Transcripts For CSPAN Small Business Assn. Administrator Tes

The Small Business committee will come to order. Before i give my Opening Statement in regard to today subject, i do want to express all of our concerns about the devastation thats taking place in kentucky. The flooding has been just horrible to see. We know these Natural Disasters are very, very hard on a community, and our prayers are with those that been victimized by the flooding. And we recognize there are many needs to how we respond as a nation to deal with this Natural Disaster. And i know our country will do everything we can to see the resiliency of the people in kentucky. I say that particularly knowing about our Ranking Member, senator paul, represents the great state of kentucky. And our thoughts are with them. I also recognize the Small Business relief is only one part of that recovery. I commend the sbas and asked that yesterday relief to Small Businesses, nonprofits, homeowners and renters in the region. Small Business Committee will work with the sba to get this information out to the effective areas to help the people of southeastern kentucky get back on their feet. I want to thank senator paul for his cooperation in arranging for todays hearing. Its been a challenge on scheduling. Thank you, senator ernst for stepping up and being willing to take on the responsibilities. I know senator paul had a conflict and we certainly understand that, but he cooperated with us and senator ernst is available and i thank her for being able to take on this position today. And let me thank patrick kelley, the associate Administrator Office of Capital Access and Small Business administration for being here today and being willing to help us understand we are in regards to the eidl program. One of the most important functions of this committee is oversight. Yes, we want to pass the right policies and make sure that they are adequately drafted and funded, that you have the resources and the direction you need. But then its our responsibility to make sure these programs are being carried out as effectively as possible. So we look at todays hearing, which is oversight the Economic Injury Disaster Loan Program during covid, and recognize that this was an incredible undertaking. On april 24, 2020, 50 billion of subsidy was provided for the Economic Injury Disaster Loan Program under covid. On may 7, the Small Business administration announced the program and imposed when their 50,000 cap even cap even though this program under law allows for loans up to 2 million. The Trump Administration decided to limit that to 150,000 cap. We were not happy about that, and members of this committee as well as many members of the senate expressed our concern that 150,000 cap was arbitrary, and we wanted to see that implemented at the full Amount Congress authorized at 2 million. By july 20, the sba had entered into 3. 1 million loans for 169 billion. Let me repeat that again, 3. 1 million loans by july 201000000 loans by july 20. April 21, under the Biden Administration april 21 of this year, Biden Administration increased the cap from 150,000, the 500,000, and then in september increased it to the full 2 million. We were were all very pleased about that. And we were very pleased that we were able to increase the total amount available to the 2 million limit. The Biden Administration deserves a high marks for implementing the congressional intent at 2 million. The sba administer a program and now theres almost 4 million loans that have been issued under the covid eidl program. Thats quite a record. Over the past two years the sba has transformed the relatively small and unknown program intended to supporting your deeds following Natural Disasters into one of the federal governments primary tool to combat the Economic Impact of covid19 pandemic. 3. 9 billion covid eidl loans the sba has issued since april 2020, more than all the loans that have been issued during the entire history of the Disaster Loan Program. Just tells you how much more additional responsibilities the sba took over and have delivered on those programs. The eidl loan program is a source of hope for Small Businesses. Its the critical capital they need during a pandemic, provides a fixed rate low interest longterm capital that is absolutely essential for Small Businesses. They dont have the resiliency. This gives them the hope of being able to stay in business. In december of last year, december 31, no new applications were allowed under law, and the sba basically closed the process for new applications. Heres where the confusion and frustration comes down. On the winding down of the program. And heres where we are really baffled as to the weight and information we received from the sba way first of april 28 of this year, the sba said that funding was exhausted. On may 6, they said the deadline for Loan Modifications appeals and denials for reconsideration. Yet on april 11, we were informed by the sba that it had 1. 3 billion of transfer funds from the American Rescue plan, 1. 2 billion available in regards to canceled loans. So we didnt understand that they gave the explanation on april 28 that the sba that funding had been exhausted. They set a date of april 16 for excuse me, sent out another notice on april 16 that all workable files have been processed. So what im confused about, we have a large number of Small Business owners that are in the process with her sba eidl loan receiving information from the sba that theyve exhausted funding, that they are all workable files have been made and yet they hadnt been notified in regards to their individual cases. On june 22, applications couldnt be processed because of lack of funds and other statement made by the sba. Yet in june staff called with minister kelly we were informed that 800 billion were made made in the eidl program. Theres frustration and anger out there. We have 41,000 applicants applicants who have never received terminations. We have 125 applicants that of an approved that havent received their funds. I can tell you, i talked to my state workers all the time handle the calls from the Small Business community, and they are my frontline workers. And there are Small Business owners are really frustrated. They have gotten insufficient information from the sba. They believe their applications have never been litigated, never been completed, and they want to know why. I want a straight answer. As i said earlier the Small Business community is in the Growth Engine of our country. Its were innovation takes place. Small Business Owners dont have the same deep pockets and resiliency. They need to know what is going on with their applications. If they are in eligible then declared ineligible. Let them handle it or take an appeal but dont leave them in the lurch pics i hope that the string will have an opportunity to get answers to those questions and that we can have the completion of the eidl loant represents the values of our committees and policy that we develop and values of the program that are so important to Small Businesses. With that levy turned over to senator ernst. Thank you, senator cardin, and i also want to express my sympathies to those families and those communities that were impacted in kentucky. I think all of us are watching and praying for the best, but understanding this is a very difficult time for them. So thank you for mentioning that. And thank you as well, chairman cardin for holding this important hearing to discuss the sbas lindy and Disaster Assistance program. The four we move forward any further on this i cant overstate how harmful inflation has been for Small Businesses in iowa and throughout the nation. As part of my 99 county tour across iowa i stick with those that speak with a Small Business owners are continuing to tell me how recordsetting levels of inflation have created a significant financial burden across their value chains. The most recent Consumer Price index report shows that prices increased by 9. 1 over the last 12 months. The largest yearoveryear increase in over 40 years. Over the same time the Producer Price index increased by 11. 3 , indicating that most Small Businesses are experiencing increasingly diminished margins, impacting their ability to provide paychecks to working families, especially those that reside in my rural communities. Small businesses are the backbone of the american economy, and despite being told otherwise, Small Business owners know the impact of inflation on their businesses, not transitory and it is proving that could be short term. This inflation crisis has created a valueadded tax that is deeply impacted their economic security. Which is why it is deeply troubling to me that the democrats in Congress Plan to move forward with a reckless partisan tax and spending spree focus on raising taxes to pay for electric vehicles for the rich, hamstring our manufacturers, and all sorts f other pet projects of far left interest groups. The covid Economic Injury Disaster Loan Program, or eidl, provided support for Small Businesses facing Financial Hardship as a result of the covid19 pandemic here as the rush of pandemic aid went out the door, bad actors took advantage of the american taxpayers generosity. We now know fraudsters built millions and millions of sba and fraudulent loans from this program. But as it transitions from supporting Small Businesses to servicing loans, i am concerned about the sbas lack of attentiveness to ensuring Law Enforcement has everything it needs to pursue those who have defrauded the taxpayers. Wrongfully awarded dollars must be returned to the program and return to the american taxpayer. Timely action is needed in order to do so. In a similar vein, the sba has unlawfully approved nearly 100 million in forgivable ppp loads to planned parenthood affiliates. To make matters worse, the sba forgave 34 of these loans, despite it being a clear violation of the affiliation role. Yet to date the sba has not launched an investigation into this issue or make any effort to recoup the ineligible funds. It is critically important to protect the integrity of the Capital Access programs that are intended to provide support to Small Businesses from fraud and ineligible distribution. Mr. Kelly, thank you for appearing before us today. I look forward to working together in the future to ensure that taxpayer money is protected from fraud and that bad actors are held accountable. Thank you. Thank you, senator cardin. Thank you, very much for your, again, taking on the responsibility today. I want to ask consent to put in the record letters that were written to administrator guzman on may 6, 2022, two, from senator van hollen and myself, and july 15, 2022, from a group of senators headed by senator cornyn and myself in regards to our concerns as to why certain information was given to our constituents and when we were told there was money available. Administrator kelley, thank you again for being here. As i pointed out earlier we appreciate your leadership on this program, the office of Capital Access is critically important to Small Businesses. The role of that committee has quadrupled, maybe more than that, since covid19 so we know that you stood up and agency that was meant for certain purpose that was really tested to its limit and we thank you very much for your service and thank you for being here and you may proceed. Great. Thank you, chairman cardin. Thank you, senator ernst. I, too, want to extend my sympathies to the commonwealth of kentucky. Obviously 35 families to date no longer have a loved one and there are hundreds of others have not been sent there as chairman cardin mentioned in his Opening Statement, President Biden declared a disaster area to five counties and obviously we will work to expand that if necessary, and obviously work to help all of the survivors. On behalf of the administrator guzman, im happy to be here with the committee today to answer any and all questions. My name is patrick kelley. I am the associate administrator of the office of Capital Access at the sba and i have been since arch first of 2021. First, i would like to echo the chairmans comment regarding the work of the Civil Servants at the sba. It truly is a privilege for me to have a Second Opportunity to work with people during a time when so much was asked of them for the last 24 months. On balance these are some of the best people ive ever worked with across the private sector and Public Sector, and i will continue to enjoy the opportunity to serve the American People. We oversee a bunch of different carriers act and economic aid act programs, and covid eidl certainly is a focused today. That particular program as was mentioned by chairman cardin serviced about 4 million Small Businesses, and roughly 400 billion in financing. The program also 72 of those loans went to Small Businesses with ten or fewer employees. 50 of the recipients were not able to access the ppp programs i think one of the Great Success stories about this, what i characterize is uber credit out of it what else were program, its a success getting to all corners of our society, and in addition to the covid eidl program just to provide an update for you and the members, we are obviously working on forgiveness in the ppp program. We are currently parking 10. 4 million loans out of the 11. 4 million forgiven, and we expect that the remaining 1 million will seek forgiveness this fall as the april, may, june 2021 ppp loans hit their ten month mark and begin to make payments. We have provided direct forgiveness to assist 1500 lenders, which is amounted to 2 million loans being serviced by the sba on behalf of lenders and borrowers to assist with that forgiveness. That particular program was also coincided with obviously the Restaurant Revitalization Program. I do want to thank the chairman said leadership on the restaurant program. We worked diligently to roll them out with members of this committee, staff, as well as the house and the 101,000 businesses were supported for 20. 8 6 billion. The last thing i will add before we get to the questions, which im looking forward to, hopefully helping folks understand what were trying to accomplish, is just to provide some context to the breadth of what the sba was asked to do. The office of advocacy at the sba estimated that in 2021, total for Small Business and Mediumsized Enterprises receiving capital from any source, any private sector lender was 651 651 billi. In the covid eidl program in 2021 we put out 200 billion on top of the 167 billion that the chairman reference in 2020. So it is absolutely the case that the sba has played an outside role as administrator guzman has worked with this committee and the nation to provide. Thank you. Well, again thank you and i agree with your last statement, that the sba has played an outside role, no question about it. It stepped up during the pandemic, and i agree with you with Civil Servants, and i give our real thanks to the incredible amount of work that they put out to get, help out quickly both with the ppp b program and i loan program, the eidl advanced program and then later with a shuttered venue in the restaurant programs. It was an incredible effort, and it saved Small Businesses. They exist today that would not have but for the billy to get those programs out, and has a point out this is all bipartisan. The bills were developed bipartisan and this hearing in regards to how the eidl program is being wound down, there is bipartisan interest to see it done right. Some want to get the numbers right because we had like 3. 9 million loans that were given out. We have we think 41,000 people who are looking for determinations that are not yet been done. We have seen at times the sba say that these are unworkable. To our knowledge, those 41,000 Small Businesses have not been informed as to their status. So they are sitting out there hoping that theyre going to get a positive respons