Todays hearing on had committee of Small Business and entrepreneurship will come to order, and i want to thank everyone for joining us here today. I want to thank you both for being here though far away. And all the members for being here today. This is our first opportunity to hear from both of you about the enactment of the cares act in particular as it applies to Small Business. The cares act is landmark legislation. In less than 2 Weeks Congress passed the largest Economic Relief package in our nations history. And now after the passage of two further reforms the Paycheck Protection Program is the largest component of the Economic Relief enact by the cares act. Opthat point i just want to say a couple of things. First of all, it was the extraordinary work of many people, staff, of course worked tirelessly to make this possible. The partnership we had from both the sba and the treasury was extraordinary. Members on this committee, every single one participated. Obviously the leadership of the Ranking Member, senator cardin, senator shaheen, and if senator collins was not a member of the committee but was part of our task force and was really invaluable in helping craft a lot of this. I want the record to reflect we have invited senator collins to sit in todays hearing and participate and rightfully so because of her extraordinary contribution in many ways because of the foundation of ideas became law. A time for national ubty i hope youll take some hope in the fact that happened when it came to this. It would have been impossible without it. After we did that it was up to the administration, particularly secretary mnuchin has been extraordinarily accessible as every member thats been involved can say. Administrat administrator caransa has an incredible amount of work to do to execute the Paycheck Protection Program. Overall it has been in my opinion an extraordinary success. It is by far in my view, no disrespect towards anyone else, by far the most effective and most impactful portion of the cares act to date. And i think history will look back at it as an example what government can do in a time of crisis to help our country. And if theres any dispute about that i want everyone to ask themselves what would our economy look like today had there not been a Paycheck Protection Program. It saved millions of jobs and Small Businesses during the single most uncertain Economic Situation thats existed in the lifetime of anyone in this room and since the great depression. It took a new approach. The cares as the cares act was being negotiated businesses at the time was faced with the prospect of laying off workers. Because the government told them you cant operate, you cant open your doors, you cant take customers, you cant do business. It is in some respects the equivalent of a taking in which government and the public interests intervened and denied people the right to do something. And we viewed the ppp as what government does when it uses its power to do that and that is help and compensate those damaged by it. Those with no work to be done pure economic logic told these people in Small Business the most economical thing to do was layoff more workers. But we knew the most efficient economic outcome was not the best outcome for the common good. In fact, would have been catastrophic for our country. So during the negotiation of the cares act i for example learned about an entire family a family that ive known for many years that within a 72hour period the father was laid off, then the mother was laid off, then their two adult kids were laid off, then the spouses of those two adult kids were laid off. In 72 hours, massive, massive calamity for that family. You can imagine the uncertainty around all this is devastating. The situation, by the way, was also bad for Small Business. Workers are not disposable inputs that can be discarded during tough times. They are integral of all business but especially Small Business. I have heard as im sure many of our members have of the personal anguish many of them felt having to layoff employees many of whom had worked for them for decades. These are people they knew. They knew their families, they knew their children, they had watched those children grow up and they knew how much they depended on these jobs to make ends meet. What Small Business needed was not cheaper debt they could take out against their future earnings. They needed a real lifeline. And what the economy needed was not just only government checks but it needed to lessen the pain of the layoffs. It needed to reduce the layoffs alt together and it needed i think as much as anything else to preserve the connected tissue of a well running economy which at its core is attach to dignified work. Instead of a traditional loan Small Businesses would have whatever cost they spent on the survival of their business forgiven as long as they kept their workers on payroll. As nationwide lock downs shutdown the economy we who worked on this, every member of this committee and those outside of it have two main priorities. The size of it, we want today make sure it reached enough businesses and people, and we needed to do it fast. This is not something we had weeks or months to work on. And im proud that both of those goals were met. The scope of the lock down meant we needed sizable relief. Initially the appropriated funds for this program are now at 670 billion. It is a lot of money. Its largen than any other program enacted by the cares act. Its largen than the 2008 stimulus bill. By some estimates its the Largest Program since the new deal. But the speed of the lock down also meant we needed to get funds to Small Businesses quickly. The cares act just to walk everybody through this was signed into law on march 27th. Exactly seven days later thanks to extraordinary and tireless work which is easy to criticize for some who were watching outside but were talking about people that were there overnight, 5 00, 6 00, 7 00 in the morning, wearily enough time to shower and change their clothes, tireless work thanks to secretary mnuchin and people working under administrator caranza and herself. Small businesses received ppp funds before millions of americans received tax refunds. Before people started receiving unemployment checks, and other lending programs run through the Federal Reserve only just now beginning to operate. Thats not a criticism of those things. That is just to describe the extraordinary effort it took to stand up a program that did want exist in just seven days. When this Program Began on april 3rd no one on planet earth had ever made a ppp loan or had ever processed one or applied for that one. And in seven days that began. Some companies who should not have received the loans received them. We read all about it. They represent the minuscule percentage of the overall program, however, and most have since returned them. Computer systems were strained under unprecedented levels of activity. Guidance released to solve problems created unanticipated problems. But again i want to be clear the bumps in the road are the price to pay unfortunately for a program in hindsight is one of the most successful programs government has ever done to rescue an economy. Economists and financial forecasters predicted last month may 2020, this is what everyone expected, 8 million americans would lose their jobs in may. They predicted unemployment would be 20 . Some even speculated it might end up surpassing the great depressions 24 rate. What would that have looked like and given Everything Else going on in the world and country right now . Well, i can tell you an an economic point it would have bankrupted the central promise of Economic Opportunity in our nation. Without ppps temporary lifeline tens of millions of americans would have been permanently separated from their livelihoods and stripped for long periods of time from the opportunity of dignified work. Many would quickly be condemned to poverty, some over generations. Parent would be up able to provide for their families tied indefinitely to government assistance. Without ppp we would have faced the extinction of Small Business as we know it. Countless blocks of urban and suburb suburban america would have been hollowed out. Its tough out there. Theres still a lot of suffering, economic pain and of course the pane related to this terrible disease. But the most catastrophic visions did not come to pass. Instead to the surprise of forecasters and everyone last month 2. 5 million americans got their jobs back. The over 500 billion in Paycheck Protection Programs dispersed through april and may enabled businesses to keep or quickly rehire workers as conditions allowed. To date 4. 5 million american businesses have received loans equal to over 500 billion, and this well know more when the forgiveness comes in, but this is equal to 50 million jobs. The average loan size is now down to 112,000, an amount based on Eligibility Criteria means the average business receiving a ppp loan would be one with ten employees. A recent survey by the National Federation of independent businesses noted that 777 of surveyed Small Business owners had applied for a ppp loan and of that 77 93 had received funding. As of june 6th there are currently 424 Community DevelopmentFinancial Institutions and minority depository institutions now in the program. They have accounted for more than 190,000 loans valued at 15. 8 billion. And the sba and treasury have also set aside 10 billion in ppp funds to continue to lend. This is the record of a successful program. I want to thank all the members of the senate and our partners of the house and of course the president for not just passing this but working to implement it. I do want to comment on the economic loan program. Offering direct lending and grants to eligible entities suffering injury due to the pandemic. To date the sba has approved more than 1. 13 million of these emergency loans totaling about 79 almost 80 billion, and 3. 9 million emergency advances. The program has realized numerous challenges both previously and responding to regional disasters and of course under this current one. Ipdrafting the cares act i raise concerns with the deficiencies of the existing program as a whole which only accounts of roughly 2 of the loans made by sba. In particular i was concerned it would be challenging to handle a disaster of this extraordinary magnitude. As such of the concept of using traditional lenders instead of direct government loans to ensure capital is reaching the hands of Small Businesses as much as possible is one of it reasons that gave rise to ppp. I kmepd the agency for standing up the idle program nationwide to respond to an unprecedented volume of applications within a short period of time. Today unfortunately we see similar and new idle challenges for borrowers including long processing and dispersement time lines and communication issues. As businesses are also relying on assistance through idle to rebuild we look forward to the agency addressing the current idle challenges and how grass, how we on this side can work to support the agency and making improvements to this program. Today is an oversight hearing. There are many oilgss that myself and members of this committee would like to raise to help keep this Program Running smoothly especially as some businesses approach filing for loan forgiveness as early as this month. But we should begin by putting these issues in perspective and recognizing the choices that congress and the administration had make in order to make this program succeed. Now recognize the Ranking Member senator cardin for his opening statement. Mr. Chairman, first, thank you for convening this hearing but thank you for your leadership in the role this committee has played in a nonpartisan manner in order to help the Small Businesses of america. This has been a proud moment of our senate careers in working together to develop three very, very important programs to help Small Businesses during covid19. We did that in a way that put the interests of our nation first and interests of Small Business and their workers. Secretary mnuchin, welcome to the committee. I personally want to thank you for your availability. You have been always available to talk with us to try to work out how this program could be administered in a seamless way, and i thank you for your personal leadership to make these programs wushlg ork as efe as we can through the administration and through congress with the need for legislative changes. Please accept our appreciation for the incredible work of your agency. As senator rubio pointed out you stood up a program literally overnight that has provided 4. 5 million loans over 510 billion, an incredible effort and we thank you very much for the hard work of the members of your agency. This committee helped craft and i was proud to be part of a drafting committee consisting of four senators. Senator rubio. Senator collins is with us today. Senator shaheen and myself have put together and listened to all the members of this committee in the senate and stood all three programs. The ppp program as well as the Grant Program as well as the loan forgiveness program. When we initially created the ppp program in march we thought our economy would be performing at a normal level than it is today. For Small Businesses to suspend their loans it seemed reasonable. As communities began the process of reopening its now clear that many Small Businesses will not be up and running at the end of the 8week period which for many as chairman rubio has pointed out will occur this month. I was proud to see the senate act responsibly last week passing bipartisan length slagz that gives businesses the discretion to use those loans over a 24week period rather than the 8week period. Ppp is working for many employers, and the may monthly job report released by the Labor Department last friday is proof of the 2. 5 million jobs added back to the American Economy last month. More than 1. 4 million were jobs of employers in the Food Service Industry many of whom secured loans through our programs. However, the depth of the economic challenge facing this country, the National Bureau of Economic Research announced this week that the United States economy is in a recession and that the Unemployment Rate remains at a historic high level 13. 3 , a level we have not seen since the great depression. For minorities the Unemployment Rates are even much higher. While the ppp success is a laudable accomplishment, there have been challenges in the program that have come into sharper focus given the massive protests our nation has witnessed over the past two weeks. The protests sparked by the death of george floyd has raised the awareness of the despairing Public Health and economic consequences of the covid19 pandemic on communities of color, black americans in particular. Civil rights are still the Unfinished Business in america. More than 50 years ago the commission created by president Linden Johnson warned of the negative consequences of continued inequality. That was 50 years ago. The Commission Report that america was headed towards two societies, one black and one white, separate and unequal. Mr. Chairman, theres no question that our country has made strides in the decades since the Current Commission released its report, but there remains an economic divide between black and white america. In 1968 a typical middle class black family has less than one 10th of the wealth of a typical middle class white family. Its the same today, and it exists at every level of education attainment. A 2018 report found there are no actions that black americans can take unilaterally that will have much of an effect on reducing the racial wealth gap. For black, Small Business owners and other underserved entrepreneurs the wealth gap is made worse by the difficulty in getting lending. Minority Business Owners are two to three times more likely to be denied loans than nonminority Business Owners and are more likely to receive less funding and pay higher Interest Rates on the loans they do receive. It is with this inequality in mind senator shaheen and i drafted language in the cares act instructing the sba and treasury to issue guidance in finance institutions participating in the ppp program to prioritize loans from underserved Small Businesses. We wanted to prevent history from repeating itself because we knew during the 2008 financial crisis Small Business lending to minority owned businesses fell druimateicall