lastly, I want to bring up something Jeremy, as the Ranking
Member of the Cyber Subcommittee for Homeland, COVID made
everybody go digital. Every small business. People that never
thought they would. It is a new thing we are dealing with. Every-
body has got to deal with. What is your department doing to help
small businesses grow and start? How are you handling it with
cyber? Because it is definitely something that is a huge issue. And
ransomware, businesses are paying between $5,000 and $15,000 to
keep their businesses going due to ransomware. So what is your
department doing on that?
Mr. MADRID. Thank you, Congressman. Under our purview at
OED, we are releasing a notice of funding opportunity for a cyber-
security grant that will be offered to the state government. So more
to come on that. And cybersecurity is a priority. Thank you.
Mr. GARBARINO. Thank you. And I yield back.
Chairwoman VELÁZQUEZ. The gentleman’s time has expired.
Now we recognize the gentleman from Louisiana, Mr. Carter, for
5 minutes.
Mr. CARTER. Madam Chair and Ranking Member, thank you
very much for the opportunity. Thank you for having this hearing.
Mr. Madrid, how can the Office of Entrepreneur Development in-
crease their coordination with HBCUs and minority-serving institu-
tions?
Mr. MADRID. Thank you. Thank you, Congressman, for that
question.
HBCU outreach, engagement, and application of engagement,
meaning results and action, is very, very important to the adminis-
trator. It is important to our agency and definitely resonates at the
Office of Entrepreneurial Development. We are excited to see with
the SBC network that there is over 30 service centers. And just as
a frame of reference, there are over 900 service centers. There are
over 30 that are implanted in the HBCU environment. We need to
do more, frankly. And we are working here this office knows under
this leadership that we want documented results. Certainly, our
role into the platform of EDMIS from a Legacy system to Next
Generation reporting is going to help us with that.
And on the WBC side, we are extremely excited. A number of
new WBCs have been implanted in HBCU environments so that in
and of itself I think speaks volumes in terms of action. But we have
got to do more and that extends itself to MSIs, to tribal colleges
and universities, to Hispanic-serving institutions. But we are very,
very excited on the progress from HBCUs. And you will definitely
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be learning more from it with our implementation with the Com-
munity Navigator Pilot as well.
Mr. CARTER. Excellent. Thank you. Let me ask you this, and I
appreciate that, and that is incredibly important particularly to my
district. But tell me, what can we do as Members of this Committee
or me as a Member of Congress on the ground in Louisiana with
multiple HBCUs in my district, what can I do to assist you or to
advance this very noble cause?
Mr. MADRID. Congressman, we would be happy to work with
you. And so if you have nuances, sometimes being on the ground,
what I have learned in my 15 years of supporting small businesses,
specifically before that I was in the banking industry, is I come
back to that premise of being on the ground. And so if we are sev-
eral states away, we want to know what is happening. So we would
be happy to work with your office on nuances that are specific on
your ground.
Mr. CARTER. Okay, great. Fantastic. I have two quick questions
before my time runs out. Tell me about the reentry entrepreneur-
ship counseling and training program because that is sounding also
very important. We know that we have to do something different
for our recently incarcerated individuals if we expect them to be
able to survive in main street America. Share with me a little bit
about what you are doing there and how those programs work.
Mr. MADRID. Absolutely, Congressman. Thank you for that
question.
The best way to approach this question is from an example,
frankly. I will point to an entrepreneur, Larry, who was formerly
incarcerated in prison 20 years for a first offense, nonviolent crime.
And with the help of an SBDC in Nashville, all Larry has done is
launched his new business in the waste removal industry. And now
they are working together. He is trying to obtain a line of credit.
So we are committed here at OED to expand the footprint of our
resource partners and also to start the process before release. That
is very, very important. We have got to be as entrepreneurial as
our small business owners and we look forward to this particular
population contributing toward the economy. So starting before
their release in structured programming——
Mr. CARTER. I do not want to cut you off but I have got just
about another, less than a minute. So two quick questions.
One is we have a program in Louisiana called First 72. It is a
program that in that significant period of the first 72 hours of
someone being recently incarcerated, there is programming set up.
I would love to offline have a conversation with you to talk about
the merits of this program in Louisiana and see if there may be
some practices that they have that you can use or maybe some best
practices you can share with them to improve on them.
So lastly, real quickly, my last 30 seconds, there were several or-
ganizations in my district that applied for Community Navigator
Pilot competitive grants. If an organization in my district was not
selected, will they have an opportunity to apply again for this fund-
ing in the future?
Mr. MADRID. Thank you, Congressman. I look forward to hear-
ing more about First 72.
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The Community Navigator Program is a pilot, so the imagined
state is that it is institutionalized in some way, shape, or form. If
it is done through Congress, we are happy to execute it. Thank you
very much for your question.
Mr. CARTER. Thank you.
I yield back, Ma’am.
Chairwoman VELÁZQUEZ. The gentleman yields back.
The gentlelady from California, Ms. Young Kim, is recognized for
5 minutes.
Ms. YOUNG KIM. Thank you, Madam Chair Velázquez. And I
want to thank our Ranking Member Luetkemeyer for holding this
hearing. And Mr. Madrid, thank you for being with us to discuss
the state of SBA’s Entrepreneur Development Programs.
I want to point to your testimony where you talk about Mr.
Montgomery of American wagyu cattle. By the way, during the
pandemic, I am one of those who had mail orders and ordered the
delicious Wagyu beef because I really like that. So I really appre-
ciate you mentioning him and thanks to PPP, Mr. Montgomery was
able to keep his staff full force and expand his businesses. And this
is where he attended an event where he was able to meet up with
his partner, lending partner, find the right banker that was able
to guide him and tell him about the PPP.
Can you describe how that partnership with local lending institu-
tions and the Entrepreneur Development Resource Networks
makes it easier for small businesses to gain access to capital?
Mr. MADRID. Thank you, congresswoman. I look forward to or-
dering some wagyu beef myself. So beyond talking about it, to do
it myself. I look forward to that and we are proud of Patrick Mont-
gomery and part of the Missouri SBDC.
But clearly, at OED, we are trying to forge collaboration building
as much as possible. That is the case also with the Women’s Busi-
ness Centers in terms of some of them being CDFIs. That has been
helpful to some of the women clientele that have had barriers to
access to capital. So we will encourage coalition building when it
comes to getting these entrepreneurs. That case specifically, Pat-
rick was a serendipitous event as you had mentioned, and so we
are glad that he was able to pivot to keep up with that mail order
business, so I hope that is a reinforcement.
Ms. YOUNG KIM. Other than sharing our love of wagyu beef, I
want to get to the point of, you know, would you agree that it helps
to have the bank representatives who know their communities on
their ground as a resource for the networks? Because I say this be-
cause a while ago we sent a letter to the congressional leadership,
both the Republicans and Democrats, to ensure that we do not re-
move the lending institutions from the equation and move towards
a direct lending approach through SBA because there is that talk
of that in the latest reconciliation package that went through the
Committee. So should that happen, who will be filling the void of
those community backers and credit union representatives that are
on the ground providing information and services to our small busi-
nesses?
Mr. MADRID. Thank you, Congresswoman. I believe that you are
referring to the efforts surrounding direct lending by the SBA. And
I will just purport to this. I want to preamble this by saying we
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will be happy as well to work with you and get questions to our
Office of Capital Access. But what I will testify to is from being on
the ground, those loan amounts, that $150,000 or less have been
so hard to access for many of our communities that have been left
behind historically who were left out of pandemic resources. It is
hard territory and we frankly, we feel like we have to step in here.
But I would be happy to take your questions back specifically to
our Office of Capital Access. But some of those folks who are trying
for those loan amounts are subject to very high interest rates and
we all can agree that that is a very, very difficult environment, es-
pecially for a business owner who has not had access to funding.
So sometimes they are first entry. So I look forward to any ques-
tions that you have that we can take back to that office.
Ms. YOUNG KIM. The point that I want to make and emphasize
is that we do not need to move away from that public-private part-
nership model that has a track record of success and that does a
better job in protecting taxpayers from fraud and abuse and other
SBA direct lending programs like the EIDL because the success of
our entrepreneurs and small businesses should not be reliant upon
a greater extension of government on main street.
So in the remaining time, Mr. Madrid, you also indicated in your
testimony that you are committed to ensuring ED programs have
robust programs and that SBA is introducing Next Generation re-
porting program. I think the Chairwoman mentioned this, but can
you clarify the reporting, the timeline of the reporting system and
its implementation? Can you provide a little information on that?
Mr. MADRID. Yes, Congresswoman. Thank you.
In terms of the EDMIS Legacy System, I know I have a couple
of seconds, but 100 percent was deployed across our Resource Part-
ner Network, the SBDCs, WBCs, and SCORE. So we are about on
the fifth month of implementation there.
Chairwoman VELÁZQUEZ. Time has expired and now we recog-
nize the gentlelady from California, Ms. Chu, for 5 minutes.
Ms. CHU. Mr. Madrid, thank you for being here and rep-
resenting the Office of Entrepreneurial Development and SBA re-
source partners across the country.
When I came to Congress, I worked hard to bring two SBDCs to
my district in the San Gabriel Valley in Southern California. Now
we have two successful locations in Pasadena and La Verne that
have been immensely important and never more so than during the
pandemic. One of the reasons why it was so important to get the
SBDCs into our area is that we have a large entrepreneurial immi-
grant and limited English proficient community, and communities,
actually. That is why I worked to insert language into the CARES
Act requiring that we make in-language materials available for
these business owners.
So I am especially glad to see that in-language services is
prioritized in the Community Navigator program but that is actu-
ally just one part of the equation. When I talk to my local SBDCs,
they tell me that translations are important but not as important
as gaining the trust and confidence of the communities that are
hard to reach. And to do that, they have been successful in
partnering with different community-based organizations that have
both the language skills and the longstanding relationships. So I
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am proud that our local SBDCs do have these existing partnerships
with these groups. But we also have one of the largest immigrant
populations in the country and some well-established community
organizations that serve them.
So, this Community Navigator program that you are able to
reach these immigrant populations that some might consider hard
to reach that need to have access to those trusted organizations. So
how are you going to make sure that happens through your guid-
ance and awarding process? And I know there is a program of hav-
ing a hub and a spoke. And will the spokes get funding? I just want
to know how exactly you are going to work this to make sure every-
body is reached.
Mr. MADRID. Thank you, Congresswoman. Being culturally and
linguistically competent is very, very important to us in terms of
reaching those terrain elements that you speak of. And so we were
excited in our outreach endeavors with the Community Navigator
Pilot, that we leverage organizations that know different commu-
nities where translation is an issue. It was very, very important for
us to have them at the table. With the anticipation of the grantees
being announced later this month, I can assure you because of the
diligent review process that we will achieve geographical diversity,
as well as diversity of sectors being served. And through the
spokes, which are the community champions on the ground, you
know, we have reinforced over time different examples of what a
navigator could be and translators were definitely one of those
items of reinforcement that we addressed time and time again. So
that is a very important scenario here.
With the hub and spoke model, the hubs are grantees, so they
will be being funded by the SBA. And then the spokes on the
ground, through consortia agreements with the hubs will receive
their funding. So we are excited that this model, it is a national
model but with a hyper-local approach, we are excited to go into
new ground where folks who have been left out running these busi-
nesses being job creators have the opportunity to truly understand
how to connect with SBA. That is the first step of many but we are
excited to take that first step in many instances on the ground
through this program.
Ms. CHU. And will the determination of the funding for the
spokes be made by the hub?
Mr. MADRID. That is right. That is right. And that is in pro-
posal all together in terms of the review, the review process that
we have now. It is a proposal of the hubs with their spoke engage-
ments.
Ms. CHU. And let me say also, people really need to know about
the Community Navigator Program but we know that SBDCs, they
were not allowed to advertise their services. So what is going to be
done to make sure that there is an actual awareness of the Com-
munity Navigator Program? Will there be a role for advertising?
Mr. MADRID. That is right. There will be a role. There was an
appropriation, aside from the one under our purview, that talks
about that application of marketing the Navigator Pilot. Thank you
very much for your question.
Ms. CHU. Thank you. I yield back.
Chairwoman VELÁZQUEZ. The gentlelady yields back.
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The gentlelady from Texas, Ms. Van Duyne is recognized for 5
minutes.
Ms. VAN DUYNE. Thank you very much, Chairman Velázquez
and Ranking Member Luetkemeyer. And thank you, Mr. Madrid,
for joining us today.
Your visit comes at a difficult time for small businesses that
have endured many challenges and hardships over the last 18
months. And now as they try to get back on their feet they are
faced with a slew of new manufactured challenges. Luxurious and
unsustainable unemployment benefits have played a significant
role in labor shortages and seemingly never-ending stimulus has
led to record inflation.
In addition, Democrats are now trying to force through the larg-
est spending bill this country has ever seen, leaving our smallest
employers fearful of massive tax hikes bound to stretch their al-
ready small margins.
I heard your answer to Congressman Roger Williams’s question
about increases in taxes and you said that no one earning under
$400,000 will experience tax increases. Now, as a direct result of
this administration’s fiscal policies, folks making under $400,000 in
small businesses are already paying more in taxes. We are all suf-
fering from increase in out-of-control inflation. For example, and I
would hope that working for the Small Business Administration
you see this, you have heard this, and you know this, too. Example
is the cost of cargo containers. They have gone from $4,000 last
year to now an average of $29,000. We have seen a 54 percent in-
crease in fuel costs, a 7 percent increase in food costs, and esca-
lating employee costs if small businesses can even find employees.
And to that point, Congressman Hagedorn brought up the list of
impacts that are going to be hitting the small businesses as a re-
sult of the vaccine mandates.
I spoke with Members of the aviation industry yesterday who are
already experiencing drastic shortages of pilots, and with this De-
cember 8th deadline looming over their heads, cargo carriers warn
that this mandate will ‘‘have a tremendous disruption on commerce
in this country.’’ So pretty much anyone who drives, buys anything,
or eats will be paying more and it is only getting worse.
So despite misleading claims pushed by this administration, in-
creased taxes, including the Democrat Reconciliation Plan, will
negatively affect the close to 1.5 million small businesses organized
as C corporations and most small businesses organized as pass-
through entities.
So according to the Texas Public Policy Foundation, I know you
are a Texan so you will appreciate this, the proposed policies
Democrats are pushing will result in Texas businesses losing well
over $650 billion in investments and reduce full-time employment
by 12,000 jobs. So given that the state admission of your office is
to ‘‘help small businesses start growing in global markets,’’ my first
question to you would be, do you believe increased taxes on small
businesses help them to grow and compete?
Mr. MADRID. Thank you, Congresswoman. And a big shout out
to Texas. Thank you for that.
Regarding the tax plan, I would love to, you know, we are happy
to respond to your questions in writing. I would love to respond or
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answer any questions about our counseling and training related to
the programs.
Ms. VAN DUYNE. What I asked you is do you believe that in-
creased taxes in small businesses help them to grow and compete?
Mr. MADRID. Our forte is not tax policy so we would be happy
to address your questions in writing but I would be happy to talk
about——
Ms. VAN DUYNE. Do you believe increases in inflation helps
small business to grow and compete?
Mr. MADRID. I would be happy to take your questions and re-
spond to them in writing, Congresswoman.
Ms. VAN DUYNE. So do you believe federal mandates that force
small businesses to fire employees in a time when they cannot find
people to hire helps small businesses to grow and compete?
Mr. MADRID. Congresswoman, I would be happy to respond,
take your questions back and respond in writing.
Ms. VAN DUYNE. So you come to us today to answer questions.
I am asking you what kinds of impacts on small businesses this ad-
ministration’s fiscal policies will have. Are you unprepared to an-
swer those questions today?
Mr. MADRID. I would be happy to talk about the Community
Navigator Pilot, our resource partners, what is happening on the
ground with our WBCs, our SBDCs, and SCORE.
Ms. VAN DUYNE. Okay. So the mission, which is to make small
businesses be able to compete and grow, we are unable to talk
about that today?
Mr. MADRID. I would be happy to talk about what is happening
on the ground to support that mission.
Ms. VAN DUYNE. Okay. So as the Ranking Member of the Sub-
committee on Oversight, Investigations, and Regulations, I was
concerned by the Inspector General’s audit of the Women’s Busi-
ness Centers earlier this year found that the SBA did not provide
efficient oversight resulting in close to a million dollars of potential
fraud. So as the administrator overseeing entrepreneurial develop-
ment programs, can you tell me how many people on your staff are
designated to provide oversight of these programs?
Mr. MADRID. Yes. Well, the Office of Women’s Business Owner-
ship and the leadership there is responsible. We have closed three
Women’s Business Centers as elaborated earlier.
Ms. VAN DUYNE. Can you tell me how many people are des-
ignated to provide oversight of these programs?
Mr. MADRID. Yes. We have a grant management officer and the
supporting staff.
Ms. VAN DUYNE. Okay. So we have one person or——
Mr. MADRID. Congresswoman, we have a team supporting that
effort at OBO that is centered around the grant specialist and the
supporting staff underneath that.
Ms. VAN DUYNE. Thank you very much.
Mr. MADRID. Thank you.
Ms. VAN DUYNE. I yield back.
Chairwoman VELÁZQUEZ. The gentlelady yields back.
Now we recognize the gentleman from Pennsylvania, Mr. Evans.
Mr. EVANS. Thank you, Madam Chair. Thank you for your lead-
ership.
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Good morning, Mr. Madrid. It is a pleasure to come to speak be-
fore us today.
In my home of the City of Philadelphia, Temple University and
Widener Small Business Development Centers have been critical to
supporting entrepreneurs especially during the pandemic. Many
small businesses in my district do not have the capital to hire ac-
countants or professionals. During the past year, the centers have
assisted in starting up 112 new businesses, 8,407 jobs, served over
2,600 clients, and helped them in forming nearly $40 million in
capital for small businesses to develop. These centers are especially
important in cities like mine where nearly half of the population
is Black and nearly 25 percent is on poverty. However, this brings
us to an issue around priorities and resources. So I want to ask the
metric that comes with funding in making these decisions. These
centers are based on increasing job save and capital formation.
However, it appears to me that there seems to be a mismatch on
the goals as is well documented the minority Black-owned busi-
nesses specifically have less access to capital and fewer employees
than in fewer White-owned businesses. If the SBA keeps increasing
the goals around job save and capital, is this not counterproductive
to the centers increasing their already stellar performance of mi-
nority women, veterans, and rural entrepreneurs?
Mr. MADRID. Congressman, I apologize but I had an interrup-
tion. So I heard the first part of your commentary and your ques-
tion. I apologize to the Committee here but can you repeat the last
part of your question. I apologize, all, for that interruption.
Mr. EVANS. Basically, let me go back. I basically said these cen-
ters in particular assisted in starting 112 new jobs, new businesses,
8,000 jobs, and over 2,600 clients. Now, the question I asked, in
terms of the goals of job save and capital, I asked the question is
this counterproductive in terms of increasing the centers’ already
stellar performance of minority, women, and veteran entrepreneurs
in terms of the objectives?
Mr. MADRID. Yes. Well, thank you for your question, Congress-
man. We certainly want to make sure that we are evaluating the
performance of the SBDCs. And so we are going to continue to re-
evaluate metrics and be timely with, especially what is happening
during the pandemic. So we feel like new business starts, capital
infusion, job creation, of course, is important, as well as asking if
the folks being served are veterans and go deeper on demographic
information. So we are definitely making sure that the metrics
apply to the current environment. And we have learned a lot from
the pandemic.
Mr. EVANS. Well, can you talk a little bit about, just in your
mind, of what you think you have learned in terms of the goals
that you see of job save and capital? What specific example can you
give in terms of what you have learned?
Mr. MADRID. Absolutely. I mean, when it comes to capital infu-
sion, I mean, the SBDCs certainly across the network had notable
advancement there. Some of it was the numbers but they had to
pivot to a virtual environment. So bringing some of those engage-
ments into the fray is very, very important because the digital and
virtual world is not going to go anywhere anytime soon. In other
words, the SBDCs that we have talked to them about that are
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going to have to evaluate new measures of how that virtual audi-
ence is security capital, for instance, is one item. With the WBCs,
just extending to our resource partner network, they had 10,000,
almost 10,000 capital infusions. So those are examples that were
taken into account that also will be applied with the Community
Navigator Pilot just to connect the dots between the resource part-
ners and the open lines of communications between our offices and
the networks themselves.
Mr. EVANS. Any way you think that this Committee can assist
you more in terms of ensuring that you meet those goals?
Mr. MADRID. Well, we look forward to working with you. I
mean, I hope that is the commonality that I have across this Com-
mittee. And so we proposition, we look forward to working with
you. Thank you.
Mr. EVANS. Thank you, too. Thank you.
Madam Chair, I yield back. I yield back to you, Madam Chair.
Chairwoman VELÁZQUEZ. Yes. Thank you. The gentleman
yields back.
Now we recognize the gentleman from Wisconsin, Mr. Fitzgerald,
for 5 minutes.
Mr. FITZGERALD. Thank you, Mr. Madrid, for being with us
today. The issues being discuss, kind of a cross-section obviously on
entrepreneurs as well as some of the SBA programs and the PPP
stuff. So I just wanted to go back to that. Congresswoman Kim
talked a little bit about it.
I think the frequent visits or the interactions I have at the local
level with either local bankers or those that are part of the credit
union system, oftentimes it is reassuring to know that if there is
a separate set of eyes on the process, and I think this was very in-
teresting when it came to the PPP loans. Very successful. Abso-
lutely bailed out a lot of small businesspeople across this nation
during the pandemic. But when you talk to bankers and they say,
listen, I had a conference table and it was full of folders on people,
some clients that they knew very well, others that maybe they had
just worked with a little bit, but you know, they were going
through these files, making sure that all the T’s were crossed, all
the I’s were dotted. And as a result of that you can see in the PPP
program that there is a lot less fraud and abuse as a result of that.
And then if you move to the SBA program’s direct loan programs,
and I have talked to individuals that have received those loans, far
less scrutiny, issued in a way that sometimes was a mystery even
to those that had received the loans themselves.
So I would once again encourage you to be an advocate for this
within the SBA to say, hey, listen. If we want to reduce those num-
bers, if we want to bring those fraud and abuse numbers down, in-
volve local financial institutions. It is like an answer that is staring
us right in the face. We just need to reach out and make sure we
embrace that. And it does not matter which side of the aisle we are
on. Obviously, we have an inherent responsibility to make sure
that we take care of the taxpayer dollars.
So that is more of a comment, I guess, than anything else. And
let me give you a chance to either respond or give me your
thoughts on that if you would.
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Mr. MADRID. Congressman, thank you. The direct lending legis-
lation and lending is based off of our successful 7(a) loan program.
And this program will not be in isolation. We will continue to part-
ner with community banks and credit unions and the community
financial institutions which will counsel borrowers through the ap-
plication and repayment process. So that is a little bit of an answer
from this perspective but we would be happy to work with you,
take your questions back to the Office of Capital Access. Thank you
for your comments.
Mr. FITZGERALD. Well, very good. So let me just follow up real
quickly. I know I have got a couple of minutes.
So when it comes to entrepreneurs, I have been an entrepreneur,
small businessperson for many years before I became a Member of
Congress. Most of the time, small businesspeople want you to just
get out of the way. They are not looking for all these types of pro-
grams and assisted grants until they are kind of up and running.
And Congressman Williams talked about this earlier in his experi-
ence but, you know, the last burdensome government can be and
the less taxing that can happen, the better off all small businesses
will be. I do not care if you have got one employee or if you have
got 20 employees, that is something that consumes a lot of the day
for some of these people that are willing to jump in with both feet.
And it is a risky thing. And people lose sleep. And people go with-
out paychecks week after week who run these small businesses. I
do not care if it is a woman or a veteran or any other group that
can have great success in small business. You need to develop pro-
grams and work to structure programs so they may assist only
when small business owners ask for their help. For too long, the
federal government specifically, but in my state of Wisconsin, there
has been too much intrusion in that process and it leaves us in a
position of trying to work around government versus interacting
with them.
And another thing, I felt, you know, I had the opportunity today
to talk a little bit about that. I want to thank you for being with
us today and I would yield back.
Chairwoman VELÁZQUEZ. The gentleman yields back.
Now we recognize the gentlelady from Pennsylvania, Ms.
Houlahan.
Ms. HOULAHAN. Thank you, Madam Chair. And thank you for
the opportunity to speak. I think this hearing has been very reflec-
tive of the complexity of small businesses in this country and par-
ticularly during lots of distressors such as this pandemic. Having
been one of those people who has lost sleep and signed my house
over and a variety of other things to grow small businesses, I can
clearly empathize with the small businesses in our community and
all of the complexity of these questions that people have been
asked reflect why we are here and why we are trying to be helpful.
One of the things that I was also struck by that I cannot let go
because it was mentioned several different times is vaccine man-
dates. It is one of those kinds of things where it depends on who
you talk to how it is received. Some people, business owners, are
very positive about that. In fact, the vast majority of people whom
I have spoke with have been extremely positive and grateful for the
clarity that has been provided by a mandate. One of the things
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that I find most frustrating about the narrative is somehow that
this should be a choice between a doctor and a person. The irony
there is not lost on me and that somehow the science tells us that
this ends up with us just being able to be more safe from being
hospitalized rather than also to save one another from death. And
so I get extremely exercised, as you can probably tell, by this frus-
trating narrative that somehow this is contributing to the unem-
ployment in our nation other than the fact that we are also contrib-
uting to helping each other survive in this country.
So the question that I have, Dean actually asked my question re-
garding ESOPs and employee ownerships and the very important
aspect of making sure that we are thinking about stakeholder cap-
italism, but with the remaining parts of my time, if it is all right,
I would like to ask about cybersecurity which is also something
that is true and present, a true and present danger to particularly
small businesses that do not have the ability to protect their busi-
nesses, to protect their bank accounts, to protect other people’s fi-
nancial information. So if you could please in the remaining time
that I have, offer up what resources that the Office of Entrepre-
neurial Development has for cyberhealth, cybersecurity, and cyber
awareness. I would appreciate that. Thank you.
Mr. MADRID. Thank you, Congresswoman. And Happy National
Cybersecurity Awareness Month to all. That is this month in Octo-
ber. And this has been on the minds of the administrator and also
OED. And I will report on a couple of items, one of which is a cy-
bersecurity grant. We are releasing through the Office of Entrepre-
neurship Education a notice of funding opportunity for that pro-
gram that will increase outreach and application of cybersecurity,
not only of awareness but we know that ransomware has been a
big issue. We are also partnering with DHS on their
Stopransomware.gov website to make sure that socialize with our
small businesses.
But we are not stopping there. We come back to the terrain,
making sure that we are on the ground, meeting small businesses
where they are. The smallest of the small, if we are really honest,
and I know you all have experienced this, is when you talk to a
small business owner that has one or two employees and you talk
to them in corner where they have built trust with you and you ask
them, do you really know what ransomware is and how it can af-
fect your business? Do you feel vulnerable? And most of the time
I have heard absolutely yes. So we want to make that government
website translatable and relatable to the small business owners.
There is also another rung and it applies to certification and pro-
curement. So we are working with our GCBD, Government Con-
tract and Business Development. They are small businesses that
are certified that need C training, certification training in cyberse-
curity in order to be eligible for procurement opportunities. So the
bottom line is segmentation, to approach it that way. It is not a
‘‘one size fits all.’’
The last thing I will say is that our Office of Entrepreneurship
Education headlines an electronic learning initiative which in-
cludes the Women’s Online Business Curriculum ASCENT and we
will add to that a cybersecurity pillar. So we are very, very excited
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about that going forward. And it will continue to be a priority in
OED and through our office of entrepreneurship education.
Ms. HOULAHAN. Thank you. With what remains of my time, I
look forward to working with you on those issues of cybersecurity
because I think they are critical to the success of small businesses.
Here in my community, we will be hosting a job fair where more
than 100 businesses will come to hopefully find people to fill the
jobs. It has been a month and a half or so since all of these benefits
supposedly have expired and still we have only 4 percent unem-
ployment in my community and many, many, many jobs to fill. So
this is a vastly complex situation that we are managing. Only I be-
lieve it is 7 percent of people who returned to the economy in Au-
gust were women so we really have quite a lot of complexity that
we need to deal with in order to find our way back to a level set
in our economy right now.
Thank you and I yield back, Madam Chair.
Chairwoman VELÁZQUEZ. The gentlelady yields back.
Now we recognize the gentleman from Florida, Mr. Donalds.
Mr. DONALDS. Thank you, Madam Chair.
Mr. Madrid, what is your job? What do you do? I have been on
the road. So I have been driving from Tampa this morning. I was
at a prior engagement. So I have been catching the hearing and
bits and pieces. So what actually do you do at the SBA?
Mr. MADRID. Well, thank you. Thank you for your question,
Congressman.
I serve as associate administrator for the Office of Entrepre-
neurial Development. And we oversee the technical resources arm
of the SBA through our Office of Small Business Development Cen-
ters, our Office of Women’s Business Ownership, and our Office of
Entrepreneurship Education. So there is a rung there that——
Mr. DONALDS. I got it. That’s cool. I do not need the long
version. I just need the short version, Mr. Madrid.
So obviously, your office is responsible for trying to help small
businesses get off the ground all across the country with technical
assistance they might need to help their financing needs to keep
their businesses afloat. That is the short note; right?
Mr. MADRID. We help businesses start and grow. And that is
through our resource partner network. And we also have an edu-
cation aspect or Office of Entrepreneurship Education through an
electronic learning initiative. And then we are also responsible for
the Community Navigator Pilot that will be launched.
Mr. DONALDS. Okay. All right. So I have got a couple questions
for you. So I had to stop at the gas station. Obviously, there are
some people who might try to start convenience stores. What do
you think the increased excise tax on cigarettes will have on a
small business or sole proprietor trying to open up a convenience
store or a gas station? Maybe not a gas station. There is a little
bit more regulations involved in that. Let’s say a convenience store
in the United States. What do you think an increase in the excise
tax is going to do to their ability? Do you think that is going to
hinder their ability to open and maintain profitability or do you
think it is going to hurt their ability to stay open and help their
profitability? Yes or no. Is it going to help or is it going to hurt.
Yes or no?
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Mr. MADRID. Congressman, tax policy is not in our purview. I
would be happy to talk about——
Mr. DONALDS. Oh, Mr. Madrid, but you are a head—Mr. Ma-
drid, you are the head of the Entrepreneurial Division. You engage
with small business owners all across the country. You have got to
have that understanding of the impact of tax policy.
All right. Let’s move on. Another small business tax policy in the
Budget Req bill. Do you think it will help or hurt small businesses
getting rid of the section 199A small business deduction on small
business owners’ taxes? Will that help or hurt small businesses in
the United States, yes or no?
Mr. MADRID. Congressman, I am not in a position for tax pol-
icy——
Mr. DONALDS. Come on, Mr. Madrid, you are in the position.
You coordinate with small business owners all across the country.
You said so yourself. That is your job title. You provide technical
assistance to all types of small businesses. So you have to have
firsthand knowledge of what is going to impact them. If the Section
199A is going to basically be taken away from them, I mean, they
are going to pay more in taxes, you do not know if that is going
to help or hurt the same small businesses you are trying to provide
technical assistance to help?
Mr. MADRID. Congressman, I would be energized to talk about
our programs at the Office of Entrepreneurial Development, the
Community Navigator Pilot, how we are on the ground with busi-
ness and counseling and education. I would be happy to talk about
that.
Mr. DONALDS. Mr. Madrid, Mr. Madrid, that is not a yes or no
answer. You are trying to give me bureaucratic speech. And to be
honest, I have been listening to bits and pieces of this hearing and
I just find it to be ridiculous. You guys are charged with helping
small businesses open, thrive, and prosper. That is your purpose.
But I do understand that you cannot talk about tax policy. Frankly,
your boss, when she came before us, she could not talk about tax
policy. We were given the same runaround in that hearing as we
are getting today.
Last question. Do you think an increase in the corporate income
tax rate and/or increase in the personal income tax rate for small
business owners whose income passes through to their 1040, do you
think that will help or hurt small businesses being able to thrive
in the United Sates, yes or no?
Mr. MADRID. Congressman, I am not in a position to, and it is
not my purview——
Mr. DONALDS. Mr. Madrid, I am going to reclaim my time.
With all due respect, if you are not in a position to make a very
clear delineation on the impact of increased taxes on small busi-
nesses, then how in the heck are you the administrator for entre-
preneurial divisions with respect to small businesses in the United
States? If you cannot understand that, then I am very, very con-
cerned about what can be understood at the SBA.
Madam Chair, I yield back.
Chairwoman VELÁZQUEZ. The gentleman yields back.
I want to thank Mr. Madrid again for taking time to answer our
questions today.
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SBA’s Office of Entrepreneurial Development plays a critical role
in facilitating the well-being and growth of American small busi-
nesses and your commitment and dedication to small businesses
shined through today. For many small businesses, counseling from
an SBA resource partner can mean the difference between success
and failure. Going forward we must work together as a Committee
to ensure those critical organizations are in position to thrive and
that the OED has the resources it needs to effectively implement
the various programs under their jurisdiction.
I ask unanimous consent that Members have 5 legislative days
to submit statements and supporting materials for the record.
Without objection, so ordered.
If there is no further business to come before the Committee, we
are adjourned. Thank you.
[Whereupon, at 11:58 a.m., the committee was adjourned.]
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APPENDIX
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68
SBD026 with DISTILLER Insert offset folio 68 here 45779.034
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69
SBD026 with DISTILLER Insert offset folio 69 here 45779.035
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70
SBD026 with DISTILLER Insert offset folio 70 here 45779.036
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71
SBD026 with DISTILLER Insert offset folio 71 here 45779.037
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72
SBD026 with DISTILLER Insert offset folio 72 here 45779.038
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73
SBD026 with DISTILLER Insert offset folio 73 here 45779.039
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74
SBD026 with DISTILLER Insert offset folio 74 here 45779.040
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75
SBD026 with DISTILLER Insert offset folio 75 here 45779.041
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76
SBD026 with DISTILLER Insert offset folio 76 here 45779.042
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77
SBD026 with DISTILLER Insert offset folio 77 here 45779.043
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78
SBD026 with DISTILLER Insert offset folio 78 here 45779.044
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79
SBD026 with DISTILLER Insert offset folio 79 here 45779.045
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80
SBD026 with DISTILLER Insert offset folio 80 here 45779.046
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81
SBD026 with DISTILLER Insert offset folio 81 here 45779.047
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82
SBD026 with DISTILLER Insert offset folio 82 here 45779.048
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83
SBD026 with DISTILLER Insert offset folio 83 here 45779.049
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84
SBD026 with DISTILLER Insert offset folio 84 here 45779.050
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85
SBD026 with DISTILLER Insert offset folio 85 here 45779.051
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86
SBD026 with DISTILLER Insert offset folio 86 here 45779.052
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87
SBD026 with DISTILLER Insert offset folio 87 here 45779.053
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88
SBD026 with DISTILLER Insert offset folio 88 here 45779.054
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89
SBD026 with DISTILLER Insert offset folio 89 here 45779.055
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90
SBD026 with DISTILLER Insert offset folio 90 here 45779.056
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91
SBD026 with DISTILLER Insert offset folio 91 here 45779.057
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92
SBD026 with DISTILLER Insert offset folio 92 here 45779.058
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93
SBD026 with DISTILLER Insert offset folio 93 here 45779.059
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94
SBD026 with DISTILLER Insert offset folio 94 here 45779.060
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95
SBD026 with DISTILLER Insert offset folio 95 here 45779.061
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96
SBD026 with DISTILLER Insert offset folio 96 here 45779.062
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97
SBD026 with DISTILLER Insert offset folio 97 here 45779.063
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98
SBD026 with DISTILLER Insert offset folio 98 here 45779.064
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99
SBD026 with DISTILLER Insert offset folio 99 here 45779.065
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100
Insert offset folio 100 here 45779.066
SBD026 with DISTILLER
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101
Insert offset folio 101 here 45779.067
SBD026 with DISTILLER
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102
Insert offset folio 102 here 45779.068
SBD026 with DISTILLER
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103
Insert offset folio 103 here 45779.069
SBD026 with DISTILLER
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104
Insert offset folio 104 here 45779.070
SBD026 with DISTILLER
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105
Insert offset folio 105 here 45779.071
SBD026 with DISTILLER
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106
Insert offset folio 106 here 45779.072
SBD026 with DISTILLER
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107
Insert offset folio 107 here 45779.073
SBD026 with DISTILLER
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108
Insert offset folio 108 here 45779.074
SBD026 with DISTILLER
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109
Insert offset folio 109 here 45779.075
SBD026 with DISTILLER
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110
Insert offset folio 110 here 45779.076
SBD026 with DISTILLER
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111
Æ
Insert offset folio 111 here 45779.077
SBD026 with DISTILLER
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File and source
- File
- CHRG-117hhrg45779.pdf
- Size
- 93,502,517 bytes
- SHA-256
- f27ff3ce7a75794969def5cd90260bc4bad9dc53085d144c80c9d61f2788c9a5
- Our copy
- CHRG-117hhrg45779.pdf
- Original
- www.govinfo.gov