Press Releases

Luetkemeyer: The Biden Administration is Threatening Small Business Recovery

WASHINGTON, D.C. – Today, the House Committee on Small Business is holding a remote hearing with the Administrator of the Small Business Administration (SBA) Isabella Casillas Guzman, and without Treasury Secretary Janet Yellen, titled “An Examination of the SBA’s Covid-19 Programs.”

Ranking Member Blaine Luetkemeyer's opening statement as prepared for delivery:

Thank you, Madam Chair, and thank you for calling this important hearing.  While I am glad we will be having a conversation with Small Business Administrator Guzman, I am deeply disappointed and concerned that Secretary Yellen is not with us today, as the appearance of the Treasury Secretary is required by law. The bipartisan Consolidated Appropriations Act of 2021 states:

Not later than the date that is 120 days after the date of enactment of this Act, and not less than twice each year thereafter until the date that is 2 years after the date of enactment of this Act, the Administrator and the Secretary of the Treasury shall testify before the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives regarding implementation of this Act and the amendments made by this Act.

This is not just troubling – it is a complete violation of the law.  I would like to work with the Chair to ensure the law is followed and that we schedule a time in the immediate future to hear from Secretary Yellen on these important programs.  I would like to submit for the record this letter that is signed by all Committee Republicans demanding that Secretary Yellen testify before us. 

The Paycheck Protection Program was established in a bipartisan manner to be administered by the SBA and the Department of the Treasury. Without reservation, Secretary Mnuchin testified before this Committee last Congress. His testimony was critical as it helped Members on both sides of the aisle explore questions from their constituents and assisted Members with next steps for the COVID relief programs.    

It is clear sign that this Administration’s Treasury Department, one of the biggest in the federal government, is ignoring America’s small businesses.  Simply put, if the Treasury Secretary and the Biden Administration truly cared about the nation’s smallest businesses and their employees, Secretary Yellen would be testifying today.     

Despite the Treasury Sectary not being with us, we have much to discuss. COVID-19 was devastating to our nation’s small businesses, entrepreneurs, and startups. Without precedent, state and local shutdown orders forced small businesses to either operate under restricted capacity numbers or close their doors to the public altogether. Responding to the backbreaking impact on small businesses, Congress and the Trump administration quickly focused on assisting small business workers. 

According to the SBA’s Office of Advocacy, small business employees represent approximately half of the nation’s workforce. Importantly, one program that was front and center for struggling small businesses was the Paycheck Protection Program, which private sector lenders delivered to small businesses.

PPP offered potentially forgivable loans if the dollars were used on payroll and a few other eligible expenses. Millions and millions of small businesses took advantage of the program, and now it is concluding. The next phases of the program will focus strictly on PPP forgiveness. 

Beyond PPP, Congress also activated the EIDL program, but unfortunately, this program – which is administered as a direct loan through the SBA – has been riddled with fraud.  From an SBA Inspector General report highlighting $78 billion in fraudulent activity to a report released three weeks ago where the Inspector General found that over 800,000 EIDL applications were flagged for identity theft concerns, it is clear the program is not safeguarding American taxpayer dollars.    

Any amount of fraud is absolutely unacceptable. However, this level of fraud shows the SBA is not suited to administer any direct lending program. On top of the fraud issues, the EIDL program is slow to reach small businesses in a time of need.  Historically, the SBA’s turn time to small businesses has always been at a snail’s pace.

In stark contrast, the PPP – unlike the EIDL program – was set up to capitalize on the efficiencies of private sector lenders, not the SBA. In addition to the turn time, the PPP also protected taxpayer dollars more effectively compared to EIDL due to lenders having a responsibility to know their customers and how to underwrite loans. 

As we continue to explore the SBA programs, we must look to the private sector to find efficiencies and innovations. The SBA’s ability to make direct loans to small businesses must be studied. 

In addition to making loans, the SBA has also been inefficiently operating the Shuttered Venue Operators Grant program for struggling venues, theaters, and other cultural entities. The night before the program launched the SBA’s Inspector General warned of serious concerns about the oversight controls in place.  Then, a few hours after opening the portal, the SBA had to take it offline to troubleshoot.  The program eventually relaunched but has yet to disburse any funds to struggling venues.    

While the SBA has been ignoring the Venues program, it has been championing the Biden administration’s Restaurant Revitalization Fund program.  The SBA has celebrated the priority period, which unfairly picks winners and losers. This Administration even highlighted that the program is reaching potentially undocumented individuals and those with an unknown immigration status over hardworking citizens of the United States. 

Overall, it seems each day brings another complication for the SBA. I know Republican Members have many of the same concerns that I do. However, the SBA’s track record for answering our questions has been underwhelming and, at times, non-existent. 

Thus far, my colleagues and I have sent numerous letters to Administrator Guzman and have received limited responses.  I would like to insert every letter that has failed to receive a response into today’s hearing record.

I am hopeful this conversation will produce results, because at the end of the day, small businesses drive our nation’s economy.  We must provide an environment for small businesses to operate independently as quickly as possible. 

Unfortunately, the Biden administration is threatening the small business recovery with tax increases and more regulatory burdens. We cannot allow these changes to occur – the health of our nation will depend on the health of small businesses. 

I yield back.  

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