SBA Administrator Kelly Loeffler testifies in House Appropriations oversight hearing

[0:00] and identify consensus. We need to work together to ensure small businesses have the tools they [0:05] need to be competitive in today's economy. Administrator Loeffler, that's why your testimony [0:11] today is so important. It serves as a guide to help us understand SBA's priorities and policies. [0:18] Small businesses are the backbone of our economy. This committee takes seriously its responsibility [0:24] to ensure SBA has the resources it needs to support them while also ensuring those resources are used [0:31] as Congress intended. I look forward to today's discussion Mr. Chairman and with that I yield back. [0:36] I thank the chairman for his remarks and I now recognize Ranking Member Hoyer for his opening statement. [0:43] Madam Administrator, welcome. Glad to have you with us. As we all know, small businesses are the heart [0:50] and soul of America's economy. More than 36 million people are employed in excess of 62 million American [1:02] workers who work for small businesses. That's 46 percent of our workforce. These small businesses [1:08] and their employees deserve better than they're getting. The administration's mantra continues to be [1:16] you're on your own. That's certainly been the SBA's approach over the past year and a half. A proposed [1:22] 67 percent cut that would stifle assistance and resources that help small businesses grow. The [1:30] elimination of programs that help women and minority business owners who face extra hurdles to starting [1:36] and growing their businesses, which I'm sure you know a lot about. Withholding disaster loans from [1:44] states because of politics such as occurred in western Maryland. New fees imposed on small businesses and [1:50] limits on borrowing attempts to shrink the agency underdoze and the limit and limit the good it can [1:57] do for so many millions of our people and eliminating 15 out of 16 entrepreneurial development programs. [2:06] Let's be clear. The SBA's role isn't to give handouts. It's to reach a hand out, a helping hand to those [2:17] who need some extra support while they do the hard work of creating jobs. President Trump has called himself, [2:24] quote, the greatest jobs president God ever created. Excuse me, God. He can't make that frankly absurd [2:33] claim if his SBA continues down the path it has been on. Administrator Loeffler, you'll have a clarity, [2:43] I'm sure, for our subcommittee today why under your leadership the SBA is making it harder for Americans to [2:50] start businesses, grow businesses and hire more American workers. I hope you're prepared to explain [2:58] why the president, you and the president continue to tell American workers and small businesses owners [3:05] you're on your own. Especially in this economy where inflation and higher costs driven by the [3:11] president's war on choice in Iran, war of choice in Iran and causing so many small businesses and working [3:18] families to struggle. I heard just yesterday from a small business owner in La Plata, Maryland in my [3:24] district that sales, rents and repairs musical equipment for families and schools. Their business [3:37] is struggling because of the high costs resulting from the president's illegal tariffs. Its owner reached [3:44] out to me in advance of today's hearing. He wrote, and I quote, unlike large national chains, small businesses [3:51] have very limited ability to absorb these rising costs. As prices increase, fewer families can afford to [3:58] participate in school music programs and school music departments face greater challenges stretching [4:04] already tight budgets. I hope your subcommittee, he meant talking to me, will consider the impact these [4:12] tariffs have on local businesses like ours and schools and families we serve. Small businesses like the [4:18] one I just spoke of deserve our help and they deserve answers. Instead of telling them you're on your own, [4:25] we ought to be doing everything we can to help them make it in America. I look forward to hearing [4:34] madam your testimony and your observations and I'll ask some questions about why we have less resources than the [4:44] Congress believed were necessary. Thank you, Mr. Chairman. I keep giving back time. That's a problem. [4:53] Oh no, you're doing great. Thank you, Mr. Hoyer. I now recognize the ranking member of the full [4:57] committee, Ranking Member DeLauro for her opening remarks. Thank you very much, Mr. Chairman and Ranking [5:03] Member Hoyer. Administrator Loeffler, welcome. Whether the Trump administration acknowledges it or not, [5:10] there was a cost of living crisis confronting the American people. Food, housing, health care, [5:15] gasoline. The price of just about everything is going up. The economic outlook remains uncertain. [5:22] Jobs are fewer and far between. American families are clamoring for relief. But this administration [5:27] does not have any plan to provide it. The only proposal they have put forward is to push for the [5:32] largest Pentagon budget in history, while reducing investments in just about every program that supports [5:39] the American people here at home. This is especially true of the Small Business Administration. [5:45] Rather than provide small business owners, budding entrepreneurs, innovators, and job creators [5:51] throughout our communities with the support they need to thrive, the Trump administration has proposed [5:57] slashing the SBA budget by two-thirds. They have proposed to eliminate 15 of the 16 entrepreneurial [6:04] development programs, many of which have strong bipartisan support. Across the country, small [6:11] businesses are struggling. We have seen a stark increase in small business bankruptcies, more than a 50% [6:17] rise in filings during the first half of 2026 compared to the same period last year. When President [6:25] Trump launched his ill-fated trade war, it was small businesses who bore the brunt of it. Many large [6:31] importers were able to absorb the shock, passing price hikes on to consumers, stockpiling inputs in [6:37] advance, or working their Washington connections to secure a carve-out for their product from the Trump [6:43] administration. For small businesses, those were not available options. When the Supreme Court struck [6:50] down these tariffs as an illegal overreach by the Trump administration, there was a moment of hope. [6:56] Perhaps now these small businesses who had suffered because of the President's trade war [7:02] could begin to recoup some of their losses, but that hope has quickly faded. Just as large corporations [7:09] were better able to withstand the turbulence caused by the President's tariffs, so too are they better [7:14] positioned to extract their refunds from the federal government. The process in place to administer these [7:20] payouts is a bureaucratic morass, favoring big businesses whose savvy lobbyists and seasoned lawyers [7:28] can navigate the administrative obstacle course that has been set up. Meanwhile, comparatively, [7:35] little money has been paid back to small businesses. The local brick and mortar shops who do not have K [7:41] street contacts or white shoe law firms on retainer. Inflation, economic uncertainty, uneven tariff relief, [7:51] all of these factors contribute to an environment in which it is increasingly difficult for small [7:56] businesses to thrive. That is all the more reason to at minimum maintain our investments in initiatives [8:03] that support our small businesses. But that is not what the administration is doing. They are proposing [8:11] substantial cuts to numerous programs that help train entrepreneurs, make capital more accessible for [8:17] small businesses, and open up investment opportunities these leaders would not otherwise have access to. [8:25] It is disparities like these that make so many people feel like the rules of the game are rigged [8:31] against them. That the only path to success runs through family connections, personal favors, or both. [8:37] But that is not healthy competition. That is not a fair market, and that is not the American dream. [8:46] Anyone with the drive and dedication to begin their own business ought to be able to, [8:50] and we should encourage them and support them in their endeavor, not put up barriers or pull the rug out [8:56] from under them. I'm eager to hear your testimony this afternoon, Administrator. I appreciate your joining [9:01] with us. I thank you, and I yield back. Thank you, Madam Chair. Today, we welcome the testimony [9:11] of the Honorable Kelly Loeffler, Administrator of the U.S. Small Business Administration. [9:15] Administrator Loeffler, without objection, your full written testimony will be entered into the record. [9:21] With that in mind, we ask you to please summarize your opening statement in five minutes. [9:26] Chairman Joyce, Ranking Member Hoyer, and members of the subcommittee, thank you for the opportunity to [9:32] testify before you today. As a former small business owner and financial services executive, [9:39] I committed to leading the U.S. Small Business Administration with the discipline of a top-tier [9:44] financial institution grounded in data integrity, efficiency, accountability, transparency, and measurable [9:51] results. The fiscal 2027 budget reflects our commitment to restoring trust in an agency that rivals [9:59] the largest banks in America for small business lending. That's why President Trump often calls [10:05] it the biggest bank in America. He knows that small business is big business. Under the Biden [10:11] administration, the SBA fell far short of that standard. Core financial systems were unreliable. [10:18] Risk management processes were fragmented. Fraud flourished. And auditors repeatedly found that the [10:25] agency lacked basic internal financial controls. Customer service suffered and oversight and [10:31] accountability were nonexistent, even as spending and headcount reached record levels. Program integrity [10:38] was absent from our lending programs where underwriting standards were dismantled, contributing to an [10:44] estimated $2.2 billion in losses that taxpayers will bear. SBA's grant programs lacked accountability, [10:52] managing hundreds of millions of dollars of funds through emails and spreadsheets, instead of through [10:59] our financial budgeting system. Fraud went unchecked, with the Inspector General estimating that SBA disbursed [11:05] over $200 billion in potentially fraudulent COVID-era loans. These were growing systemic failures. Technology and [11:15] cyber security were not improved despite spending hundreds of millions of dollars. The agency leased [11:23] offices with virtually no staff while retaining thousands of employees tied to temporary COVID-era [11:29] programs long after those programs ended. No credible financial institution could function this way. And [11:36] certainly, no small business would survive such wasteful spending. Simply put, this agency had it operated in the [11:45] private sector. It would have failed. Therefore, we moved quickly to impose fiscal order and accountability. We [11:52] implemented internal controls, a fraud risk framework, and restored compliance with the law. We ended [11:59] misguided policies and addressed underwriting weaknesses to ensure that our loan programs would again operate [12:06] at no cost to taxpayers. We began modernizing failing technology systems. We reduced excessive staffing, [12:13] reorganized around centers of excellence, and eliminated billions in wasteful of duplicative contract [12:21] spending. We assembled a leadership team built to rival the very best of the private sector, drawing on [12:28] decades of C-suite experience, technology, and financial services experience. The culture has shifted from [12:36] unchecked expansion to disciplined execution for small businesses and taxpayers. That means we've [12:43] reinstated prudent underwriting standards to stop the Biden-era losses, strengthen the disaster loan [12:49] program after the last administration allowed it to run out of funds, and we're clearing a backlog of [12:56] roughly 340 million dollars in undisbursed grants that by law should have already been awarded. We restored the [13:05] mission of the agency to support small businesses and economic growth. We've demonstrated that discipline [13:11] delivers results. In fiscal 2025, the SBA approved 45 billion dollars in 7A and 504 lending, which was a record, [13:23] and supported another 53 billion in total portfolio value through the small business investment company [13:29] program. But unlike the prior administration, we are not chasing headline numbers. We're targeting capital where [13:36] it strengthens the economy while maintaining a cost neutral standard. That same discipline drives our [13:42] fiscal 2027 budget and a well managed agency that should cost less and deliver more. We have cut [13:51] non-essential contracts, returned staffing to pre-pandemic levels, and generated significant cost savings [13:58] while improving performance. It also means asking harder questions about programs where outcomes cannot be [14:05] measured. No serious institution continues funding efforts without measurable accountability. These reforms are [14:13] restoring SBA's capability and relevance. With record business formation, record exports, accelerated job [14:22] creation, and renewed domestic manufacturing, we can now deploy capital effectively to help the nation's 36 [14:30] million small businesses seize the growing opportunity under President Trump's America first economy. Our responsibility is [14:39] to deliver what any stakeholder would expect from a credible financial institution, efficiency, transparency, and results. [14:47] That is today's SBA. Disciplined, accountable, and firmly focused on our mission on behalf of taxpayers. Thank you and I look forward to your questions. [14:57] Thank you, Administrator Loeffler, and I'll recognize myself for questions. Administrator, I appreciate SBA's continued support for capital access in rural and underserved communities. I'd like to understand your view on the health of the 7A loan portfolio's subsidy rate. Given the loan volume projected in SBA's FY27 budget, are there any signs of stress in the portfolio we should be watching? [15:21] And how is SBA balancing growth in Lending with prudent risk management? [15:26] Chairman, thank you for the question. And I fully agree the importance of rural lending is not lost on me as someone that was raised on a now a five generation farm in a small business that my father started the year I was born. [15:41] I understand the need for access to capital is difficult locally when you're depending on small community banks. And that was particularly a problem during the Biden administration. [15:51] where we lost almost 500 lenders from participating in the SBA program because they lost confidence in the lending guardrails around the 7 program under a framework known as do what you do. [16:06] The Biden administration lowered the underwriting standards to a level that began almost immediately causing early problems in the portfolio from delinquencies all the way to defaults. [16:18] In some cases, our smallest loan programs now are suffering from a quadrupled default ratio of 5.11% up from 1.32%. [16:28] Now, what does it do when banks lose confidence in the SBA's underwriting standards? They pull back from lending. [16:34] That means rural communities do not have the access to needed capital. We were able to right that ship as soon as we came in. [16:41] Make no mistake, the most dangerous thing that the Biden administration did to the SBA was weaken our lending standards and endanger those loans to small businesses. [16:50] We were able to correct that lending paradigm, shift it back to conservative underwriting, was still able to put out record lending, 45 billion in total, and a record 7 billion to rural America. [17:04] So you have my commitment that we'll continue to focus on it. And we've just established the Office of Rural Affairs to focus more closely on delivering that much needed capital. [17:15] Ohio has a significant base of small manufacturers rely on the SBA's 504 loan program for equipment and facility financing. [17:23] Would you tell the committee how a loan volume in that program compares to demand we're seeing from the manufacturers trying to reshore or expand domestic production? [17:31] Chairman, thank you for that question. This is a really important question in light of President Trump's agenda to reshore, re-industrialize this nation after 50 years of sending our manufacturing overseas and telling Americans that their jobs had gone to China or Mexico. [17:48] I've walked factory floors in Ohio. I was at Republic Wire, a great example of a small business that is benefiting from our 504 program. [17:58] It's growing, and we've prioritized growth in that program because of the need for more manufacturing in America. Republic Wire is one of the leading copper wire manufacturers. [18:09] They're an incredible source of creating a skilled workforce. They've benefited tremendously, not just from the 504 program, but from the working family tax cuts that I'm grateful to congressional Republicans for passing, [18:21] because he emphasized to me that every dollar that he has saved in taxes, he plows back into his manufacturing facilities that he is growing thanks to the 504 program. [18:30] We are going to make sure that that is not the best kept secret in the SBA's portfolio, and we continue to refine that program and evaluate ways to improve it. [18:39] On June 6th, the SBA staff informed the committee of plans for an agency-wide reorganization. This is a significant undertaking, impacts the FY26 funding that was enacted earlier this year. [18:51] Since 608 was enacted as part of FY26 appropriation bills, requires agencies to consult with the committee on significant reprogramming and reorganization requests. [19:01] SBA's reorganization is pretty significant. Why didn't SBA work with the committee on this reorganization plan? [19:07] Chairman, thank you for that question, and please allow me to clarify. We did notify Congress of our intent to reorganize, and it represented the culmination of a year and a half of work of evaluating the agency staffing needs. [19:23] When I came in on day one, the agency had doubled in size and workforce from the prior administration, and so the other alarming trend was 90% of the staff was working from home. [19:37] In addition to what we had failing loan programs, failing grant programs, technology was falling over. There was a clear need to reorganize and put centers of excellence together. [19:47] Now, all of the technology employees are in one group, the technology budget group, so that all the budgetary items flow through to the CFO. All of the economists are with the CFO. [19:58] We're able to strengthen our internal controls by putting centers of excellence together and making sure everything flows through a common budget. This reorganization, before and after, resulted in the same number of employees because we had already managed the return of the agency to the pre-pandemic headcount levels that it needed. [20:19] So this reorganization is going to generate efficiencies for our agency and better performance for small businesses in our program delivery and program integrity. [20:28] Thank you. The chair now recognizes the ranking member Hoyer for any questions you may have. [20:32] Thank you very much. Madam Administrator, the Congress appropriated funding for SBA's Entrepreneurial Development Program, some of which you've talked about. [20:43] SBDC's Women Business Centers, SCORE Veterans Business Outreach Centers, and others. Is the SBA currently withholding, delaying, or otherwise failing to obligate any of that appropriated funding? [21:00] Ranking Member Hoyer, no. In fact, we are facilitating the release of those funds that under the Biden administration, as far back as 2021, were never provided, which were required statutorily to be sent out. [21:13] We're managing $340 million when we came in on day one that had never been disbursed, and we had to entirely fix the technology that supported it and the grants management program. [21:28] We've rebuilt that. We rebuilt it ahead of schedule, and now we've already got already $106.5 million of that backlog from the last administration out while getting most of what we've committed to getting out. [21:42] And I commit to you that we will follow the law and get the funding out as deemed appropriate by this body. [21:52] Have you received any directions from OMB at any time during the course of your administration at the SBA to not disperse funding that has been appropriated? [22:05] Well, we're working closely both internally and externally. So we work with OMB. We work with our internal political and career colleagues to ensure that the funds are going out as directed, as intended by Congress, and that they meet the law and that they meet the executive orders. [22:24] And so we have continued to look at meeting all those objectives and making sure that the programs, I think small businesses would be interested to know that some of the programs that were lined up for funding were things like the Binational Institute for Human Development, which supports illegal aliens in Guatemala and Mexico. [22:45] Excuse me, Madam. [22:46] I have limited time. [22:47] I have limited time and my question was pretty simple, which I don't think you've answered. And that is, have you been directed at any point in time since you have been the administrator of the SBA by OMB and Mr. Vote, not necessarily him personally, but OMB to not expend money that had been appropriated by Congress? [23:09] I have been directed to follow the law. And in doing so, I'm following the White House executive orders. I'm working internally. And we're making sure that everything that you have directed to get out gets out. But we are not going to blindly write blank checks like the last administration did to the Chinese Mutual Aid Society. [23:30] I know, let me claim my time because my time is short. You didn't answer the question. I didn't ask you whether you have done things that are prudent to do. I asked you, have you been directed by either Mr. Vote directly or OMB not to expend funds that were appropriated by the Congress of the United States? [23:53] You're avoiding. That's an either yes or no question. [23:56] I think I've been very clear that we are following all requirements to get. [24:00] No, that's not very clear. And I do not work directly on grant disbursements. And I'll be happy to have my team follow up with you to clarify. But all of the funding that we've committed to getting out, we are getting out. [24:11] Let me be clear. The Biden administration did not get their money out. $340 million. We are cleaning that up by applying not just the technology, but the framework to make sure. [24:22] I understand. [24:23] To make sure that the grant funding to the nonprofits that we fund are not blank checks to. [24:27] I understand. Please, Madam Administrator, my time is very limited and you are filibustering. Now, with all due respect, you're closing up cities around the country. Is that in terms of your reorganization to which the chairman referred? Is that accurate? [24:43] That's inaccurate. [24:44] Okay. What is accurate? [24:46] When I came in, we had 132 offices. I think people would be shocked to know that we had 132 offices, 29 of which had zero or one employee. [24:57] Okay. Are you closing offices? [24:59] Yes, we absolutely are. [25:00] Can you name me an office that you are closing that is in a blue city or blue district? One. [25:08] We don't classify them by blue cities. [25:11] Can you name one? [25:13] We are making several changes across the country. The president said he did consider the politics. [25:19] No, we're changing areas. [25:21] Can you name one, Madam Administrator? [25:24] I can name several. Yeah. I can tell you we have had to move out. [25:29] What are they? [25:30] Los Angeles, Portland, New York, Chicago, Atlanta. [25:34] No, that we're closed. Can you name me one that is scheduled to be closed that is not in a blue district? [25:43] Yeah, I'm sure I can. I'll be happy to get that district or city. We don't target them by blue or red. [25:51] No, I understand, but it would be. [25:53] Is there anyone working in that office? Let me give you an example. We had an office for four years that had no employees working in it. We didn't even have access. [25:59] We couldn't open it with the key. Matter of fact, it was closed if you had no people working in it. [26:04] We were paying. The taxpayers were paying for it. The taxpayers are now saving $32 million. [26:09] Madam Administrator, with all due respect, I've asked you two direct questions. [26:14] You have not answered either one of them. That's regrettable. I will send you some questions in writing. [26:20] I would hope you would answer them. Thank you very much. [26:22] Chair now recognizes Chairman Cole for any questions he may have in five minutes. [26:26] Thank you very much, Mr. Chairman. [26:28] Administrator Loeffler, as I stated in my opening statement, tribal participation in 8A programs is different from all other participants. [26:35] Changes or pauses in 8A programs have a lasting domino effect that impacts some of our most rural constituents. [26:43] To that point, I understand that there's a number of applications that have been at the SBA for over a year or some longer than that. [26:54] Given that, can you explain why the SBA is not aggressively processing applications for tribal and other native entities? [27:03] And as a second follow-up, where is the SBA at in resuming timely processing consistent with the statutory 90-day required? [27:11] Chairman, thank you for the question and the ability to clarify the changes we're making in the 8A program. [27:17] You're right. This is an important federal contracting program for our tribal communities. [27:24] And when we came in on day one, that program, we realized, had been being used by the Biden administration to expand political influence. [27:34] So they had added to what was about a 2,000 firm program, they added 2,100 firms to it, crowding out the ability of the tribal communities, the ANCs, the Native Hawaiian organizations, to be able to get access to that program. [27:51] So we've had to undertake a thorough audit. This program is 50 years old. It had never been audited in its 50-year history. [28:01] So we've undertaken that audit and then required that all 4,300 firms participating in it now supply three years of financials. [28:12] Almost 1,000 firms declined to provide that information and several just exited the program, recognizing that they didn't qualify to be in it. [28:22] About 736 left the program, but they had gotten contracts for $5.5 billion. [28:31] And so what we're doing is making the program work for the deserving entities and small businesses that compete for these federal contracts. [28:41] We continue to award the contracts. That is active. [28:46] We do about $45 billion a year through that program, which is, as you point out, an important program. [28:53] And we will continue to reform the program so that it's no longer based on race. [28:59] The last administration had done race-based admissions to the program and penalizing white business owners. [29:07] Those days are behind us, and we've also restored the statutory 5%, which had previously been up to 15 years. [29:15] Well, where are we in getting back to, number one, I laud the effort to try and clean up the program. [29:20] There are certainly problems, and you're to be commended for looking at them. [29:24] But there's an awful lot of legitimate businesses in here, too, that have been delayed, and the applications have been a long time. [29:33] So where are we at in trying to get through that backlog? [29:37] Chairman, we're very close. I failed to mention that we just ended the comment period yesterday for reform of this 50-year-old program that has never been touched. [29:50] This reform, you know, now that we're through the comment period, we'll be replying to the comments, and we will get the program. [30:00] If you could give us an estimate of where we're at in terms of, again, applications have been waiting an unusually long time. [30:08] We have about 180 letters to respond to, and I'm hopeful within the next couple of months we can get back to the- [30:15] Thank you. I was pleased to hear at a recent conference, SBA officials confirmed that tribal and native entity-owned participation in 8 program should not be impacted by the administration's EEI policies or recent regulatory proposals. [30:30] Again, given that position, are there plans for future rulemaking that would impact tribal and native-owned small businesses? [30:38] Chairman, what we're looking at right now is just restoring that program to level the playing field for all qualified small businesses. [30:45] And as you mentioned, we have issued assurances that the tribal community is one of the qualified applicants in that. [30:53] Separately, we have long had, for the last year and a half, been pursuing any examples of fraud. [31:00] And we will continue to make sure fraudulent actors are not coming into the 8 Federal Contracting Program. [31:08] We have shown examples from USAID bribery schemes. [31:13] So we will continue to pursue fraud in that program and make sure that everyone is, you know, legitimately operating that program. [31:23] I appreciate that. I'm just about out of time, but just two quick points or questions. [31:29] In December of 2025, SBA ordered all 8 participants to provide financial records as part of a program-wide audit. [31:38] While I certainly support ridding the program of bad actors, it's important to note, and I hope you do, [31:44] that tribal 8 entities are not subject to the same size or net worth caps as individual applicants. [31:52] I think there's been some confusion maybe about that. [31:55] Do you have specific safeguards built into your audit methodology that would ensure tribal 8 entities are not being swept into determinations designed to catch, frankly, other problems that are not really related to them? [32:10] Again, it's a different category, if you will, of entities compared to normal small businesses. [32:17] Yes, Chairman, we understand that distinction, and I thank you for the opportunity to clarify that. [32:21] Well, I appreciate that, and we'll have some other questions for the record that we can get to you. [32:27] And again, thank you very much. Appreciate your responsibility. [32:30] Feel back, Mr. Chairman. [32:31] Thank you, Mr. Chair. [32:32] The Chair now recognizes Ranking Member DeLauro for any questions she may have in five minutes. [32:37] Thank you very much, Mr. Chairman. [32:40] Madam Director, according to the website of the Small Business Administration, the SBA, quote, [32:47] works to ignite change and spark action so small businesses can confidently start, grow, expand, and recover, end quote. [32:55] Administrator Loeffler, would you agree that recovering money lawfully owed to small businesses is an important part of this mission? [33:02] Yes, or no? [33:06] Yes, Chairman, Ranking Member. [33:09] Ranking Member, that's fine. [33:11] According to recent court filings, U.S. Customs and Border Protection, or CBP, has approved tens of billions of dollars in tariff refunds. [33:19] As you know, this comes as a result of the Supreme Court rule striking down President Trump's IEPA tariffs. [33:25] However, a U.S. Court of International Trade, Judge Eaton, has noted that it appears much of the process [33:34] refunds have gone to large importers, while many small businesses continue to face obstacles in obtaining refunds and are now being encouraged to sue. [33:48] Administrator, are you aware of these concerns? [33:51] Ranking Member DeLauro, this is not a concern we hear on a daily basis. [33:56] Quite to the contrary, we see small businesses thriving thanks to President Trump fighting to put American industry and the American worker first. [34:04] And that's why we have record business formation right now. [34:09] Well, let me, I appreciate that and I'm sure that's the case. [34:14] But the issue is, the Court of International Trade has noted that it appears much of the process refunds from the tariff money have gone to large importers. [34:28] Small businesses continue to face obstacles in obtaining refunds. [34:33] As a matter of fact, they've outlined some of the companies that the refunds are going to. [34:38] The Walmarts, the large corporations, the small businesses are at the end of the line. [34:44] Are you aware of the concerns of these small businesses? [34:47] Ranking Member, I talk to small businesses every single day. [34:51] Their chief concern. And they don't care about the refunds. [34:55] That's, that is, that's not an issue that, that. [34:58] You don't hear about the, that they're having difficulty with refunds. [35:02] Well, that's interesting in and of itself because it's one of the biggest issues that's, that's out there. [35:08] The Consolidated Administration and Processing of Entries, or CAPE, the program through CBP has become notoriously known as difficult to navigate. [35:21] Am I, to assume that you, you have not heard anything about that as well? [35:26] Ranking Member, when I talk to small businesses and we talk about their chief concerns, they're focused on hiring skilled workers. [35:35] They're focused on growing, getting access to capital so they can expand. [35:39] Okay. [35:40] They're focused on ensuring that regulation gets rolled back. [35:43] They are glad that taxes have been cut. [35:46] But they don't, they're not concerned, any of those who were really in a chaotic trade policy, caught up in a net here. [35:57] And they're having difficulty being able to get the refunds that they've been told that they are eligible for. [36:06] You have hear, hear nothing about that. [36:08] Small businesses are thriving, thanks to President Trump's fair trade agenda. [36:11] Okay, okay, fine. [36:12] I just see, the process does seem to favor. [36:15] And these are not my words. [36:16] I can quote you, Judge Eaton. [36:18] I mean, that's what, I wish to say this to you. [36:21] If you could get to us a rundown of the refunds, who is getting those refunds, the amount of the refunds, and their category is a large business, small business, or whatever it is. [36:34] Who are the companies getting the trade refunds so that you can dispel what is public knowledge about these efforts, which you don't seem to know about? [36:43] So, the process seems to favor large companies with in-house customs experts, outside trade counsel, while smaller businesses often lack the resources. [36:52] I want to ask you, does SBA share that concern? [36:55] I'm afraid I'm going to get the same answer about the thriving small businesses. [36:59] Have SBA conducted any assessment of whether small businesses are disproportionately struggling to access tariff refunds compared to larger firms? [37:08] Are you doing an assessment of that? It's yes or no? [37:11] No, ma'am. [37:12] You're not doing an assessment of what's happening to small businesses. [37:14] No, ma'am. What I see every day is restoring all industries. [37:16] Will you commit to working with CBP to provide this committee with a report identifying how many small businesses have successfully received refunds, and what are the barriers that remain? [37:29] I will commit to continuing to advancing the interest of small businesses. [37:32] No, no, this is CBP to provide this committee with a report. Can you get us a report? [37:37] We're frequently asked to deliver reports. These reports are not wet. My staff will be happy to meet with your staff. [37:43] I wonder, this committee needs a report of what's happening. [37:46] I can tell you what's happening on the ground with small businesses. [37:48] Oh God, no. No, you can't. [37:50] Small businesses do not have access to the same legal resources as Fortune 500 companies. [37:55] Let me be clear, this isn't a question of whether or not someone supports or opposes tariffs. [38:00] It's about ensuring that the small businesses that you represent and the manufacturers in Connecticut are treated fairly. [38:07] Federal government owes them money. They shouldn't have to jump through hoops to get it back. [38:11] It is that simple. [38:12] Mr. Chairman, I requested a report. I hope the committee believes that we should get a report and understand what is happening with the tariff refunds for large businesses and small businesses. [38:22] I yield back. [38:23] I stand by your giving that report. The chair now recognized Mr. Edwards. [38:29] Thank you, Mr. Chair. Thank you for being with us. As you know, Western North Carolina was devastated by Hurricane Helene in 2024. As a result of that, [38:49] businesses that took out SBA disaster loans to stay afloat found themselves locked out of CDBGDR grant funding because of the Stafford Act's duplication of benefits rule. [39:11] From the SBA's perspective, how many small businesses in our region might have been affected by that conflict? [39:18] And does the SBA track how often that rule prevents businesses from accessing aid that they might otherwise be qualified for? [39:27] Congressman, thank you for the question and for your advocacy of Western North Carolina. [39:32] Obviously, it's been from day one for this administration a priority area. The SBA delivered over $235 million in relief. [39:41] We are working closely across the administration through our Office of Disaster Recovery and Resilience through Administrator Chris Stallings who was former GEMA head in the state of Georgia has strong relationships across the country. [39:58] We want to make sure and we'd be happy to work with you on technical details, making sure that we can get those roadblocks out of the way. [40:09] We have heard of that. I don't have an estimate of the number of business potentially impacted or homeowners, for that matter, impacted at this point. [40:20] We'd be happy to try to get that information to you and to work together to address that. [40:27] I'd very much look forward to that and I thank you for that opportunity. [40:32] I introduced the Helene Small Business Recovery Act, which would clarify that SBA loans and federal grants, such as those offered through the CDBGDR program, are not duplicative. [40:45] Has the SBA, to this point, taken a position on the Helene Small Business Recovery Act and would the agency support legislative clarification that loans and grants aren't automatically duplicative? [41:01] Certainly, Congressman, we'd be happy to provide technical assistance in that regard to ensure that we're navigating the aspects of the loan programs that made it prohibitive previously. [41:15] But you've not taken any position or maybe even looked at it? [41:20] We have looked at it and we would like to work with you on that. Thank you. [41:25] I commend that you've gotten $340 million in backlogged grants or funding and loans out the door. [41:37] I know that many of my constituents, many of the small businesses that I represent have been able to take advantage of that. [41:45] One of the things that you mentioned to us in your opening comments that really gets my attention is your, and I can't remember the exact name of it, but the Rural Assistance Office that you opened. [41:56] Can you tell us a little bit more about your vision and how that might help small businesses in a rural area, mountain area like mine? [42:05] Yeah, absolutely. [42:06] So when we came in, the Office of Rural Development was embedded under an existing, you know, funnel. [42:16] And we wanted to have a standalone operation for our rural advocacy so that we had an office with clear line of sight into rural communities to work across the country. [42:30] We have a network of regional administrators and regional advocates. [42:35] So drawing together the advocacy effort, which is our deregulatory arm, and then the rural, the regional administrators who often encounter rural issues that we have one office that consolidates those concerns. [42:50] And it's everything from deregulation to access to capital to other SBA resources that we offer. [42:57] And that office was just staffed last week. [43:01] Thank you. [43:02] It looks like I'm going to run out of time before I ask my next question. [43:06] So, Mr. Chair, all you. [43:07] Very kind, sir. [43:10] The chair now recognizes Mr. Pocan for his five minutes. [43:14] Thank you, Mr. Chairman. [43:15] Thank you, Administrator Loeffler, for being with us. [43:17] Has the SBA created any new loan programs specifically for small businesses that have been negatively impacted by tariffs? [43:28] Congressman, no. [43:29] We've created new loan programs. [43:30] No? [43:31] Okay. [43:32] There's no specific program for small businesses who have been hurt by tariffs? [43:35] We've created programs. [43:36] Just a yes or no is all I really need. [43:37] That's fine. [43:38] No, sir, but even better. [43:39] So there's data that the average small business, just like last September, for example, [43:44] average small business lost $42,600 because of tariffs. [43:48] That's why I was asking if we had something in place because clearly I spent 37 years of my life since I had hair literally owning a small business. [43:55] A year ago, I sold it. [43:56] But a small business, the handful of employees. [43:59] I know you're used to big businesses because you're, you know, much wealthier person, I understand. [44:04] But for the average small business, those are the ones that were really impacted the most. [44:08] I'm looking at something right now. [44:10] First half of this year, small business bankruptcy filings surged up to 50% compared to the same time last year. [44:18] Joint Economic Committee found data that said 292,000 jobs at small businesses were lost in 2025, larger than any other year since QuickBooks started reporting these numbers. [44:31] That's four and a half times larger than the number of jobs lost in 2020 during the pandemic. [44:37] Donald Trump has been worse than the pandemic for people, jobs, and for small businesses. [44:42] So as one of those small business owners, and I dealt every day, it was a business-to-business business, right? [44:46] So I talked to those people all the time, literally, for 37 years. [44:51] They've been negatively impacted by tariffs. [44:54] So, you know, I'm just wondering, you know, what we're doing specifically for those small businesses hurt by the president's erratic use of tariffs. [45:04] Congressman, thank you for that question. [45:06] I cannot validate any of the numbers you're sharing here. [45:08] They're completely counter to what we see in this country. [45:11] And I'd be glad to submit for the record some names of small businesses that have gone bankrupt so that you'll have that. [45:17] Maybe you could reach out or someone at SBA could reach out. [45:20] Because I think the problem is you're talking to really, really rich people. [45:23] And really, really rich people are doing really, really well under Donald Trump. [45:26] But most small businesses aren't those really, really, really rich people. [45:30] They're people, bluntly, who run auto repair businesses, have sign shops, have ice cream shops. [45:36] And those are the folks that are being impacted. [45:38] Let me, maybe this will help a little in how I look at it and maybe for you to think about it. [45:42] Who pays tariffs? [45:44] Congressman, according to Harvard and the Richmond Fed, 80% of the tariffs are paid by [45:53] the foreign countries where they originate. [45:55] That's why the United States was on its heels for 50 years. [45:58] That would be like me saying if you said, what color is my hair? [46:01] I'd say I have long flowing red hair, right? [46:03] Because it's complete BS, right? [46:05] That's not true. [46:06] Who pays tariffs are these small businesses who've been impacted 42,600 on average last September. [46:14] And then they pass the costs on to consumers. [46:16] So before I sold my business, when Donald Trump started his tariffs last year, [46:20] I started getting increases on aluminum sheets. [46:22] I did engraving. [46:23] It's one of the parts that I did. [46:24] It's specialty printing. [46:25] But I also got increases, by the way, on American-made walnut plaques because they decided [46:31] they could also make money while they're doing the increased costs on tariffs. [46:34] They could pass on some other costs. [46:36] So that's part of the fun of being a small business, not a really, really, really rich, [46:40] big business. [46:41] But when you're a small business, that's the kind of stuff you have to juggle. [46:44] So I did see the impact in invoices. [46:48] Every single day, I would see those coming in, and we paid those extra costs. [46:53] Yard sign wires for politicians. [46:55] We made political signs for folks. [46:57] We saw the steel costs increase because of the tariffs. [47:01] So I'm just saying, for the average small business, there's been a big impact. [47:05] And the fact that you're talking to businesses and not hearing this, I'll tell you, [47:11] just bluntly, not even a member of Congress, as a guy who's a small business, [47:15] who ran a business-to-business venture, I heard it all the time. [47:19] And I still hear it all the time. [47:21] And I sit down and meet with my small businesses in my community. [47:24] So what can I say to them when I say the SBA administrator says, [47:27] foreign countries are paying tariffs, you just are imagining it, or you're lying? [47:32] Because they're not imagining it, and they're not lying. [47:34] Well, Congressman, with all due respect, I'm going to set aside the reductive comments [47:39] you made about small business success, because every small business is a job- [47:44] So you're saying, you'll take my time back. [47:45] But let me- [47:46] You're saying a small, the real small venture- [47:48] Yeah, a collision repair- [47:49] Doesn't matter if the bankruptcies are 50%- [47:50] A collision repair company. [47:51] You only care about big businesses? [47:52] Is that the new policy of the SBA? [47:54] A collision repair- [47:55] Unless Donald Trump and his sons can invest in, it's not something you care about? [47:58] Is that what you're saying? [47:59] A collision repair company, you voted against the working family tax cut, [48:02] where that repairman, where that auto mechanic is not going to- [48:04] Oh, please, if you want to go there, I need five more minutes. [48:07] They're not going to get expensive- [48:08] You have no clue. [48:09] Give me five more minutes, and I'll ask you questions about that. [48:12] Yeah, well- [48:13] I yield back, Mr. Chairman. [48:14] This administration is fighting for the American worker. [48:15] Think about small businesses. [48:16] I know that's in the title of your administration. [48:18] It needs to be in your heart, okay? [48:20] Because that's what I did for 37 years. [48:22] I'm still thinking about your red hair. [48:25] Flowing. [48:27] The chair now recognizes Mr. Alford for his five minutes. [48:31] Thank you, Chair. [48:33] Mr. Pocan, that black walnut came from my district. [48:35] My yard. [48:36] Yes, very good. [48:37] Hey, Administrator Loeffler, thank you so much for being here. [48:41] You recently visited small businesses in Kansas City. [48:46] How many small businesses have you visited since your time as administrator? [48:52] Congressman Alford, it was incredible to be in your district and to tour several small businesses. [48:59] I have probably this year, since starting in January, been to more than 100 small businesses on official visits. [49:08] Last year, I'm sure it was two or three times that, given we had a full year already under the belt. [49:15] So that is really where I am able to connect with small businesses and hear the actual concerns that they have. [49:22] Exactly. [49:23] There may not be talking about tariffs, but they are talking about the benefits of the One Big Beautiful Bill. [49:28] And I know that my colleagues on the other side of the aisle don't like to hear that. [49:33] But there are some things in there that are supporting small businesses, not just millionaires and billionaires, correct? [49:39] Well, Congressman, the good news is the working family tax cuts, the results are in. [49:43] Americans were saved from a $5 trillion tax hike that every congressional Democrat voted for. [49:52] And now, thanks to the congressional Republicans, I appreciate you voting for the working family tax cuts that saved Americans $82 billion. [50:00] It saved $29 million workers from paying tax on overtime, $8 million tipped workers from paying taxes on tips, $30 million-plus Americans from taxes on Social Security. [50:12] And the small business deductibility of equipment, of R&D, and the 20% pass-through averted losses of millions of jobs in this country. [50:23] As part of the White House's supplemental request transmitted last month, [50:26] the SBA would receive authorization to increase the 7A and 504 loan programs. [50:31] I strongly support the idea. [50:33] I'm also the sponsor of the STRONG Act. [50:35] I'm the only member of the Appropriations Committee also sitting on the Authorizing Committee just across the hall there. [50:41] Can you speak about why these loan limits are outdated and how small manufacturers could benefit from the increased limits? [50:48] Congressman, thank you for the chance to talk about this important issue. [50:54] Our loan limits in the SBA have not been raised since 2010. [50:59] So, 16 years ago, it was set at $5 million. [51:02] Today, as I walk factory floor after factory floor, in fact, the SBA's largest category of lending is manufacturing. [51:11] Last year, we did about 5,000 loans totaling $3.5 billion, $4.5 billion. [51:17] But about 200 in the last couple years have hit the loan cap. [51:22] So, if we had a $10 million limit, we've done the modeling to ensure that this would be zero subsidy to taxpayers still. [51:29] The underwriting standards would be maintained. [51:32] We can continue what President Trump has started through the fair trade agenda that is reshoring industries, [51:38] whether it's Cusa Steel in Georgia, Agate Steel in Arizona, Marlin Steel in Maryland. [51:44] We see them adding shifts, adding workers, because we are a nation of builders, again, thanks to President Trump. [51:51] And this $10 million loan limit will unleash what the working family tax cuts, the fair trade agenda, the energy dominance, [51:58] and the deregulation agenda has done for the American people to put the American people first after four years of a Biden administration [52:06] that looked the other way when it came to Main Street and manufacturing and American jobs. [52:11] Speaking of looking the other way, you mentioned in your opening statement there is $200 billion in fraudulent COVID-era loans. [52:18] I consider that a conservative number. [52:20] Why was this money not recovered under Administrator Guzman's? [52:26] Congressman, I can't speak for the prior administration, but I can tell you during the prior administration, [52:33] the Office of Inspector General identified $200 billion in fraudulent loans. [52:39] The administration then attempted to forgive those loans. [52:42] The loans were taken off the balance sheet of the SBA, but then required to come back and not be forgiven, [52:49] because they were tagged as fraudulent. [52:51] The third tranche of PPP that the Biden administration put out was four to five times as potentially fraudulent as the first two tranches. [53:01] And so we have to make sure that there's accountability on behalf of taxpayers. [53:06] We've already submitted $22 billion in loans totaling 562,000 borrowers to Treasury for collections and to the DOJ for prosecution. [53:18] And thanks to President Trump and Vice President Vance forming this effective fraud task force at the White House, [53:28] we are going to continue to ensure that people are held accountable. [53:33] And that is our focus every single day. [53:36] Thank you again. [53:38] I yield back. [53:39] Thank you, Congress. [53:40] Thank you, Mr. Offord. [53:41] The chair now recognizes the gentlelady from Washington, Mrs. Klusenkamp-Perez. [53:45] Thank you, Mr. Chairman, and thank you, Administrator, for being here today. [53:48] It's my understanding that there's been some delay in actually getting the funds that have been appropriated by Congress to your agency from OMB. [53:55] Due to these challenges, significant unapplicated funds remain a need to be spent before the end of FY26. [54:00] Specifically, on the latest documents from May for the money directed to the entrepreneurial development programs, [54:06] expiring in 2026, SBA had obligated $31 million out of 248 appropriated by Congress, [54:15] leaving $159 million, more than half unobligated. [54:19] Given these unobligated funds, what are the agencies' plans to ensure that all the unobligated funds expiring in 26 will be awarded and obligated by September 30th? [54:29] Congresswoman, thank you for the opportunity to talk about the grants program. [54:35] And when we came in, as I had mentioned earlier, $240, $340 million. [54:42] And moving forward, do you have a – I'm sorry, time is so loaded. [54:44] Yeah. [54:45] Yeah. [54:46] So we are getting that money out the door, and we understand the $330 million that we are going to move and obligate by the end of the fiscal year. [54:54] And we continue to work through the – the backlog, which was over 1,500 grants that had not been paid when we came in. [55:04] So given these balances, does the SBA intend to make awards using funds from both fiscal years, or will you do separate years for each? [55:12] Well, we are making sure that we fit congressional intent, what was allocated in that year of obligation. [55:21] But we are going back to 2021 to get funds from that far back out. [55:26] So we are working closely with our CFO now that the grant solutions system has been integrated into our budget program to allocate it to the proper year. [55:37] So will you be – will you be issuing NOFOs? [55:45] We have begun to do that. [55:48] Yes, ma'am. [55:49] And given that there's a fairly short period, about a month – I'm going to move on here really quickly because we're running out of time. [55:59] I was – I was very glad to see at the bottom of your last press release that you're announcing the – as has been mentioned, the reorganization of the agency that was formally establishing the Office of Rural Affairs. [56:12] As you know, Congress has consistently identified the need for more resources directed towards rural communities like mine, and this body has consistently asked for more information about the Office's strategic plan. [56:23] Can you give us an overview of what the Office of Rural Affairs is doing and how is it delivering to rural constituents in districts like mine? [56:32] Does this office have its own employees, and how many? [56:35] Congresswoman, yes, it does have its own office. [56:38] It has its own employees. [56:39] Right now, there are two people in it. [56:41] The office was – we recruited for that role for several months to ensure we had the right fit. [56:47] We had the right fit. [56:48] I have been remiss in talking about our leadership team, but we are – we have an excellent leadership team, and we were very careful in selecting someone that could work closely with our regional administrators and our advocates to consolidate the rural challenges that we know exist. [57:07] As I mentioned, I was raised on a family farm. [57:09] I understand that access to capital, access to skilled workers, access to resources that they need is very scarce, and ensuring that we're addressing their highest level needs in rural communities. [57:22] I'm sorry, you said you have two employees? [57:24] In the Rural Affairs Office. [57:27] Okay, and are they – where are they located in the country? [57:30] Are they in D.C. or are they in rural communities? [57:33] One is in a rural community, and one is in Washington. [57:37] Okay, and which community is that, can I ask? [57:39] New Hampshire. [57:40] Okay. [57:41] And what – what is needed from Congress to make it more effective and efficient? [57:46] Well, we have everything we need because the Rural Affairs Department works very closely with our Office of Field. [57:55] It works closely with our regional advocates, so it's really networked across the country through a strong field and advocacy organization, [58:04] and this effort through consolidating rural issues through that office was meant to amplify it and isolate the rural issues so that they didn't get overlooked. [58:17] So I wanted to really put a spotlight on rural affairs, and I think – I think we'll see the results. [58:22] We've – already through our policies, we did $7 billion in lending to rural America last year. [58:28] We've worked very closely to – with USDA and EPA to deregulate, so diesel exhaust fluid, we were able to have a very successful – [58:38] Which we agree with. [58:39] Yes. [58:40] And I – you know, but I – when I'm talking to my log truck operators, they're not saying they're getting any kind of support on the – on the DEF. [58:47] So we have continued to raise that issue, and just last week the EPA put out a clarifying notice, and we continue to track it, [58:54] and we would welcome them to contact our Office of Advocacy to work on that. [58:57] Thank you. [58:58] Yield back. [58:59] Thank you very much. [59:00] The chair now recognizes the gentleman from Texas, Mr. Cloud. [59:04] Thank you, Mr. Chairman, and thank you, Administrator, for being here. [59:07] I'm always constantly amazed at how we in D.C. somehow equate our worth as how much dollars get sent out the door, [59:17] whether or not we've used them effectively or whether they're going to accomplish what they were sent to accomplish. [59:24] I really appreciate the fact that you came in and just kind of got to the nuts and bolts of cleaning house. [59:29] Some of the things you mentioned today is just hundreds of millions of dollars that went to the CCP. [59:34] I think dollars – I don't know that you mentioned this, but taxpayer dollars went through SBA, went to foreign identity theft rings. [59:42] I mean, just to think that taxpayers are basically paying for their identity to be stolen. [59:47] Grant programs that had unacceptable vetting standards, accountability standards. [59:52] You know, and here we see where the low standards actually meant less capital was available in the markets. [1:00:00] Temporary programs that were attempting to be turned into permanent programs. [1:00:06] Reagan once said that, you know, the most closest thing we have to eternal life on earth is a temporary government program. [1:00:14] Offices that were closed that had no employees in them, much like the leering centers that we've seen in some states and the like. [1:00:23] And the list goes on and on and on. [1:00:26] On top of that, we had the Biden backlog of $340 million that wasn't sent out the door when it should have been. [1:00:35] But I'm curious to know why you think that would have happened and if you could speak to some of the protections you put in place with grants and with loans to make sure that the vetting process is good. [1:00:46] Absolutely. [1:00:48] Congressman Cloud, thank you for the opportunity to talk about what we saw when we came in and how we've changed it. [1:00:54] When we came in, 90 percent of the staff, which had doubled to over 8,500 employees during the Biden administration, were working from home. [1:01:04] So it would be hard to manage a program well when you're not in the office for four years. [1:01:10] So we brought everyone back to the office. [1:01:13] We realigned the organization around centers of excellence. [1:01:17] We reduced the staff by 54 percent. [1:01:20] We rationalized our technology systems, many of which were falling over and insufficient to the task. [1:01:27] When you think about putting out $340 million a year into grant programs via email and spreadsheets that are not connected to a budget system, [1:01:38] that's a recipe for disaster in any business, especially a financial services business that is meant to have high levels of integrity. [1:01:46] It's why this agency has not passed an audit in five years. [1:01:50] We are making sure to get our material weaknesses and our internal controls repaired. [1:01:56] And we've strengthened our technology. [1:01:58] We brought in a Fortune 500 chief technology officer who has rapidly stood up modern technology, taking us from the Stone Age to the Information Age. [1:02:08] And we are making sure our employees no longer have to operate on Windows 2008, on seven-year-old laptops, on loan management and grant management systems that are falling over. [1:02:19] And that we actually have fraud detection controls that are proactive before the money gets out the door, not after. [1:02:26] So this is, you know, I could talk for an hour about this, but this is just the start. [1:02:30] We've been here a year and a half. [1:02:31] I think by the end we're going to have what would be one of the most sophisticated, digitally advanced agencies that will be able to be more responsive and accountable to small businesses and taxpayers. [1:02:46] It would seem like this would happen with negligence over time, but the lack of will to do something about it seems very troubling from year after year. [1:02:57] Recently, Senator Joni Ernst received documents from the Biden SBA that during their time that they substituted the word Planned Parenthood for Benghazi. [1:03:09] Are you familiar with that and any idea why they would do that? [1:03:15] My understanding, I look, this is Planned Parenthood should have never gotten PPP money. [1:03:26] And when I was in the Senate, I was one of the first senators to sign on to letters or draft letters demanding that Planned Parenthood give the money back. [1:03:37] And the administration agreed they did not qualify. [1:03:39] They were not a small business. [1:03:40] They were not shut down. [1:03:42] They had tens of thousands of employees and they were a big business. [1:03:46] But yet they took $80,000, $80 million from taxpayers. [1:03:51] And it would seem like the Biden administration tried to cover up by using the code word Benghazi to avoid FOIA. [1:04:01] And my understanding. [1:04:02] That would be the reason, I guess. [1:04:03] Yes. [1:04:04] I'm sorry. [1:04:05] My understanding is that this is potentially with federal law enforcement. [1:04:09] Okay. [1:04:10] So we can't speak to it. [1:04:11] Gotcha. [1:04:13] Thank you. [1:04:14] Thank you, Mr. [1:04:15] Thank you, Mr. Cloud. [1:04:16] Thank you, Mr. Chairman. [1:04:17] Welcome. [1:04:18] I kind of wanted to pick up a little bit on where Chairman Cole left off and go beyond that a bit. [1:04:28] I've got a report here that talks about what's happened during the Trump administration at SBA from the standpoint of the impact on businesses. [1:04:38] Contract dollars for Native American, Alaskan Native, and Native Hawaiian-owned small businesses are down 19%. [1:04:46] Contract dollars for Hispanic small businesses are down 17%. [1:04:51] Termination of contracts is one that caught my attention here, too. [1:04:57] More than 65,000 contracts have been terminated. [1:05:00] More than 60% of those are terminated were held by small businesses. [1:05:08] 2,874 for 8 small businesses. [1:05:12] And these are terminated for convenience, by the way. [1:05:15] So there's apparently no indication of fraudulent activity or anything like that. [1:05:20] 3,208 contracts for black-owned small businesses, which is 107% more than were canceled under the Biden administration. [1:05:28] And then for service-disabled veteran-owned small businesses, 6,435, which is 41% more than were canceled under the Biden administration. [1:05:40] I've got a lot of these kinds of companies in my district, and they have been very unhappy, to say the least, [1:05:49] with respect to the transition from the services they get now from the Small Business Administration compared to what they used to get [1:05:57] or just the ability to contact them, period. [1:06:00] And I wanted to know if your take on this, especially the termination of the contracts. [1:06:05] I don't think it's fraud. [1:06:07] But, you know, what is behind that from your perspective? [1:06:10] Congressman, thank you for your question. [1:06:13] The Trump administration has met and exceeded the small business contracting goal for fiscal 2025, [1:06:20] and in fact exceeded it for veterans contracting and service-disabled veterans contracting. [1:06:24] Okay, but there were contracts that were awarded and then terminated. [1:06:28] What's behind these high levels of contract terminations for convenience? [1:06:33] Congressman, these are awarded across dozens of agencies. [1:06:36] I can't speak for each individual agency as to why they may terminate a contract, but you would expect a normal amount of turnover as an administration turns over. [1:06:49] No, you really should not have contracts turn over just because the administration changes, especially if it's a multi-year contract. [1:06:57] In fact, I would argue the exact opposite from that perspective. [1:07:01] If the government enters into a contract and the contract's being performed, government can still terminate for convenience, but terminating because there's a change in administration, i.e. for political reasons, I think it would be not only just wrong, but probably illegal. [1:07:16] So you're not saying that, are you? [1:07:20] Congressman, we, of course, are going to always follow the law. [1:07:23] I can tell you that at the SBA, we terminated hundreds of contracts when we came in, totaling a $3.3 billion life of contract savings because they were wasteful contracts. [1:07:33] So the 6,434 veteran and service-disabled veteran-owned contracts held by small businesses, those were wasteful contracts? Is that what you're saying? [1:07:45] I would leave it up to the agencies themselves to deem why they come. [1:07:49] So you don't know. [1:07:50] For my agency, I can tell you that we had hundreds of contracts that weren't even being used, multiple contracts for- [1:07:55] Hundreds and thousands are a very different thing. [1:07:58] And to the extent, you know, you mentioned earlier, there's a lot of fraudulent activity going on, I guess. [1:08:04] But again, terminating for convenience is the wrong way to go if there's actual fraud. [1:08:10] And then with respect to fraud, I do want to ask you to turn over to us a list of cases that have been indicted based on referrals from the SBA to the Department of Justice, fraud cases. [1:08:23] Because you talked about a lot of those. [1:08:25] I'd love to see, you know, how many there are and what, you know, what they're about. [1:08:29] Because it's, I haven't heard that many, but maybe they're, maybe they're more than I've heard. [1:08:35] But I think it's important to understand that there's a difference between small businesses that are committing fraud or did it in the past and termination for convenience for these people who have legitimate contracts. [1:08:47] And apparently we're doing the work, otherwise you wouldn't have terminated it for convenience. [1:08:51] Real quick on this too, with respect to the tariffs, I visit small businesses in my district too, and two things. [1:09:00] One is the tariffs that were struck down by the Supreme Court for being illegal took money out of these small businesses' pockets and they don't have a way to get it back. [1:09:10] We talked to the Secretary of Commerce about this issue. [1:09:13] I don't remember you sitting there across the hall. [1:09:15] He committed to trying to make sure that they could get the money back, recognizing that they lost it and the Trump administration had not set up a program to help them get it. [1:09:24] SBA ought to be doing that. [1:09:25] You ought to be part of helping them get the money back that they lost due to illegal tariffs. [1:09:30] Because the big guys are getting it, as you heard from the ranking member. [1:09:36] Help the small businesses get it too. [1:09:38] And with that I yield back. [1:09:39] The chair now recognizes Ms. Sinson for any questions. [1:09:43] Thank you, Mr. Chairman. [1:09:44] Good afternoon, Administrator Loeffler. [1:09:46] Thank you so much for coming before our committee today. [1:09:48] And I had the opportunity, I was reminiscing about our wonderful visit through my congressional district back in Iowa. [1:09:55] Cedar Rapids, a nice business round table. [1:09:57] Main streets, I think we had some pretty good smoothies and visited a great farm, agribusiness farm in Atkins, Bloomsbury Farm. [1:10:07] We had a great time on a very hot summer day in Iowa. [1:10:09] So thank you for coming to help talk with our small businesses and most importantly, listen to them, right? [1:10:14] They were tired of having all the uncertainty that existed. [1:10:17] So passing the working families tax cuts, giving those small businesses the certainty and having a direct line to you, it meant the world to my constituents. [1:10:24] So thank you for coming to Iowa. [1:10:26] I wanted to talk a little bit about when disaster strikes, because when it does hit, it can be very, very challenging for small businesses to navigate. [1:10:34] In February of last year, I alongside Senator Scott, Representative Carbohal and 10 other bipartisan co-sponsors introduced a piece of legislation, the SBA Disaster Transparency Act, [1:10:44] which would require you to publicly report on the disaster loan account, just like FEMA has to. [1:10:49] So what I would ask is, what are you doing to be more transparent, provide more clarity around the disaster loan account and other similar accounts under SBA? [1:10:59] Congresswoman Henson, thank you, and thank you for hosting me in your district. [1:11:03] It was truly a memorable visit, and I think it represents really the best of America, the heartland, [1:11:09] and appreciate the insights I always get from walking main streets and hearing from job creators. [1:11:16] I want to share the progress we've made, and hopefully all of you have seen our monthly disaster report that we provide to Congress [1:11:25] in the wake of the last administration running out of funding amid Hurricane Helene, tragically, in 2024. [1:11:36] This is an easy-to-read, comprehensive report that includes a lot of modeling around potential scenarios of when disaster relief funds could be depleted. [1:11:48] Right now we're showing an account of about $3.7 billion in reserves that would take us through to somewhere between October 2027 and December at last look, [1:12:02] and that continues to change with the number of disasters that we're responding to. [1:12:06] Year-to-date we've responded to about 237 disasters, currently actively have 39 that we're managing, [1:12:14] and it's been an opportunity for us to look at how we can provide you data better to give you the confidence that the funding will be there. [1:12:24] So I welcome any feedback that anyone has on this report. [1:12:27] Well certainly I would agree that it's malpractice to run out of money and not let Congress know, [1:12:33] because we need to be having those conversations about supplemental funding if that is the case, [1:12:37] so that transparency is number one, respectful for taxpayers, but number two, just critical when a situation like that arises. [1:12:43] So do you think a piece of legislation like this, or even just the change in practice that you've made, [1:12:48] will be helpful in holding future administrations accountable? [1:12:51] Congresswoman, I think it's a great question, because if future administrations do not provide you the transparency, [1:12:59] we can have a repeat of what happened in 2024 when the SBA administrator testified in front of Congress, [1:13:04] saying that there were plenty of reserves in the disaster fund, and then just mere days later, [1:13:11] the hurricane Helene hit the coast, went through seven or eight states, and the money was gone. [1:13:21] So we should try to take every measure we can to ensure transparency there. [1:13:26] Well it could be a hurricane on the east coast, or a major derecho coming through a state like mine, [1:13:29] we need to be able to have the resources to help our people. [1:13:32] One quick question I want to close with, and moving to USDA partnership, [1:13:37] a memorandum of understanding that you've signed to help make sure we're combating lawfare against our farmers, [1:13:42] our ranchers, and our small businesses. [1:13:43] I'm grateful to see that you're prioritizing rural America as we visited many of those said businesses. [1:13:49] Can you talk a little bit about your goals for this initiative in partnership with USDA, [1:13:54] and what should our farmers and ranchers be on the lookout for? [1:13:57] Congresswoman, thank you for this question. [1:14:00] So it was wonderful to partner with Secretary of Agriculture, Brooke Rollins, [1:14:05] and really formalize what had been an informal arrangement where the USDA is advocating for our farmers and ranchers, [1:14:15] the hardest working Americans, to stand up against whether it's big government or activist environmental groups [1:14:22] that are influencing government policy, and so we've already been able to demonstrate wins, [1:14:28] whether it's the diesel exhaust fluid or right to repair or other issues. [1:14:33] We are going to strategically be using our Office of the Ombudsman to handle non-USDA concerns [1:14:40] that might be impacting farmers and ranchers, [1:14:43] and then the USDA will handle the USDA facing whether it's the Department of Forestry or others. [1:14:49] And this collaborative effort is organized through a White House ambassador for ranchers, John Rich, [1:14:58] and really has now the visibility that it needs to make sure that they know there's an advocate for them [1:15:05] and a place to go to file those concerns and complaints against the abuse of excessive regulatory constraints [1:15:12] that really drive their businesses to the brink. [1:15:15] I'll look forward to working with you more on that, specifically on the casework side, [1:15:18] because obviously people will come to us if they've had a bad interaction [1:15:21] and we want to be able to direct them to the right place. [1:15:23] So thank you, Administrator Loeffler. I appreciate you being here. [1:15:26] Thank you, Mr. Chairman. [1:15:27] Thank you very much, Ms. Henson. [1:15:29] The Chair now recognizes the gentleman from Georgia, Mr. Bishop. [1:15:33] Thank you very much and welcome, Administrator Loeffler. [1:15:37] I'm going to follow along the questioning you were just having from the gentle lady. [1:15:43] Given the recent news that USDA has ended its relationship with 10 guaranteed lenders nationwide, [1:15:50] as well as reporting last year about a draft executive order, [1:15:55] it appears that the administration is preparing to transition all of USDA's rural development lending programs to SBA. [1:16:03] It's concerning to me because, of course, we have a lot of rural development needs in Georgia [1:16:12] and because USDA has a wealth of experience with its seasoned personnel that are handling those programs. [1:16:20] And I don't know if SBA is prepared to take up this work that's really critical to rural America. [1:16:26] Can you provide further information on the administration's efforts to transition the USDA program [1:16:32] to USDA programs to SBA? [1:16:34] Has SBA conducted an analysis to assess the potential fraud risk expansion, lender vetting requirements, [1:16:42] and program integrity controls that are needed if SBA assumes responsibility for those rural credit programs? [1:16:51] What is the agency doing to strengthen relationships with small rural communities to build an understanding [1:16:57] of the unique challenges that these regions face? [1:17:03] Congresswoman, thank you for the question. [1:17:05] I appreciate the concept. [1:17:09] I could not validate that that's actually happening. [1:17:14] What I would say is that SBA has an active lending portfolio in rural America to the tune of $7 billion last year. [1:17:24] So we continue to really co-exist where USDA has a certain portfolio and competency. [1:17:33] I wouldn't be able to comment on the shift in lenders. [1:17:37] I think what we're focused on is strengthening our own lender portfolio. [1:17:42] We work with over 5,000 lenders across the country. [1:17:45] And we are ensuring that not only do our lenders have the right loan portfolio to offer to our small businesses across the country, [1:17:57] but that the underwriting standards are- [1:17:59] What about the 10 lenders that were terminated? [1:18:04] We're terminated. [1:18:06] I think the USDA, well SBA has now is planning to assume control of the business and industry loan guarantee program, [1:18:19] the rural micro-entrepreneur assistance program, the rural business investment program. [1:18:25] Congressman, I wouldn't be able to elaborate on any of what you've heard. [1:18:33] So I would just say to you, the SBA maintains its own lending programs for small businesses. [1:18:40] I'm particularly talking about those that come through the Rural Development Agency and those rural programs. [1:18:48] Let me shift gears a little bit. [1:18:50] It was mentioned earlier, but it's my understanding that you've been reshaping SBA through an aggressive auditing [1:18:59] and dropping of hundreds of 8 minority-owned contractors and modifying the lending fees. [1:19:06] The agency suspended more than 1,000 contractors in January and moved to terminate more than 620 firms in March [1:19:14] after they refused to provide financial data. [1:19:17] I've also heard that SBA has not certified a single 8 company in nearly a year. [1:19:24] Can you explain what's going on here? [1:19:26] And it sounds to me like a lot of minority business owners are not getting a fair shake from SBA. [1:19:31] While SBA is statutorily required to provide assistance to socially disadvantaged people, [1:19:39] what safeguards has SBA implemented to ensure due process or prevent erroneous suspensions [1:19:46] and to protect legitimate disadvantaged contractors from undue harm? [1:19:51] Congressman, thank you for that question and the chance to clarify this program. [1:19:56] When we came in, the 8 program was technically supposed to have a 5% statutory percent of contracting. [1:20:04] The Biden administration had moved it up to 15%, crowding out our veterans and service-disabled veterans contracting, [1:20:12] so we moved it back to 5%. [1:20:14] But as we got into the program, we found that the Biden administration had admitted 2,100 firms based on racially-based admissions to the program. [1:20:25] And which the federal courts had found that race-based contracting was unconstitutional. [1:20:32] And we set about reforming that program to ensure that… [1:20:35] I referenced socially disadvantaged. [1:20:38] That's right. [1:20:39] That's not racial. [1:20:40] Socially disadvantaged would be verifiable disadvantage. [1:20:44] The Biden administration had helped several small businesses craft their social disadvantage statement, [1:20:51] or required a minimal statement without verification. [1:20:55] What we want to make sure is that it's a level playing field for every socially and economically disadvantaged business, [1:21:01] that it does not discriminate against white business owners, [1:21:05] and that small businesses have a chance to compete broadly for 8A, [1:21:10] along with the entity-owned organizations that participate in the 8A program. [1:21:15] And this is a program that needed reform because, as you pointed out yourself, [1:21:21] we found 1,000 firms that did not reply to requests for financial documentation. [1:21:27] We've worked with about 300 of those firms to keep them in the program. [1:21:31] So to your point on due process, you're exactly right. [1:21:33] We made sure that we were not arbitrarily exiting people from the program. [1:21:38] But we also found 120 DC-based firms that made $5.5 million in contracting deals. [1:21:45] When they did not fit the program, they were big businesses. [1:21:48] This was a 50-year-old program that had never been audited, [1:21:51] and it clearly was past due time to audit the program for eligibility. [1:21:55] One final question that the chair will indulge me. [1:22:01] My district office staff has been hearing from constituents with complaints about the SBA field offices [1:22:08] and how they are not as helpful now as they had been in the past. [1:22:13] For example, we've heard reports that SBA is directing callers back to the website [1:22:18] rather than providing assistance. [1:22:20] And the callers are describing the staff as rude or unhelpful. [1:22:25] This is a very concerning trend. [1:22:28] I'd just like to ask you, what resources do you feel are required from us in Congress [1:22:35] in SBA's FY27 appropriations bill to ensure timely delinquency notices, respectful constituent services, [1:22:44] and adequate staffing at the field offices? [1:22:47] Congressman, thank you for that question because our focus has been on restoring customer service [1:22:53] that was lost in the last four years. [1:22:55] The average wait time calling into the SBA used to be 15 minutes. [1:23:00] Today it's about 22 seconds before an individual at 1-866-SBA-HELP will answer the phone. [1:23:07] And it's dramatically changed from having three dozen different phone numbers to dial into [1:23:12] and 3,000 mailboxes. [1:23:14] We have a coordinated, professionally managed customer support system. [1:23:18] And so I would love to hear from your office where we can resolve any issues that your constituents may be having. [1:23:23] Are they being referred back to your website? [1:23:26] I can't speak to individual callers, but often we have information there. [1:23:32] But we have a service center that helps people individually walk through their loan program. [1:23:37] So their individual information might be contained through a login [1:23:41] where they might walk through someone through their loan. [1:23:45] But that's not our standard practice. [1:23:48] But you do have a decrease in the number of personnel that are now answering the phones as a result of the… [1:23:55] We have an increase in quality in customer service. [1:23:58] It's not… [1:23:59] There's a perception in government that having more people means more quality. [1:24:03] We have higher quality. [1:24:05] Setting aside, I don't know if we have the same number or fewer. [1:24:08] What we have now is a cohesive customer support system that's no longer fragmented across dozens of numbers and disconnected databases. [1:24:17] We're building a new customer interface that will have a lender portal that will have a customer service portal where you can log in. [1:24:24] We're going to have a lot of self-service, but we're going to continue to increase the customer service levels in person [1:24:30] because we're dealing with about a half a trillion dollar portfolio that we're servicing, whether it's disaster, COVID era, business loans, or the like. [1:24:39] So it's very important that we have that personal touch as well. [1:24:42] How many personnel did you lose as a result of DOGE? [1:24:45] Zero. [1:24:46] Thank you. [1:24:51] Thank you, Mr. Bishop. [1:24:54] With that, our time is concluded. [1:24:57] I would like to thank Administrator Loeffler for being here today. [1:25:00] There may be some members who would also like to submit questions for the records. [1:25:05] Please submit any questions for the record to the subcommittee staff within seven days. [1:25:09] The subcommittee stands adjourned. [1:25:10] If I can, the last question answered. [1:25:17] Are you saying that no personnel in the Small Business Administration were removed as a result of DOGE's activity? [1:25:27] You said no definitively. [1:25:29] Is that accurate? [1:25:30] Ranking Member Hoyer, yes. [1:25:31] It was my decision. [1:25:32] All right. [1:25:37] The subcommittee stands adjourned. [1:25:39] Thank you. [1:25:40] All right. [1:25:42] I'll see you next time. [1:25:43] Bye. [1:25:44] Bye. [1:25:45] Bye. [1:25:46] Bye. [1:25:49] Bye.