File size: 151,236 Bytes
8ca9a67 |
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185 186 187 188 189 190 191 192 193 194 195 196 197 198 199 200 201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 250 251 252 253 254 255 256 257 258 259 260 261 262 263 264 265 266 267 268 269 270 271 272 273 274 275 276 277 278 279 280 281 282 283 284 285 286 287 288 289 290 291 292 293 294 295 296 297 298 299 300 301 302 303 304 305 306 307 308 309 310 311 312 313 314 315 316 317 318 319 320 321 322 323 324 325 326 327 328 329 330 331 332 333 334 335 336 337 338 339 340 341 342 343 344 345 346 347 348 349 350 351 352 353 354 355 356 357 358 359 360 361 362 363 364 365 366 367 368 369 370 371 372 373 374 375 376 377 378 379 380 381 382 383 384 385 386 387 388 389 390 391 392 393 394 395 396 397 398 399 400 401 402 403 404 405 406 407 408 409 410 411 412 413 414 415 416 417 418 419 420 421 422 423 424 425 426 427 428 429 430 431 432 433 434 435 436 437 438 439 440 441 442 443 444 445 446 447 448 449 450 451 452 453 454 455 456 457 458 459 460 461 462 463 464 465 466 467 468 469 470 471 472 473 474 475 476 477 478 479 480 481 482 483 484 485 486 487 488 489 490 491 492 493 494 495 496 497 498 499 500 501 502 503 504 505 506 507 508 509 510 511 512 513 514 515 516 517 518 519 520 521 522 523 524 525 526 527 528 529 530 531 532 533 534 535 536 537 538 539 540 541 542 543 544 545 546 547 548 549 550 551 552 553 554 555 556 557 558 559 560 561 562 563 564 565 566 567 568 569 570 571 572 573 574 575 576 577 578 579 580 581 582 583 584 585 586 587 588 589 590 591 592 593 594 595 596 597 598 599 600 601 602 603 604 605 606 607 608 609 610 611 612 613 614 615 616 617 618 619 620 621 622 623 624 625 626 627 628 629 630 631 632 633 634 635 636 637 638 639 640 641 642 643 644 645 646 647 648 649 650 651 652 653 654 655 656 657 658 659 660 661 662 663 664 665 666 667 668 669 670 671 672 673 674 675 676 677 678 679 680 681 682 683 684 685 686 687 688 689 690 691 692 693 694 695 696 697 698 699 700 701 702 703 704 705 706 707 708 709 710 711 712 713 714 715 716 717 718 719 720 721 722 723 724 725 726 727 728 729 730 731 732 733 734 735 736 737 738 739 740 741 742 743 744 745 746 747 748 749 750 751 752 753 754 755 756 757 758 759 760 761 762 763 764 765 766 767 768 769 770 771 772 773 774 775 776 777 778 779 780 781 782 783 784 785 786 787 788 789 790 791 792 793 794 795 796 797 798 799 800 801 802 803 804 805 806 807 808 809 810 811 812 813 814 815 816 817 818 819 820 821 822 823 824 825 826 827 828 829 830 831 832 833 834 835 836 837 838 839 840 841 842 843 844 845 846 847 848 849 850 851 852 853 854 855 856 857 858 859 860 861 862 863 864 865 866 867 868 869 870 871 872 873 874 875 876 877 878 879 880 881 882 883 884 885 886 887 888 889 890 891 892 893 894 895 896 897 898 899 900 901 902 903 904 905 906 907 908 909 910 911 912 913 914 915 916 917 918 919 920 921 922 923 924 925 926 927 928 929 930 931 932 933 934 935 936 937 938 939 940 941 942 943 944 945 946 947 948 949 950 951 952 953 954 955 956 957 958 959 960 961 962 963 964 965 966 967 968 969 970 971 972 973 974 975 976 977 978 979 980 981 982 983 984 985 986 987 988 989 990 991 992 993 994 995 996 997 998 999 1000 1001 1002 1003 1004 1005 1006 1007 1008 1009 1010 1011 1012 1013 1014 1015 1016 1017 1018 1019 1020 1021 1022 1023 1024 1025 1026 1027 1028 1029 1030 1031 1032 1033 1034 1035 1036 1037 1038 1039 1040 1041 1042 1043 1044 1045 1046 1047 1048 1049 1050 1051 1052 1053 1054 1055 1056 1057 1058 1059 1060 1061 1062 1063 1064 1065 1066 1067 1068 1069 1070 1071 1072 1073 1074 1075 1076 1077 1078 1079 1080 1081 1082 1083 1084 1085 1086 1087 1088 1089 1090 1091 1092 1093 1094 1095 1096 1097 1098 1099 1100 1101 1102 1103 1104 1105 1106 1107 1108 1109 1110 1111 1112 1113 1114 1115 1116 1117 1118 1119 1120 1121 1122 1123 1124 1125 1126 1127 1128 1129 1130 1131 1132 1133 1134 1135 1136 1137 1138 1139 1140 1141 1142 1143 1144 1145 1146 1147 1148 1149 1150 1151 1152 1153 1154 1155 1156 1157 1158 1159 1160 1161 1162 1163 1164 1165 1166 1167 1168 1169 1170 1171 1172 1173 1174 1175 1176 1177 1178 1179 1180 1181 1182 1183 1184 1185 1186 1187 1188 1189 1190 1191 1192 1193 1194 1195 1196 1197 1198 1199 1200 1201 1202 1203 1204 1205 1206 1207 1208 1209 1210 1211 1212 1213 1214 1215 1216 1217 1218 1219 1220 1221 1222 1223 1224 1225 1226 1227 1228 1229 1230 1231 1232 1233 1234 1235 1236 1237 1238 1239 1240 1241 1242 1243 1244 1245 1246 1247 1248 1249 1250 1251 1252 1253 1254 1255 1256 1257 1258 1259 1260 1261 1262 1263 1264 1265 1266 1267 1268 1269 1270 1271 1272 1273 1274 1275 1276 1277 1278 1279 1280 1281 1282 1283 1284 1285 1286 1287 1288 1289 1290 1291 1292 1293 1294 1295 1296 1297 1298 1299 1300 1301 1302 1303 1304 1305 1306 1307 1308 1309 1310 1311 1312 1313 1314 1315 1316 1317 1318 1319 1320 1321 1322 1323 1324 1325 1326 1327 1328 1329 1330 1331 1332 1333 1334 1335 1336 1337 1338 1339 1340 1341 1342 1343 1344 1345 1346 1347 1348 1349 1350 1351 1352 1353 1354 1355 1356 1357 1358 1359 1360 1361 1362 1363 1364 1365 1366 1367 1368 1369 1370 1371 1372 1373 1374 1375 1376 1377 1378 1379 1380 1381 1382 1383 1384 1385 1386 1387 1388 1389 1390 1391 1392 1393 1394 1395 1396 1397 1398 1399 1400 1401 1402 1403 1404 1405 1406 1407 1408 1409 1410 1411 1412 1413 1414 1415 1416 1417 1418 1419 1420 1421 1422 1423 1424 1425 1426 1427 1428 1429 1430 1431 1432 1433 1434 1435 1436 1437 1438 1439 1440 1441 1442 1443 1444 1445 1446 1447 1448 1449 1450 1451 1452 1453 1454 1455 1456 1457 1458 1459 1460 1461 1462 1463 1464 1465 1466 1467 1468 1469 1470 1471 1472 1473 1474 1475 1476 1477 1478 1479 1480 1481 1482 1483 1484 1485 1486 1487 1488 1489 1490 1491 1492 1493 1494 1495 1496 1497 1498 1499 1500 1501 1502 1503 1504 1505 1506 1507 1508 1509 1510 1511 1512 1513 1514 1515 1516 1517 1518 1519 1520 1521 1522 1523 1524 1525 1526 1527 1528 1529 1530 1531 1532 1533 1534 1535 1536 1537 1538 1539 1540 1541 1542 1543 1544 1545 1546 1547 1548 1549 1550 1551 1552 1553 1554 1555 1556 1557 1558 1559 1560 1561 1562 1563 1564 1565 1566 1567 1568 1569 1570 1571 1572 1573 1574 1575 1576 1577 1578 1579 1580 1581 1582 1583 1584 1585 1586 1587 1588 1589 1590 1591 1592 1593 1594 1595 1596 1597 1598 1599 1600 1601 1602 1603 1604 1605 1606 1607 1608 1609 1610 1611 1612 1613 1614 1615 1616 1617 1618 1619 1620 1621 1622 1623 1624 1625 1626 1627 1628 1629 1630 1631 1632 1633 1634 1635 1636 1637 1638 1639 1640 1641 1642 1643 1644 1645 1646 1647 1648 1649 1650 1651 1652 1653 1654 1655 1656 1657 1658 1659 1660 1661 1662 1663 1664 1665 1666 1667 1668 1669 1670 1671 1672 1673 1674 1675 1676 1677 1678 1679 1680 1681 1682 1683 1684 1685 1686 1687 1688 1689 1690 1691 1692 1693 1694 1695 1696 1697 1698 1699 1700 1701 1702 1703 1704 1705 1706 1707 1708 1709 1710 1711 1712 1713 1714 1715 1716 1717 1718 1719 1720 1721 1722 1723 1724 1725 1726 1727 1728 1729 1730 1731 1732 1733 1734 1735 1736 1737 1738 1739 1740 1741 1742 1743 1744 1745 1746 1747 1748 1749 1750 1751 1752 1753 1754 1755 1756 1757 1758 1759 1760 1761 1762 1763 1764 1765 1766 1767 1768 1769 1770 1771 1772 1773 1774 1775 1776 1777 1778 1779 1780 1781 1782 1783 1784 1785 1786 1787 1788 1789 1790 1791 1792 1793 1794 1795 1796 1797 1798 1799 1800 1801 1802 1803 1804 1805 1806 1807 1808 1809 1810 1811 1812 1813 1814 1815 1816 1817 1818 1819 1820 1821 1822 1823 1824 1825 1826 1827 1828 1829 1830 1831 1832 1833 1834 1835 1836 1837 1838 1839 1840 1841 1842 1843 1844 1845 1846 1847 1848 1849 1850 1851 1852 1853 1854 1855 1856 1857 1858 1859 1860 1861 1862 1863 1864 1865 1866 1867 1868 1869 1870 1871 1872 1873 1874 1875 1876 1877 1878 1879 1880 1881 1882 1883 1884 1885 1886 1887 1888 1889 1890 1891 1892 1893 1894 1895 1896 1897 1898 1899 1900 1901 1902 1903 1904 1905 1906 1907 1908 1909 1910 1911 1912 1913 1914 1915 1916 1917 1918 1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 2051 2052 2053 2054 2055 2056 2057 2058 2059 2060 2061 2062 2063 2064 2065 2066 2067 2068 2069 2070 2071 2072 2073 2074 2075 2076 2077 2078 2079 2080 2081 2082 2083 2084 2085 2086 2087 2088 2089 2090 2091 2092 2093 2094 2095 2096 2097 2098 2099 2100 2101 2102 2103 2104 2105 2106 2107 2108 2109 2110 2111 2112 2113 2114 2115 2116 2117 2118 2119 2120 2121 2122 2123 2124 2125 2126 2127 2128 2129 2130 2131 2132 2133 2134 2135 2136 2137 2138 2139 2140 2141 2142 2143 2144 2145 2146 2147 2148 2149 2150 2151 2152 2153 2154 2155 2156 2157 2158 2159 2160 2161 2162 2163 2164 2165 2166 2167 2168 2169 2170 2171 2172 2173 2174 2175 2176 2177 2178 2179 2180 2181 2182 2183 2184 2185 2186 2187 2188 2189 2190 2191 2192 2193 2194 2195 2196 2197 2198 2199 2200 2201 2202 2203 2204 2205 2206 2207 2208 2209 2210 2211 2212 2213 2214 2215 2216 2217 2218 2219 2220 2221 2222 2223 2224 2225 2226 2227 2228 2229 2230 2231 2232 2233 2234 2235 2236 2237 2238 2239 2240 2241 2242 2243 2244 2245 2246 2247 2248 2249 2250 2251 2252 2253 2254 2255 2256 2257 2258 2259 2260 2261 2262 2263 2264 2265 2266 2267 2268 2269 2270 2271 2272 2273 2274 2275 2276 2277 2278 2279 2280 2281 2282 2283 2284 2285 2286 2287 2288 2289 2290 2291 2292 2293 2294 2295 2296 2297 2298 2299 2300 2301 2302 2303 2304 2305 2306 2307 2308 2309 2310 2311 2312 2313 2314 2315 2316 2317 2318 2319 2320 2321 2322 2323 2324 2325 2326 2327 2328 2329 2330 2331 2332 2333 2334 2335 2336 2337 2338 2339 2340 2341 2342 2343 2344 2345 2346 2347 2348 2349 2350 2351 2352 2353 2354 2355 2356 2357 2358 2359 2360 2361 2362 2363 2364 2365 2366 2367 2368 2369 2370 2371 2372 2373 2374 2375 2376 2377 2378 2379 2380 2381 2382 2383 2384 2385 2386 2387 2388 2389 2390 2391 2392 2393 2394 2395 2396 2397 2398 2399 2400 2401 2402 2403 2404 2405 2406 2407 2408 2409 2410 2411 2412 2413 2414 2415 2416 2417 2418 2419 2420 2421 2422 2423 2424 2425 2426 2427 2428 2429 2430 2431 2432 2433 2434 2435 2436 2437 2438 2439 2440 2441 2442 2443 2444 2445 2446 2447 2448 2449 2450 2451 2452 2453 2454 2455 2456 2457 2458 2459 2460 2461 2462 2463 2464 2465 2466 2467 2468 2469 2470 2471 2472 2473 2474 2475 2476 2477 2478 2479 2480 2481 2482 2483 2484 2485 2486 2487 2488 2489 2490 2491 2492 2493 2494 2495 2496 2497 2498 2499 2500 2501 2502 2503 2504 2505 2506 2507 2508 2509 2510 2511 2512 2513 2514 2515 2516 2517 2518 2519 2520 2521 2522 2523 2524 2525 2526 2527 2528 2529 2530 2531 2532 2533 2534 2535 2536 2537 2538 2539 2540 2541 2542 2543 2544 2545 2546 2547 2548 2549 2550 2551 2552 2553 2554 2555 2556 2557 2558 2559 2560 2561 2562 2563 2564 2565 2566 2567 2568 2569 2570 2571 2572 2573 2574 2575 2576 2577 2578 2579 2580 2581 2582 2583 2584 2585 2586 2587 2588 2589 2590 2591 2592 2593 2594 2595 2596 2597 2598 2599 2600 2601 2602 2603 2604 2605 2606 2607 2608 2609 2610 2611 2612 2613 2614 2615 2616 2617 2618 2619 2620 2621 2622 2623 2624 2625 2626 2627 2628 2629 2630 2631 2632 2633 2634 2635 2636 2637 2638 2639 2640 2641 2642 2643 2644 2645 2646 2647 2648 2649 2650 2651 2652 2653 2654 2655 2656 2657 2658 2659 2660 2661 2662 2663 2664 2665 2666 2667 2668 2669 2670 2671 2672 2673 2674 2675 2676 2677 2678 2679 2680 2681 2682 2683 2684 2685 2686 2687 2688 2689 2690 2691 2692 2693 2694 2695 2696 2697 2698 2699 2700 2701 2702 2703 2704 2705 2706 2707 2708 2709 2710 2711 2712 2713 2714 2715 2716 2717 2718 2719 2720 2721 2722 2723 2724 2725 2726 2727 2728 2729 2730 2731 2732 2733 2734 2735 2736 2737 2738 2739 2740 2741 2742 2743 2744 2745 2746 2747 2748 2749 2750 2751 2752 2753 2754 2755 2756 2757 2758 2759 |
<html>
<title> - STATE OF THE SMALL BUSINESS ECONOMY IN THE ERA OF COVID-19</title>
<body><pre>
[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]
STATE OF THE SMALL BUSINESS ECONOMY IN
THE ERA OF COVID-19
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD
FEBRUARY 4, 2021
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Small Business Committee Document Number 117-002
Available via the GPO Website: www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
43-321 WASHINGTON : 2020
-----------------------------------------------------------------------------------
HOUSE COMMITTEE ON SMALL BUSINESS
NYDIA VELAZQUEZ, New York, Chairwoman
JARED GOLDEN, Maine
JASON CROW, Colorado
SHARICE DAVIDS, Kansas
KWEISI MFUME, Maryland
DEAN PHILLIPS, Minnesota
MARIE NEWMAN, Illinois
CAROLYN BOURDEAUX, Georgia
JUDY CHU, California
DWIGHT EVANS, Pennsylvania
ANTONIO DELGADO, New York
CHRISSY HOULAHAN, Pennsylvania
ANDY KIM, New Jersey
ANGIE CRAIG, Minnesota
BLAINE LUETKEMEYER, Missouri, Ranking Member
ROGER WILLIAMS, Texas
JIM HAGEDORN, Minnesota
PETE STAUBER, Minnesota
DAN MEUSER, Pennsylvania
ANDREW GARBARINO, New York
YOUNG KIM, California
BETH VAN DUYNE, Texas
BYRON DONALDS, Florida
MARIA SALAZAR, Florida
SCOTT FITZGERALD, Wisconsin
Melissa Jung, Majority Staff Director
Justin Pelletier, Majority Deputy Staff Director and Chief Counsel
David Planning, Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Nydia Velazquez............................................. 1
Hon. Blaine Luetkemeyer.......................................... 3
WITNESSES
Dr. Robert W. Fairlie, Professor, Department of Economics,
University of California, Santa Cruz, Santa Cruz, CA........... 6
Ms. Sharon Pinder, President & CEO, Capital Region Minority
Supplier Development Council, Silver Spring, MD................ 8
Mr. Stephen Schoaps, Owner, Strother Cinema, Seminole, OK........ 10
Ms. Karen Kerrigan, President & Chief Executive Officer, SBE
Council, Vienna, VA............................................ 11
APPENDIX
Prepared Statements:
Dr. Robert W. Fairlie, Professor, Department of Economics,
University of California, Santa Cruz, Santa Cruz, CA....... 48
Ms. Sharon Pinder, President & CEO, Capital Region Minority
Supplier Development Council, Silver Spring, MD............ 58
Mr. Stephen Schoaps, Owner, Strother Cinema, Seminole, OK.... 65
Ms. Karen Kerrigan, President & Chief Executive Officer, SBE
Council, Vienna, VA........................................ 67
Questions for the Record:
None.
Answers for the Record:
None.
Additional Material for the Record:
NFIB Research Center Study................................... 76
PPP Report................................................... 123
Associated Builders and Contractors (ABC).................... 146
ACA International............................................ 149
Brookings Metropolitan Policy Program........................ 151
Engine....................................................... 157
Hispanic Business Enterprises (HBE).......................... 162
National Association of Federally-Insured Credit Unions
(NAFCU).................................................... 190
STATE OF THE SMALL BUSINESS ECONOMY IN THE ERA OF COVID-19
----------
THURSDAY, FEBRUARY 4, 2021
House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to call, at 10:01 a.m., in Room
2360, Rayburn House Office Building, Hon. Nydia M. Velazquez
[chairwoman of the Committee] presiding.
Present: Representatives Velazquez, Golden, Crow, Davids,
Mfume, Phillips, Newman, Bourdeaux, Delgado, Houlahan, Kim of
New Jersey, Craig, Luetkemeyer, Donalds, Fitzgerald, Garbarino,
Hagedorn, Kim of California, Meuser, Salazar, Stauber, Van
Duyne, and Williams.
Chairwoman VELAZQUEZ. Good morning. I call this hearing to
order. I want to thank everyone for joining us today for our
first hearing of the 117th Congress. I welcome all our new
Small Business Committee Members, and welcome back those of you
returning to the Committee from the 116th Congress.
I want to make sure to note some important requirements.
Let me begin by saying that standing House and Committee rules
and practice will continue to apply during hybrid proceedings.
All Members are reminded they are expected to adhere to these
standing rules, including decorum.
House regulations require Members to be visible through a
video connection throughout the proceeding, so please keep your
cameras on. Also, please remember to remain muted until you are
recognized to minimize background noise.
If you have to participate in another proceeding, please
exit this one and log back in later. In the event a Member
encounters technical issues that prevent them from being
recognized for their questioning, I will move to the next
available Member of the same party, and I will recognize that
Member at the next appropriate time slot, provided they have
returned to the proceeding.
For those Members physically present in the Committee room
today, we will also be following the health and safety guidance
issued by the attending physician.
This past year, COVID-19 sparked a once-in-a-lifetime
crisis for American small businesses. As we meet today,
entrepreneurs nationwide are holding onto their businesses for
dear life. According to the research published by the Federal
Reserve Bank of New York, the number of active business owners
fell by 22 percent from February to April 2020, the largest
drop on record.
That same research showed minority owned businesses faced
the worst outcome. This pandemic has hit minority owned
businesses the hardest. COVID has caused a 41 percent decline
in Black-owned businesses, a 32 percent decline in Latino-owned
businesses, and 26 percent decline in Asian-American-owned
businesses.
As we start the new year, it is not clear that conditions
have improved. As the virus has continued to spread, small
businesses are increasingly pessimistic in their outlook for
2021. The NFIB Small Business Optimism Index declined 5.5
points in December to 95.9 percent points, a level not seen
since 1973.
Even more troubling is that 20 percent of firms consider
themselves to be at risk or distressed. The pandemic has hit
small businesses that rely on large gatherings and foot traffic
especially hard. According to the New York State Restaurant
Association, more than half of all restaurants in New York City
are in danger of closing forever.
While small businesses in hospitality, retail, travel,
leisure, entertainment, and others that rely on foot traffic
for revenue struggle, big businesses strive. Profits soared for
large corporations like Amazon, Wal-Mart, Home Depot, Best Buy,
Costco, and others, who gained market share and saw their stock
prices rise accordingly.
Forty-five of the fifty most valuable publicly traded U.S.
companies turned a profit between April and September 2020, one
of the most tumultuous economic periods in modern history. We
need to be thinking about big and bold policies that provide
small businesses with the resources they need to make it
through this crisis and grow in the future.
In December, Congress passed a bill reopening the Paycheck
Protection Program, allocating new funding for EIDL advances,
and creating the Shuttered Venue Grants Program. These
initiatives will save jobs and help businesses stay afloat, but
that relief package was only a down payment on the stimulus the
small business economy needs. Small businesses are still in a
crisis, and we must do more.
Looking forward, we must enact bold relief measures under
the Biden administration that reflect the dire reality main
street firms are facing. Small businesses have made it clear
they need more direct and flexible cash infusions. Throughout
this pandemic, small business owners told our Committee they
couldn't afford to take on additional debt during this
uncertain time.
Programs like the targeted EIDL advances will provide small
business owners with desperately needed relief without weighing
down their balance sheets. We will hear testimony today about
the benefits of advances and other grants and if more funding
is required.
In addition to capital, small businesses also need access
to customers. The U.S. Federal Government is the largest
consumer globally, purchasing over $500 billion in goods and
services each year. The Federal Government can play a unique
role in supporting small businesses by using the Defense
Production Act and Buy American policies to increase the
customer base of the small businesses' economy.
Our nation's recovery depends on the well-being of small
businesses and their employees. These are uncertain times for
American entrepreneurs, and this Committee must help lead to
the other side of this crisis. Members of this Committee serve
as the voice of small businesses in the House, and we must work
tirelessly to support them.
Today's hearing will give us a clear view of the small
business economy's state and the work we need to do going
forward.
Ladies and gentlemen, the hard work we have been engaged in
over the past 11 months on behalf of America's entrepreneurs
continues to date. I am looking forward to carrying on that
work in a bipartisan manner with our new Ranking Member, Mr.
Blaine Luetkemeyer of Missouri.
Let me be the first to welcome you back to this Committee.
With that, Mr. Ranking Member, you are recognized for your
opening statement.
Mr. LUETKEMEYER. Thank you, Madam Chair.
And, again, I look forward to working with you. I think
there is a lot of common ground here where we can make a lot of
progress for our great small business folks back home and
across this country.
Appreciate you holding this kickoff hearing. As the
Committee begins the 117th Congress, there are few topics more
important within our jurisdiction than examining the small
business economy during this unprecedented global crisis. It is
my hope that we continue to explore all facets of this
significant issue in a bipartisan manner and work efficiently
to support and ensure all small businesses, entrepreneurs, and
innovators rebuild and return to economic independence.
While this emergency period is unparalleled, we know that,
prior to COVID-19, small businesses were operating at historic
levels. In 2018 and 2019, optimism reached record heights for
small business owners, and the unemployment rate was decreasing
sharply and eventually hovered around 3.5 percent. And, if
small business have confidence, they are more comfortable
taking prudent risks and innovating new ideas. These are the
characteristics that drive our economy forward.
Our pre-COVID-19 small business environment was constructed
through progrowth policies that focussed on tax reform and a
vigorous deregulatory environment that allowed small businesses
to reinvest their hard-earned dollars into their business'
employees. Instead of concentrating on mountains of paperwork,
small businesses were free to focus on their own goods,
services, customers, and employees.
Unfortunately, COVID-19 and accompanying protective
measures struck at the core of the small business community. A
once busy Main Street became dormant due to the crisis at hand
and the burdensome shutdown measures instituted by State and
local governments.
As a response, Congress and the former administration
developed tools that could deliver assistance to small
businesses quickly. One program that has been especially
effective is the Paycheck Protection Program, known as the PPP.
According to the Small Business Administration, by the time
PPP expired on August 8, 2020, it had assisted over 5 million
small businesses. In total, these loans provided over 2, or--
excuse me--$525 billion to small businesses from coast to coast
and assisted in saving over 50 million jobs.
As the emergency period wore on, Congress worked to install
the PPP with more flexibility and further enhancements. In the
latest COVID-19 relief bill, signed into law in December 2020,
the PPP was reauthorized with $284 billion.
This second round of funding was tailored and targeted to
ensure small businesses and other eligible entities that were
truly impacted by COVID-19 received the relief they needed.
Just last month, the PPP program was officially relaunched, and
I look forward to working in a bipartisan manner to ensure that
the program continues to reach small businesses across the
country that were hardest hit by the pandemic.
Beyond PPP, the December COVID relief bill extended the
Economic Injury Disaster Loan Program and reformed the EIDL
Advance Program. Additionally, it extended debt relief program
for existing and new 7a, 504, and micro loans. It also created
the Shuttered Venue Operators, SVO, Grant Program for venues,
theatres, and museums.
In total, the December COVID relief bill delivered $325
billion--targeted dollars to the Nation's smallest and hardest-
hit businesses and industries. Ensuring that programs are
operating effectively and efficiently remain paramount on this
Committee.
The best way, in my judgment, to get these businesses back
on their feet is to allow them to open up. Let them get back to
business. It works. In Missouri, my home State, we opened up in
mid-May. For 2020, we wound up with a 5 percent increase in
revenues over 2019--2019--that is right--and 2020 had more
revenue coming into our State coffers than we did in 2019. We
have a 4.4 percent unemployment rate today and have 200,000
open jobs in our State as a result of that.
As these small businesses worked to try and create--as we
work to try and create an environment for small business to
rebuild, create jobs, and expand in the future--i.e., get back
to work--I am concerned that this administration is taking
steps to institute a regulatory environment that heavily
burdens small businesses.
By rescinding the commonsense administrative action that
required repeal of two regulations for every one created, there
is concern that heavyhanded regulations are returning. This
regulatory environment combined with conversations surrounding
increasing the minimum wage are warning signs for America's job
creators.
Our Nation's small businesses are more fragile than ever
before, and additional rules and regulations are
counterproductive to the recovery. These hard-working men and
women are the backbone of this great Nation, and, when they
succeed, so does our economy.
I look forward to working with all of my colleagues to
ensure our Nation's environment is rich with opportunities for
growth. I would like to thank all the witnesses for joining us
today, and thank you, Madam Chair.
With that, I yield back.
Chairwoman VELAZQUEZ. The gentleman yields back.
I would like to take a moment to explain how this hearing
will proceed.
Each witness will have 5 minutes to provide a statement,
and each Committee Member will have 5 minutes for questions.
Please ensure that your microphone is on when you begin
speaking and that you return to mute when finished.
With that, I would like to introduce our witnesses.
Our first witness today is Professor Robert Fairlie,
Professor of Economics at the University of California, Santa
Cruz. Professor Fairlie has testified before Congress numerous
times on policy issues related to small businesses, and we are
thrilled to have him before us today.
Most recently, Professor Fairlie was instrumental in
research regarding the impact of COVID-19 on business owners of
color, which has helped guide and will continue to guide
congressional policymaking. We look forward to hearing more
about this important research and the implications it has on
federal relief efforts.
Our second witness is Ms. Sharon Pinder. Ms. Pinder is the
President and CEO of the Capital Region Minority Supplier
Diversity Council, a nonprofit corporation whose mission is to
link corporations and government agencies with competitively
viable minority business enterprises.
Prior to joining the council, Ms. Pinder served for 3 years
as the Director of the Mayor's Office of Minority and Women
Owned Business Developments for the city of Baltimore, where
she was responsible for the city's minority and women business
programs.
In 2014, the University of Maryland, Eastern Shore,
recognized Ms. Pinder's dedication to small businesses by
naming a scholarship, the Sharon Pinder Award for
Entrepreneurship, in her honor.
Welcome Ms. Pinder.
Our third witness is Mr. Stephen Schoaps. Mr. Schoaps is
the owner of Strother Cinema, a neighborhood theatre with two
screens, in Seminole, Oklahoma. As with virtually all other
theatres, music venues, and museums, Strother Cinema was forced
to close during the pandemic. As a shuttered venue owner, he is
also looking forward to seeing the newly enacted Shuttered
Venue Grant Program that will be implemented by the SBA.
We look forward to hearing about his experiences with these
programs, especially the role that the EIDL advance played in
helping keep his business afloat.
Welcome, Mr. Schoaps.
I would now like to yield to the Ranking Member, Mr.
Luetkemeyer, to introduce our final witness.
Mr. LUETKEMEYER. Thank you, Madam Chair.
Our next witness is Karen Kerrigan. Ms. Kerrigan is the
President and chief executive officer of the Small Business and
Entrepreneurship Council, also known as SBE Council.
Founded in 1994, the SBE Council advocates for small
businesses, entrepreneurs, and start-ups. In addition to
advocacy, SBE Council produces educational resources and
significant research for our Nation's job creators.
For more than two decades, Ms. Kerrigan has been a
prominent voice in supporting small businesses, whether
providing information on access to capital, discussing funding
revenues, or leading on regulation and tax reform, Ms. Kerrigan
has proven herself to be a distinguished advocate for small
businesses everywhere. She is a frequent television commentator
on small business growth and has participated in and led small
business events at the White House and numerous Federal
agencies.
She is also no stranger to Capitol Hill, where she has
testified before various committees before, including this one.
Ms. Kerrigan is a graduate of the State University of New York
in Cortland and a member of several Federal advisory boards.
Ms. Kerrigan, we thank you for your smart approach and
understanding of the entire small business ecosystem,
especially during this time of COVID-19. Welcome back to The
Committee. We look forward to your testimony.
Chairwoman VELAZQUEZ. I now recognize Professor Fairlie for
5 minutes.
STATEMENTS OF DR. ROBERT W. FAIRLIE, PROFESSOR, DEPARTMENT OF
ECONOMICS, UNIVERSITY OF CALIFORNIA, SANTA CRUZ, SANTA CRUZ,
CALIFORNIA; SHARON PINDER, PRESIDENT AND CEO, CAPITAL REGION
MINORITY SUPPLIER DEVELOPMENT COUNCIL, SILVER SPRING, MARYLAND;
STEPHEN SCHOAPS, OWNER, STROTHER CINEMA, SEMINOLE, OKLAHOMA;
AND KAREN KERRIGAN, PRESIDENT AND CEO, SBE COUNCIL, VIENNA,
VIRGINIA
STATEMENT OF DR. ROBERT W. FAIRLIE
Mr. FAIRLIE. Thank you, Chairwoman Velazquez, Ranking
Member Luetkemeyer, and members of the Committee. It is an
honor to testify before you on the state of small business
economy. I am a professor of economics at the University of
California, Santa Cruz, and have studied entrepreneurship,
racial inequality, and small business policy for over 25 years.
I have been asked to discuss the findings of my research on
the impacts of the pandemic on small business owners. As you
know, obtaining up to date and accurate information on the
effects of the pandemic has been extremely difficult. I have
spent the past 8 months compiling and analyzing data to
investigate what happened to small business owners, especially
minority business owners.
From the middle of March to early April, most States
imposed shelter-in-place restrictions that closed nonessential
businesses. In my research, I found that the number of active
business owners in the U.S. plummeted by 3.3 million, or 22
percent, between February and April of 2020. No other 2- or
even 12-month window of time has ever shown such a large change
in business activity.
For comparison, from the start to the end of the Great
Recession, the number of active business owners dropped by only
5 percent. African American businesses were hit the hardest,
experiencing a 41 percent drop in business activity, Latinx
business owner activity fell by 32 percent, and Asian business
owner activity dropped by 26 percent. Unfavorable industry
concentrations and the smaller scale of minority owned
businesses were partly responsible.
Job losses were also much higher for minority workers.
Black unemployment hit a peak of 17 percent, and Latinx
unemployment hit a peak of 18 percent. Although many of the
closures turned out to be temporary, any month of closure
reflects lost income to the owner of the business. But the
owner still has to pay rent and other bills.
It has been especially difficult to figure out how much
small businesses lost in sales and revenues in the pandemic.
Using taxable sales data from the California Department of Tax
and Fee Administration, we found average losses of 17 percent
in the second quarter of 2020. Normally, year-over-year growth
is in the range of 3 to 4 percent.
Sales losses were the largest in businesses affected by
mandatory lockdowns. For example, we found that hotels lost 91
percent, restaurants lost 61 percent, and clothing stores lost
56 percent.
At the same time, online sales grew by 180 percent in the
second quarter of 2020. Without a strong online presence, many
small businesses will not have the resources to weather a
prolonged recovery. Recent Census Bureau surveys indicate that
only 15 to 20 percent of small businesses have enough cash on
hand to cover 3 months of operations.
One of the stated goals in the CARES Act was to prioritize
serving underserved markets and businesses owned by socially
and economically disadvantaged individuals. Did the PPP and
EIDL programs, which were the key components of the CARES Act,
get distributed to minority communities?
Using data on 15 million individual loans, we found that
funding from these relief programs both flowed to minority
communities and away from minority communities. If anything, we
found a positive relationship between PPP loan receipt for
business in the minority share of the population.
There is some evidence, however, that the first round of
funds flowed disproportionately to nonminority communities.
When focusing on PPP loan amounts per employee, we also found a
disproportionate flow to nonminority communities. In contrast,
EIDL loans and advances in both number and amounts were
provided to minority communities.
In my continual work tracking how small businesses are
doing in the recovery, I recently found some alarming trends.
From April to October, there was constant month-to-month
improvements in business activity. But, in November and
December, that pattern reversed. Over those 2 months, small
business activity dropped by 6 percent.
The losses I have described here are especially alarming
for two vulnerable groups: African Americans and Latinx. Prior
to the pandemic, business ownership and revenues were already
low for both groups. But, perhaps more importantly, there is a
huge wealth gap. Half of Black families in the U.S. have less
than $10,000 in total wealth, and half of Latinx families have
less than $25,000 in total wealth. White levels of wealth are 7
to 18 times higher. Many minority business owners will simply
not have the financial resources to weather prolonged closures.
I would like to turn to discussing what could help move us
forward.
First, consumers need to feel safe again. The number one
priority for helping small businesses is to get the vaccine out
faster, enabling customers to go back to small businesses.
Second, more financial assistance is needed for small
business owners, especially during the next few months. In
particular, rent relief and protection could be crucial for
survival.
Third, we need to slow down the extensive shift to online
shopping that occurred in the pandemic and is likely to
continue. Small businesses need to have more of an online
presence. Aid in the form of web page assistance could be
useful. Search engines could prioritize local businesses
instead of online retailers and big-box stores.
Fourth, the Federal Government needs to collect more data
on race and their relief efforts. Demographic information was
only partially and unevenly collected in the first two rounds
of the PPP program, and there was much criticism for this
omission.
Chairwoman VELAZQUEZ. Doctor----
Mr. FAIRLIE. Additionally, collection of information----
Chairwoman VELAZQUEZ. Professor Fairlie, your time has
expired, and maybe during the question-and-answer period, you
will be able to expand on any point that you were not able to.
Mr. FAIRLIE. Yeah, I am finished. Thank you for the
opportunity to present.
Chairwoman VELAZQUEZ. I now will recognize Ms. Pinder for 5
minutes.
STATEMENT OF SHARON PINDER
Ms. PINDER. Good morning, Madam Chairwoman Velazquez and
Ranking Member Congressman Luetkemeyer and the distinguished
members of the Committee of Small Business, and I certainly
have to recognize my favorite Congressman, Congressman Kweisi
Mfume. Thank you for your service to our country, and thank you
for this opportunity to speak with you today.
I am Sharon Pinder, president and CEO of the Capital Region
Minority Supply Development Council and operator of two centers
funded by the U.S. Department of Commerce, Minority Business
Development Agency. We operate the MBDA Business Center,
Washington, D.C., and the Federal Procurement Center, the only
one of its kind in this country.
There is an old economic adage that says, ``When America
catches a cold, minority businesses catch pneumonia.'' Well,
now it is worse. America has COVID-19, and both minorities and
their businesses are dying at dramatic rates. Just like many
minority individuals have preexisting health conditions, well,
most minority businesses faced preexisting discriminatory
conditions that show up in ways like access to capital, lack of
access to opportunities, mentorship, et cetera.
PreCOVID, there were 1.1 million minority owned businesses
employing 6.3 million people, generating more than 1.8 trillion
in revenue annually. Then, in 2020, the world came to a halt,
and the data that we, I think, were all talking from, the
National Bureau of Economic Research, looking at between
February and April, African Americans experienced the largest
loss.
Madam Chairwoman talked about the 41 percent with African
American-owned businesses, Latinx businesses, 32 percent Asian
businesses, et cetera. But my organization and our sister
organizations across this country live this every day, and what
we know to be true is that our businesses need a lifeline.
And, as we examine and reflect upon the state of minority
businesses due to COVID-19, we have to factor in, layer in the
social injustice piece. Black-owned businesses were especially
impacted by this.
Ladies and gentlemen, the failure of our minority small
businesses places our country at risk why? Because minority
businesses are poised to become the majority population. We
need to plug up the cracks in our economic foundation and
preserve our place in the future global marketplace.
I can spend hours talking about issues with PPP and all
those things, but I would like to spend my remaining time
talking about some solutions.
We ask that Congress look at some existing assets through a
different lens. The Defense Production Act statute is one of
the country's most powerful laws for Federal intervention in
national commercial activity. Title III of the act establishes
the President's authority to invest in specific industries.
The idea of investment in business development would be
crucial, for example, in jump-starting minority businesses in
manufacturing. There could be a no-interest loan like those
provided to businesses to ramp up for defense work.
A quick example. In the State of Maryland, through the
CARES Act, we recently implemented funds to--for COVID-19 small
business relief grant and loan program. Governor Hogan
allocated $5 million that was allocated or dispensed by
Meridian Management Group. But the loans were from 25,000 to
150,000, 0 percent interest the first year, and 2 percent of
the remaining 5 years. The remaining fund I told you was 5
million. There was $20 million on request. There is a need.
There is an identifiable need.
Title IV of the Defense Production Act includes a section
that establishes preference for small business contractors.
Showing a preference for minority businesses as a subset of
small business by expanding the use of sole source programming
provisions of the 8a program will put more money into those
minority businesses that compete in both the Federal and
private sector.
Let's look at--further at existing assets. How about Buy
American. We are excited about President Biden's Buy American
executive order. The concept of Buy American has been around
since 1933, but the executive order includes all Federal
procurement now. That is huge. We hope that it will be
implemented with--in a manner that is advantageous to minority
businesses.
With the Buy American executive order, we propose a
strategy that involves OEM teaming up with foreign
manufacturing companies to produce and manufacture goods and
services in partnership with U.S.-based minority businesses.
Such a joint venture could introduce a pathway for foreign
businesses who want to move their organizations to the U.S., an
avenue to do so, and at the same time provide resources and
increase support to the development of minority businesses.
Madam Chairwoman, minority and small businesses are in need
of an economic vaccine. The Capital Region Minority Supply
Development Council is a national minority supply development
council and networks stand ready to support your House Small
Business Committee in its work to help build small and minority
businesses.
My written testimony goes into or provides more detail.
Again, I appreciate the opportunity to have this
discussion.
Chairwoman VELAZQUEZ. Thank you, Ms. Pinder.
I now recognize Mr. Schoaps for 5 minutes.
STATEMENT OF STEPHEN SCHOAPS
Mr. SCHOAPS. Thank you, Chairwoman Velazquez, Ranking
Member Luetkemeyer, and distinguished members of The Committee.
My name is Steve Schoaps. My wife and I own Strother Cinema, a
small, two-screen movie theatre in Seminole, Oklahoma. Seminole
is a small town in rural Oklahoma that has been hard-hit by
COVID-19, like many other small towns across America.
We are an integral part of our community, and it has amazed
me that, with everything going on in our town and across our
country, people call me or talk to me everywhere I go asking if
we are okay, and when are we going to open the theatre again? I
guess I didn't understand how many people cared about us and
the service we were providing our community. Now I do.
We are hurting, like most other theatres across America,
from small-town, single-screen theatres to megaplexes in the
big cities. The pandemic has basically wiped out our business.
According to estimates from the National Association of Theatre
Owners, 75 percent of movie theatre companies will be insolvent
before this spring unless they receive financial aid. Ninety-
five percent have experienced revenue losses greater than 70
percent. Nationwide, 63 percent of jobs in theatres have been
lost to furlough or permanent layoff. And, in Oklahoma, we have
lost 45 percent of the jobs in movie theatres.
It started out that people were just scared to go to the
movies, but we put in place comprehensive cleaning procedures
and social distancing policies that made our auditoriums and
lobbies safe. But then the movies stopped coming. The film
slate coming from Hollywood dried up through studio closures
and the studios' reluctance to take chances with movie assets
that are worth billions of dollars.
Comparing our theatre's 2019 revenues to the same time
period in 2020, we have seen a 92 percent reduction in revenue.
We have been forced to reduce our staffing to almost nothing
and have resorted to selling popcorn and concessions to go. We
have even started renting out our theatre to video gamers who
play on the big screens.
We have been able to survive, but not without the help of
the programs that Congress and the SBA have developed to help
us. The most important thing that we needed to figure out was
how to stay afloat without taking on too much new debt. Given
the scale of our losses and the reduced film slate for 2020 and
2021, taking on more debt will impact our ability to recover.
That is why businesses like ours are especially in need of and
grateful for grant programs provided by Congress and the SBA,
including our forgivable Paycheck Protection Program loan and
the upcoming Shuttered Venue Operators Grant Program.
In particular, I would like to highlight the help provided
to us through the EIDL grant program, which we received as part
of our EIDL loan applications. While the loan application was
being evaluated, we received a $10,000 grant. We were able to
use the money to pay a myriad of ongoing expenses, including
rent, utility bills, workers compensation insurance, property
and liability insurance, technology vendors, our security
system, and property maintenance, along with many other things.
These expenses have continued unabated during the pandemic
and could not be deferred or suspended. Being able to stay
current with our vendors also helped prevent a secondary crisis
among the businesses that support our theatre, which helps
ensure that they will survive the pandemic too.
We were very challenged when we learned that the EIDL grant
would count against our PPP forgiveness. The COVID relief bill
that was passed in late December helped us again by fixing the
EIDL grant issue, and that will mean a lot when we receive that
money back from our bank.
Small businesses are running on razor-thin margins and, for
small-town theatres, surviving is what it is all about. In many
towns like ours, we are one of the few entertainment options
left available locally, and one of the more important communal
gathering places, and that means a lot to our community.
Congress' help and the help of the SBA have been an
integral part of our survival this past year and will be again
this year. We would love to just go back to the businesses we
ran in 2019, but that is not going to happen.
With social distancing, our capacity has been reduced by
half. And, in other States, it is reduced even more. Movie
studios will be slow to release big films this year, and their
streaming services will gobble up what used to be our bread and
butter.
Cleaning and maintaining theatres will cost more well into
the future until we get through the pandemic, and people's
attitudes about large gatherings will have a damaging effect on
our business. We are just trying to make the changes necessary
to survive in the future. The challenges we faced in 2020 and
the challenges yet to come will be daunting, but we can
overcome them. We just need your help for a little while, and
so far you have been there when we have needed you.
Thank you for everything you have done and are doing for
small businesses and, in particular, the movie theatre
industry, and thank you for your time today.
Chairwoman VELAZQUEZ. Thank you, Mr. Schoaps. Thank you for
your willingness to share your story with us. Quite insightful
and compelling.
Now Ms. Kerrigan is recognized for 5 minutes.
STATEMENT OF KAREN KERRIGAN
Ms. KERRIGAN. Yes. Thank you. Thank you, Chairwoman
Velazquez. Thank you for your invitation to participate in this
important hearing today on the state of small business in an
era of COVID-19.
The work of the House Small Business Committee has been so
vital to entrepreneurs, small business owners, and their
employees over the course of the pandemic last year, and we
deeply appreciate the engagement and hard work of each and
every Committee member. And I welcome all the new members as
well. We look forward to working with you.
Chairwoman Velazquez and Ranking Member Luetkemeyer, we are
very grateful for your leadership. We look forward to another
round of working with you on developing and advancing solutions
that will help our small businesses and entrepreneurs lead the
way in digging the economy out of the significant jobs and
small business hole we are facing.
As you well know, America's entrepreneurial sector is more
important than ever, and SBE Council is hopeful and optimistic
that our Nation can rebound if policies and programs continue
to provide relief and support for small businesses and to help
our entrepreneurs transform and grow their businesses.
Obviously the sudden onset of the pandemic, severity and
long-term nature of shutdowns and restrictions, followed by
continuous uncertainty about the course of the disease and when
and if economic normalcy will return has shocked and deeply
wounded our small business ecosystem. Countless small
businesses have been lost. More will be lost, and this
devastation will take some time to dig out of, particularly in
certain areas of the country and in business sectors that have
been hit the hardest.
Yet, despite the vast hardship on Main Street, there have
been innumerable stories of survival and resiliency. Many small
business owners and their employees have discovered new tools,
new markets, and new methods for operating in the COVID-19
economy. Moreover, there has been a surge in the number of
individuals who are pursuing entrepreneurial activity according
to the U.S. Census Bureau business formation data on high-
propensity business applications--these are likely employers--
over 1.5 million employer applications were filed last year,
which is an increase of 16 percent compared to 2019. So this is
really great news. The entrepreneurial spirit is alive and
well.
So we really do need to be thinking about and addressing
policies that will not only support existing small businesses
get through the challenging months ahead and to the other side
of the pandemic, but also those that encourage individuals to
move forward with their intention of starting a business and
being successful in that endeavor in order to breathe life into
America's small business ecosystem.
When I hear from small business owners directly or review
their current challenges and concerns in a number of regular
surveys produced by organizations and media platforms--and I
have highlighted some of those in my written testimony--one
message comes through very clearly.
First, small business owners can't afford to withstand any
new shocks or costs. And, second, more revenue capital is
desperately needed.
Of course many small businesses continue to struggle to pay
their bills. An Alignable January 2021 Rent Poll revealed 33
percent of small business owners reported that they could not
pay their rent in January. The number is higher for minority
owned businesses at 48 percent.
The year-end Q4 2020 MetLife U.S. Chamber survey found that
half of small businesses see their operations continuing for a
year or less before having to permanently shut down.
Now, hopefully with the added PPP boost and other programs
running smoothly, an acceleration in vaccine output and
distribution, and States and localities restarting economic
activity, these will all help to shift small business optimism
and outlook in a positive direction--more of a positive
direction than what was conveyed in the surveys in my written
testimony.
Small business owners may be the optimists among us, but
they are exhausted. They need a period of stability and
continued support, and our organization looks forward to
working with all of you on common-ground areas that will help
restore this sector, help it recover, and bring our economy
back to robust and sustainable growth.
So I look forward to our discussions and your questions and
talking about what these solutions are for moving forward.
Thank you so much.
Chairwoman VELAZQUEZ. Thank you, Ms. Kerrigan.
Now I will begin by recognizing myself for 5 minutes.
Professor Fairlie, I would like to address my first
question to you.
Thank you so much for the type of research that you have
done demonstrating the negative impact of COVID-19 on
underserved businesses, particularly Black, Latino, and Asian
Americans. It was that data and that type of research that
validated the anecdotal stories that we were hearing from
businesses that were not able to get any access to the PPP
program or EIDL program given the fact that they didn't have
preexisting relationships with financial institutions, and that
gave the argument to us to insist----
And, by the way, former Secretary Mnuchin and the
Administrator both recognized that, yes, there was a disparity
when it came to underserved communities.
That gave the basis for us to insist in the December relief
package to set aside not only PPP for underserved community and
minority businesses, but also for mission-based lenders.
Has your research given you any opportunity to look at the
impact that these programs and targeted relief programs have
had on the businesses that we intended to help?
Mr. FAIRLIE. Yes. So that is one of the things that I
definitely want to start looking into. I looked the other day
when I was preparing for this testimony and the data have not
been released yet. So we have no information on that.
Chairwoman VELAZQUEZ. Okay. Mr. Schoaps, I understand that
you--but, Mr. Fairlie, is it your estimated guess that more
businesses that were left behind during the first tranche of
money will have a better opportunity now to access the PPP
program and the EIDL program?
Mr. FAIRLIE. Yes, I do think so. One of the things that I
found in my research is that the EIDL program did reach
minority communities, and that was promising. The first round
of the PPP program did not, right? That was the one that had
the problems with the established banks, as you mentioned.
So I think there is just much more awareness, there is much
more emphasis on fintech and also on, you know, kind of small
local community banks. And I think that it will make a
difference, it will help.
Chairwoman VELAZQUEZ. The latest data that was provided to
us by the Small Business Administration demonstrated the large
number of smaller loans that were made after the second--the
December relief package.
Mr. Schoaps, I understand you received a few SBA relief
products, including PPP, EIDL loan, and EIDL advance. Can you
elaborate on the value to you and your business of receiving
the EIDL advance?
Mr. SCHOAPS. The EIDL advance was integral in us surviving.
It came at a time that the PPP money was running out. It came
at a time when we were looking, waiting to hear about our EIDL
loan. And the EIDL grant program was tremendous for us.
Now, we were thrown for a loop when we found out that it
was going to go against our PPP forgiveness. However, that has
since been corrected in the December COVID relief bill.
But no, it has been integral. It helped us pay our rent,
our--all the expenses that we had kind of piling up at a time
when there was no revenue coming in whatsoever.
Chairwoman VELAZQUEZ. How was your experience with SBA when
seeking the EIDL loan and advance?
Mr. SCHOAPS. Our experience with the SBA was phenomenal, to
be real honest. When I filed for my PPP loan, my banker said,
hey, you need to maybe consider this EIDL program. Go and fill
out an application and see if you qualify, and even if you
don't qualify there is a possibility you can get this grant
they have.
And so I went online, filled out an application, and it
was--I didn't think much about it. I didn't think I had much
hope of getting it. And just one day I happened to be looking
at my bank account and there was $10,000 in there from the EIDL
grant program. And we used that immediately to pay bills that
were there. I thought it was a simple operation. We went
online, filled out the application, and it was just an easy,
easy situation. The SBA has been nothing but great on that
program.
Chairwoman VELAZQUEZ. Thank you, Mr. Schoaps.
My time has expired, and I recognize the Ranking Member,
Mr. Luetkemeyer, for 5 minutes.
Mr. LUETKEMEYER. Thank you, Madam Chair.
I would like to begin with Ms. Kerrigan. One of the things
that is in the new budget bill that is being promoted by the
administration is the increasing of the minimum wage.
This morning, I would like to enter into the record, Madam
Chair, the NFIB Research Center study, Economic effects of
enacting the Raise the Wage Act on small businesses and U.S.
economy.
Chairwoman VELAZQUEZ. Without objection.
Mr. LUETKEMEYER. The summary on the front here says it is
going to cost 1.6 million jobs and have a real output loss of
more than $2 trillion to our economy. And this is by the
National Federation of Independent Businesses, which is that is
the effect on small businesses.
So, Ms. Kerrigan, my question to you is, what is your
thought process on the doubling, basically the doubling of a
minimum wage with regards to how small businesses are going to
be affected, what kind of response they will have, especially
since you mentioned in your testimony that the small businesses
cannot withstand any more new shocks for costs?
Ms. KERRIGAN. Thank you, Congressman. Gosh, this is going
to be very, very harmful for many small businesses,
particularly those who have been hardest hit by the pandemic,
you know, and in those certain sectors, you know, the
restaurant industry, et cetera.
And you are right, I mean, right now, you know, with many
small businesses being in a position where they are struggling
to pay their bills, they can't pay their rent. I also noted in
my written testimony that revenues starting in 2021 are down,
you know, over 40 percent. Forty percent of small business
owners report their revenue, you know, is down this year, even
compared to last year.
Mr. LUETKEMEYER. Okay. I would like to interrupt just a
second here, if I could.
Ms. KERRIGAN. Sure.
Mr. LUETKEMEYER. What would be the response for the small
business folks in order to survive? Are they going to lay off
people, go to automation, just close up altogether? What, in
your judgment, would you see happening along that line?
Ms. KERRIGAN. All of the above. I mean, I do think there
are going to be small business owners who are just--who grinded
it out up to this point who are exhausted who really can't take
the cost, and they will throw in the towel for sure. I mean, we
are seeing that already, given a lot of the uncertainty.
So, I mean, definitely, the workers' hours will be lost,
jobs will be lost. I don't know how much they could pass on,
you know, to--you know, to consumers and stay competitive, you
know, particularly when they are competing with bigger
enterprises.
Mr. LUETKEMEYER. Okay. I apologize. I have got some more
questions and I have got to move on here very quickly. My time
is limited.
Dr. Fairlie, you talk about in your testimony sales losses
are largest in businesses affected by mandatory lockdowns. I
will just give you some statistics very quickly here. Due to
COVID lockdowns, Florida and New York, roughly the same
population, 19 to 21 million each, Florida has roughly 20,000
people that died due to COVID, New York 39,000 people, and yet
Florida is open and New York is not.
I indicated in my opening testimony how Missouri, my own
home State, opened up mid May and wound up with a positive
revenue growth for the year, and we now have 4.4 percent
unemployment. New York's own survey during the September-
November period show that less than 1.4 percent of COVID deaths
came from restaurants and bars and hair and personal care was
one-tenth of 1 percent.
Lockdowns are killing us, and I think your testimony here
indicates that. I would like for you to elaborate on that just
a little bit more, if you would, please.
Mr. FAIRLIE. Well, it is one of the arguments that I have
made is that if we can get the vaccine out faster, distribute
it more, you know, evenly across the population and get people,
customers to feel comfortable to go back, then we can open up
businesses and get going again.
I mean, if you are comparing New York to Florida, it is
very difficult to compare the two, right? New York has very
densely populated areas. It is a very expensive place to live.
You have got multi-families living in the same households. So
it is just much more of a vector for spreading the disease than
in Florida, which is much more spread out.
Mr. LUETKEMEYER. Well, we can talk about that later.
But, Mr. Schoaps, very quickly with you. Good to hear that
the program has worked for you. One of the things that I am
concerned about is the regulators coming in and pressuring the
creditors, your creditor to foreclose on people who are falling
behind on their loans, on their debts, and then by doing that
just decimating entire industries within the communities,
costing jobs.
What kind of relationship do you have with your banker and
creditor? Is this something that would be concerning to you if
the regulators came in and forced them to do something
different?
Mr. SCHOAPS. I don't really think it would. I have spent
many years even before owning a small business developing my
relationship with my banker. And if there was one thing I
would--and I heard you talking about minorities and their
relation with banks.
I really think somebody needs to help mentor small business
owners in developing that relationship with their bank. I have
literally had my banker call me and say, look, if you have any
problems or issues, you need to let us know so we can help you
out. We have some other things we can do.
And so I think that relationship with your bank is one of
the key things, and I would really like to see more businesses
build those relationships with their bankers. Of course, I am
lucky. I live in a small town. A small town banker might be my
neighbor. And so----
Chairwoman VELAZQUEZ. Mr. Schoaps.
Mr. SCHOAPS. Yes.
Chairwoman VELAZQUEZ. Thank you so much. Time has expired.
Now we recognize the Chairman on the Subcommittee on
Underserved, Agricultural, and Rural Business Development, Mr.
Golden from Maine.
Mr. GOLDEN. Thank you, Madam Chair.
I wanted to direct my first question to Ms. Pinder, and
then if I have some time left over we will take it from there.
Ms. Pinder, I am from Maine. I live in a community,
Lewiston, Maine, which is about 36,000 people. Immediately
across a river dividing two communities is Auburn of about
18,000 people. So we are talking about, you know, a population
of roughly 55 to 60 thousand people, perhaps not as large as
many an urban area out there, but in the State of Maine this is
about as urban as it gets. We are one of the more rural States
that you could look at.
In Lewiston, we actually have a large amount per capita of
recent immigrants from Western Africa as well as over the past
decade of Somali Americans, many of whom have turned to
entrepreneurship and starting their own businesses, and many of
their children now graduating from our schools and coming of an
age where they might look to start their own businesses or take
on these existing businesses.
I wanted to ask, in an area like this--I know it is not as
urban as Washington, D.C. or New York City or many other, you
know, big urban areas, but in one like this that I have
described, how might you think the Federal Government could
support economic development? I know you have talked about the
Defense Production Act and the Buy American executive order.
Feel free to talk further about those, but if you have other
ideas beyond those, we are all ears.
Ms. PINDER. So, Congressman, you are asking what resources
are available to provide support to some of those businesses?
Is that----
Mr. GOLDEN. Absolutely. As we are thinking about the COVID
response as well and the things that the Biden administration
are looking at doing to support small businesses, what do you
think we should be looking at on this committee?
Ms. PINDER. Well, in reference to what you were talking
about your constituents going into entrepreneurship, part of
what they can take advantage of are some existing programs that
are in place. We have a national network of--we exist all over
the country, and so there is access from our MBE Centers as
well as our Minority Supplier Development Council that your
constituents can access as well. There are existing resources,
such as PTAP and things of that nature that can do that.
But at the end of the day--and the businesses I am assuming
you are talking about are mostly doing startups at this
particular point in time. And so as a result of that, looking
at how to support that, you know, maybe there is information
they can receive from SBA loans as we are talking about it, you
know. Information of Pell grants to students to attend colleges
and things of that nature might help.
But what I was proposing, in terms of us looking at some
existing assets through the Defense Production Act and things
of that nature, looks at how do we then take some policies that
are in place that kind of help and look at innovative kind of
ways to kind of help our businesses, in terms of their growth.
You know, where are the opportunities? It is all about
opportunities, right? Where are some of the opportunities,
whether it is in the Federal sector--we support primarily the
private sector, but identifying where those opportunities are
and then helping with removing the barrier to the access of
capital. That is kind of what is key.
Mr. GOLDEN. On that, Ms. Pinder, you might have some
advice. Many of our community members who came from, many of
them from Kenyan refugee camps, these are Somalia Americans,
you know, many of them have issues with access to capital due
to issues with lending on interest.
Are you aware of other resources that are out there to help
a small business family like this in accessing capital?
Ms. PINDER. Yes. And what I can do, Congressman, is provide
you with that, with some information after this session. I
certainly can forward that information to you, because those
kind of startups are really prevalent across the country, and I
certainly can provide that.
Mr. GOLDEN. That would be very helpful.
Madam Chair, I am sure I am getting pretty close here, and
I don't want to put someone in the situation of having just
seconds to respond, so I will yield my time.
Chairwoman VELAZQUEZ. Thank you. The gentleman yields back.
Now we recognize the gentleman from Texas, Vice Ranking
Member of the committee, Mr. Williams.
Mr. WILLIAMS. Thank you, Chairwoman.
Mr. Schoaps, you touched on the Shuttered Venue Operators
Grant program in your testimony. I was proud to be the
Republican lead on the Save Our Stages Act in the House, which
I am sure you know is what this program is based off of.
The Shuttered Venue program recognizes that businesses like
yours were some of the first to close and will be the last to
reopen, as COVID-19 caused some problems. Other aid programs,
such as Paycheck Protection Program, do not meet the unique
needs of these highly affected industries. The SBA must swiftly
implement this program to deliver much-needed relief to small
businesses like yours that you own.
So I would say, Mr. Schoaps, I would like to give you the
opportunity to speak directly to the Small Business
Administration on how your business is impacted every single
day this critical program is not accepting applications.
Mr. SCHOAPS. Well, thank you first of all, Congressman, for
supporting and sponsoring the Shuttered Venue Operators Grant.
Every day that that grant application process isn't open causes
consternation for everybody in the theater business especially.
We are--a lot of us are closed. If we are not closed, we are
running at losses, at best.
And I think every day we don't have that application
process open, the more worry comes into our lives about the
future, whether we are going to survive or not. You know, I sit
down with my wife almost every night and we say, well, how many
more days do you think we can last? How many more? Are there
weeks? Is it weeks or days?
And I think the Shuttered Venue Operators Grant is the hope
we have for the future, and I think that that is one thing that
we need to get that application process open as quickly as
possible. I know it is an involved thing, but----
Mr. WILLIAMS. Well, we hear you, and we are going to make
some noise to get that money to you.
Many Americans are under the false notion that they must go
to a 4-year college to be successful and make it in America. I
personally do not think this is true and believe our country
would be better off if more people utilized trade schools so we
could have more plumbers, contractors, welders, et cetera, in
the workforce. Once a person learns a skill, they can translate
that knowledge into creating their own small business.
Ms. Kerrigan, what role do you see career and technical
education opportunities playing to help hardworking Americans
overcome the economic devastation of COVID-19?
Ms. KERRIGAN. I think they are critical, I mean, absolutely
critical, you know, particularly given, you know, where we see
some of the growth. Actually, the bright spots are in the
economy now, you know, in terms of home improvement and in
terms of those other type of services that are really, you
know, on the uptick, you know, versus some of the other
sectors. So, obviously, there is a skills gap, and this type of
training is going to be critical for these workers, moving
forward.
And you are right. I mean, you know, in terms of spurring
entrepreneurship, you know, I think it also is very vital. I
mean, it is these individuals, these new individuals that enter
into these professions that actually see things in the
marketplace, talk to consumers maybe that their current
employer does not. So there is more competition, more vibrancy,
more innovation in those industries.
But yes, moving forward, vital. And I agree with you in
terms of the 4-year very expensive college education not being
necessary.
Mr. WILLIAMS. Thank you. In other words, we have enough
lawyers. Thank you.
COVID-19 has caused a massive shift in consumer preference
from brick-and-mortar retail stores to online shopping. This
does not seem like a temporary trend. It is likely to persist
long after the pandemic. Unfortunately, there are so many rural
areas across the country, including my district, that do not
have access to high-speed internet.
This is setting these small businesses up for failure,
simply because they do not have access to the necessary
infrastructure to succeed. I plan on pushing for rural
broadband to be in any infrastructure program that may come to
the floor.
So, Dr. Fairlie, in the brief time that we have, can you
talk about how increasing rural broadband funding would help
small businesses.
Mr. FAIRLIE. Yes, I fully agree. I think anything and
everything we can do to help small businesses have more of an
online presence is crucial, right? I mean, you just see big box
stores, you know, the online retailers have done incredibly
well, right? That was talked about in the very beginning, that
their revenues are up. Their stock prices are up.
Small businesses, of course, are not seeing that. And that
I think is, you know, everything we can do. Broadband access I
think is a crucial issue, especially for rural small
businesses.
Mr. WILLIAMS. Thank you. I yield my time back.
Chairwoman VELAZQUEZ. The gentleman yields back.
The gentleman from Colorado, Mr. Jason Crow, Chairman of
the Subcommittee on Innovation, Entrepreneurship, and Workforce
Development, is recognized.
Mr. CROW. Thank you, Chairwoman. And thank you to all the
witnesses today. You are very insightful, and I appreciate you
taking time. I know how busy you are doing your normal work, so
we appreciate your insights.
I just wanted to start by clarifying something. There was
discussion earlier about the impact of minimum wage on the
pandemic. And I certainly understand some of those concerns,
but also, just to be clear, the Raise the Wage Act doesn't
actually immediately take effect after enactment. There is a
delay after enactment, and then is a gradual increase over a 5-
year period. So I think we have to be very careful about how we
frame this, in terms of its impact on businesses during the
pandemic. So I wanted to start with that.
And I represent a community where one of the biggest
challenges that our small businesses face right now is that
people can't actually afford to live in the community and can't
actually afford to patronize the businesses and help them grow
as well. So we have to I think address this with a level of
sophistication and look at the multiple dynamics going on here.
So, with that said, I would like to start with Ms. Pinder.
Ms. Pinder, I represent one of the most diverse districts in
the country. Nearly 20 percent of the residents in my district
were born outside of the country, and I have over 150 languages
spoken. So I am very concerned and very attuned to the issues
of underserved communities and their lack of access to capital.
So, as you might know, we changed the PPP program and some
of these relief programs to dedicate money to CDFIs, to help
drive that money to those areas of need. So I would appreciate
your comments on what are still the barriers for underserved
communities in accessing CDFI money and money that is allocated
to try to get to those businesses in great need.
Ms. PINDER. I think that the second round, there were all
those problems that were identified with the first round of PPP
and EIDL loans and all those kinds of things, because of the
rush to get out and that kind of thing.
But I think that the intentional nature of looking at how
to place or push the money down to intermediary types of
organizations or CDFIs was a good one, because we have to be
intentional about it. There has to be organizations or
resources that are, if nothing else to describe this, boots-on-
the-ground kind of approaches.
And understanding where those communities are--I mean,
where those businesses are and being able to market and
communicate the existence of the resources, because that has
been one of the biggest barriers of entry for achieving this
money throughout the cycle. It is where are the resources,
where can I identify those resources, and then the government
or private sector organizations that have taken this on being
intentional about making the information known.
Mr. CROW. Just to follow up on that last point, Ms. Pinder,
what would be an effective way--and I know I am kind of putting
you on the spot here a little bit, but what would be a really
effective way to get that information, that last piece you just
mentioned, get that information known and communicate what is
available to some of these communities?
Ms. PINDER. I think you have to meet people where they are,
right? And so if you are looking to increase awareness in
particular communities, what are those--the knowledge of where
the CDFIs are? How do you use means to advertise that
information? And whether it is through our churches or through
organizations that exist in those communities, I think that is
how you meet people where they are.
Mr. CROW. Thank you. I appreciate that very much.
Professor Fairlie, you had also touched on this in your
written testimony about the changes between the first round of
funds, relief funds, and the second round of funds.
So the same question for you, if I may: What are some of
the barriers that you have determined and seen from your
research on getting CDFIs connected to those underserved
communities?
Mr. FAIRLIE. Well, I think that, you know, the big problem
in the first round is that it was mainly established banks that
were providing the funds, and those were going out to mostly
nonminority businesses.
And it was the second round of PPP funds that--where they
really targeted, you know, trying to get this fintech into
local banks, CDFIs, you know, those types of organizations that
really made the big difference, right? In the research that I
show, you can just see this incredible difference between this
positive relationship with nonminority communities overall in
the U.S., and then it switches around, totally, you know,
reverses in that second round.
So I think it is really important. I think that we need to
be aggressive. We need to go out and talk to small business
owners, you know, get that information out to them so that they
know about these programs, so that they know to apply.
Mr. CROW. Thank you. Madam Chair, I yield back.
Chairwoman VELAZQUEZ. The gentleman yields back.
The gentleman from Minnesota, Mr. Hagedorn, is recognized
for 5 minutes.
Mr. HAGEDORN. Thank you, Madam Chair.
I would like to expound a little bit about these lockdowns
that our Ranking Member, Mr. Luetkemeyer, brought up. In our
State of Minnesota, our Governor, Tim Walz, has held onto
emergency powers and made all sorts of arbitrary decrees, and
in so doing his central government planning has really affected
our small businesses. It has crushed a lot of them, put some of
them out of work, out of business permanently. And you look
at--some of them just didn't make sense. You had big box
stores, corporate stores open, small businesses closed.
And then you get into the rural areas that I represent down
in southern Minnesota and you have border communities, and the
Minnesotans were just across the border going to Iowa, South
Dakota, or Wisconsin to purchase their goods there, go dine,
and go to a bar or restaurant. And then we were hurt.
Now we are trying to open back up, but the effects of these
lockdowns are really hurting small businesses. You have a
situation where we don't have enough labor. Part of that is
because the schools are still closed throughout most of
Minnesota with regulations that don't make sense. Even the CDC
says it is okay to get the teachers and everybody back in
school for in-person learning. That would free up the parents
to be able to go out and do work again in the community, work
for our small businesses.
And then at some of the border communities, the employees
have literally gone to neighboring States and taken full-time
jobs there, knowing that those States will remain open when
Minnesota's opening and closing.
So I guess to Ms. Kerrigan, what are your thoughts about
that? I would like to hear any other experiences that you have
learned along the way and just how devastating some of these
lockdown orders have been to small businesses across the
country.
Ms. KERRIGAN. Well, they have been very, very, very
devastating, obviously. You know, from the beginning of the
pandemic or very shortly thereafter, you know, we said that,
yeah, this is a very difficult challenge for the country,
unprecedented, but still small businesses could operate safe
and smart. They had every incentive to do so.
And you are right. I mean, sort of the inequities in
allowing sort of the larger stores to remain open and closing
the smaller stores that could have sold some of these goods
that were provided by the larger stores and, in effect, herding
a larger amount of customers into bigger stores, you know,
didn't make sense from our members' perspective.
So--and what we are seeing now, Congressman, is you do see
businesses just in these locked down States, I mean, really
picking up--you know, picking up and moving, moving to other
States. I mean, it was the trigger for them, actually, to move
to more business-friendly States, you know, to lower cost
States, and to States that--you know, where there was a little
bit more flexibility, you know, in terms of these policies.
So I don't know if I have one simple answer for you. I
mean, hopefully with the vaccines and now we are seeing the big
drop in the disease. I mean, we are on a course here where
economic activity can, you know, open up and get back to
normal, whatever that might be, you know, the next 6 months or
so.
Mr. HAGEDORN. Sorry to cut you off. I want to get over to--
thank you for that. And that has been our experience with
businesses and others going to neighboring States like South
Dakota that have been more open.
Mr. Schoaps, I have a real quick question for you. Being in
the business that you are, in the movie theater business in a
small community, we have communities in my district in Madelia
and Kasson that have small theaters that haven't been able to
reopen.
In some of our rural communities, obviously, we need
infrastructure for folks to be there, jobs and everything else,
good, obviously, healthcare and education. But quality of life,
things to do, entertainment, that is really important in a
community the size of yours. I think it is what, you have about
7,000 people. And I see that. What is your thought about that?
Mr. SCHOAPS. Well, I have to agree with you. I can't tell
you the number of people that have come up to me and asked when
we are going to open. They come knocking on our door when they
see us in the theater. They want us to open.
But it goes back to what you were talking about just a
minute ago. As long as L.A. and New York are locked down, they
represent 25 percent of the revenue that goes into movies,
movie theaters in the country. And movie studios will not put
out their movies, their big movies, if they know that L.A. and
New York are locked down.
So yes, it is quality of life. Movie theaters are a big
thing in small towns, simply because it is a gathering place.
It is a place where--it is a reach out to the rest of the world
from a small rural community.
Mr. HAGEDORN. Thank you very much. I appreciate the time.
Chairwoman VELAZQUEZ. Now we recognize the gentlelady from
Kansas, Ms. Davids, Chairwoman of the Subcommittee on Economic
Growth, Tax, and Capital Access.
Ms. DAVIDS. Thank you, Chairwoman.
I am definitely cognizant of the fact that it was about a
year ago that the Small Business Committee held our first
hearing on how the emerging, at that time emerging pandemic
might impact small business. And, obviously, so much has
changed in that time.
I have been honored--hold on a minute. The buzzing is
happening in my office.
I have been really pleased to be able to speak with a lot
of small business owners in the Third District in Kansas. And,
first of all, I appreciate folks taking time out of their
business schedules just like you all have here today to share
experiences and perspectives.
And, you know, I think that what we are hearing now and
what I have heard at home is that, obviously, small businesses
are in a fight for their lives. And they are getting innovative
and using every tool at their disposal to keep their doors open
and employees paid. And there is obviously a lot of work to do,
continue to do to provide the capital and resources and relief
that our small businesses are going to need.
You know, I know we talked about the EIDL or heard about
the EIDL loan earlier. A small business owner in my district
was able to apply for and receive the funds almost immediately
within a day of applying. And it really saved her business, and
she was able to continue to operate. So know that when these
programs are working effectively, they can save jobs. They can
save businesses.
And I also know that some of the issues that we are facing
are because we don't have the necessary funds or programs
available for people to get a second drawdown on the PPP, and
so we are going to continue to work on that.
And then finally, I want to mention that when it comes to
the supply chain and our small manufacturers and medium size
manufacturers, I have introduced the SUPPLIES Act because I
know that there are so many businesses, particularly in Kansas,
who are eager to shift their production over to things like
personal protective equipment, testing supplies, and even to
help with the vaccine rollout. I know a lot of healthcare
workers are still struggling to get all of those things.
So I am glad to see that the American Rescue Plan includes
$10 billion of funding for domestic manufacturing, for
emergency medical supplies and this sort of thing.
So, Ms. Pinder, I would love to hear you speak a little bit
to the opportunity to utilize small businesses and particularly
minority-owned businesses when it comes to the implementation
of the Defense Production Act. I know you mentioned that in
your testimony, and would just love to hear you talk a little
bit more about that.
Ms. PINDER. Thank you, Congresswoman. One of the things
that I talked about is how do we then take existing assets and
see how we leverage them in order to help support what you are
talking about, because you are right, there is this plethora of
need that is out there, and how do we identify, specifically
for those businesses that are hurting the most.
So traditionally, assets like the Defense Production Act
and like Buy American has not really looked at or leveraged how
we then translate some of that that perhaps we could leverage
with, say, minority and women and small businesses.
We take, for example--I talked about the title, Title 3,
that the President has authority to invest in specific
industries. What you talked about, people pivoting during that
time, well, what if we could take something of that nature. And
the goal of Title 3, for example, is expand domestic capacity
for supplies, but if, indeed, that can be done and implemented
in mind with supporting minority and smaller businesses.
I think those are the kind of things that we need--that
Congress can take a look at. It is all about implementation,
right? So how do we implement it to make sure that that is
indicated in those efforts.
Ms. DAVIDS. Thank you, Ms. Pinder. We will probably follow
up more after this.
I will yield back to the Chairwoman.
Chairwoman VELAZQUEZ. The gentlelady yields back.
The gentleman from Minnesota, Mr. Stauber, is recognized
for 5 minutes.
Mr. STAUBER. Thank you, Madam Chair.
And at our first meeting of this year, I do not mean to
kick things off in such a negative way, but I believe this
situation calls for it.
Small businesses were crushed at the hands of their State
and Federal Governments. Speaker Pelosi put politics ahead of
our country. For months, she made her partisan wish list items
a priority over the millions of Americans who were suffering.
It was unacceptable.
So now here we are a new Congress, and yet we have not
heard any fresh ideas on how to help America's small
businesses. Instead, we have the tired old ideas. One of them
is known to close small businesses across this Nation.
Ranking Member Luetkemeyer brought this up in his comments,
the $15 minimum wage. When asked, one of the witnesses stated:
Jobs will be lost, small businesses will close.
President Biden's relief plan shows just how out of touch
he is with the hardworking small business owners of America,
and it is frustrating. It is unconscionable that a relief
package took so long. Americans and small business owners
everywhere deserve better.
Now to our witnesses. I want to thank you all for being
here today. Your testimony will provide much-needed clarity on
policy proposals that can actually deliver effective targeted
relief to our small business owners, who are the engine of our
economy.
As the government has rolled out relief programs, mistakes
were clearly made. Lenders wrongly doled out PPP loans to
individuals who should not have qualified. The SBA created
ongoing guidance, some making loans out of compliance at a
moment's notice.
Ms. Kerrigan, in your opinion, where have our relief
programs failed our small businesses?
Ms. KERRIGAN. Well, I will start with the good news, that,
you know, over the course of time there have been lessons
learned. And, you know, based on this current PPP round, you
know, there are many things that have been done right.
But I will agree with you in terms of there was the need
for speed back, you know, in the summer, where the economy had
some momentum, where small businesses saw some light, you know,
at the end of the tunnel, and yet Congress left town in August
without acting and without extending the PPP program, where
there was actually money that was left in that program.
So, you know, getting small businesses that money that they
needed to weather what we went through in the fall and what we
are going through currently I think would have been very, very
important to save a lot of small businesses, save jobs. And
that is one area, you know, that I will recognize.
And then just again, you know, I think there just needs to
be the continuous sort of reevaluation of the program and for
the SBA and for the Congress, you know, to act on
recommendations I think a little bit more quickly, in terms of
getting--making it more flexible, reducing complexity, and
providing more certainty both for, you know, small business
owners and the lenders, particularly as we move through and
into the forgiveness period.
So, I mean, again, I know it was a big lift, getting this
money out the door. A lot of small businesses benefited. But
there could have been things done along the way that could have
helped a lot more small businesses, and particularly reaching
those in the minority and disadvantaged communities as well.
Mr. STAUBER. I appreciate those comments, and I agree with
you, that need for speed. Once the investments ran out at the
end of August, it was unacceptable that our small businesses
across this Nation had to wait almost 4 months before the
additional relief.
Ms. Kerrigan, a second question: Can you identify any
issues in our relief program that have made small business
owners reluctant to spend money they have received or reluctant
to turn to the government for aid at all in the future?
Ms. KERRIGAN. You know, I think some of those issues have
been resolved, in terms of, you know, some tax issues. You
know, I still think there can be additional flexibility in the
PPP program.
You know, many business owners just don't think that
program is for them, particularly as it relates to, you know,
the 60/40 split, 60 percent for payroll, 40 percent for other
expenses, particularly if they are in high-cost areas and have
high overhead.
Mr. STAUBER. Thank you. Ms. Kerrigan, my time has run out,
and I appreciate all the witnesses. And I yield back.
Chairwoman VELAZQUEZ. The gentleman yields back.
Now we recognize the Chairman of the Subcommittee on
Contracting and Infrastructure and Vice Chair of the committee,
Mr. Kweisi Mfume from Maryland.
Mr. MFUME. Madam Chair, thank you very much. And I
appreciate the opportunity. I assume we will have an
opportunity also in a second round to expand on everything that
we don't get a chance to cover here, so I look forward to that.
A couple of quick things. I want to thank the witnesses,
all of whom I am sure have busy schedules and lifestyles, for
making time available. This sort of discussion helps those of
us, as lawmakers, get a sense of the divergence of thought and
where some of the urgent matters are that we can apply
ourselves to right away.
I must admit, having served on this committee in the
eighties and the nineties, that this issue that continues to
come up about the minimum wage is a little perplexing to me. I
appreciate the Ranking Member introducing it and the response
that was given, but for me it is a little like deja vu. The
answers are the same as they were many, many years ago, that it
would cause job loss and, of course, businesses would be forced
to close, and that would be the end of small businesses as we
know them.
In fact, in 1988, the Federal minimum wage was at $3.35.
Today, 33 years later, it is at $7.25. So it has taken us 33
years to give Federal workers a minimum wage increase of $3.90.
Thirty-three years is a long time, and in the interim,
businesses did not go out of business. Cost in some instances
were passed along to consumers.
But the issue here is one of a lesson, and I think the
lesson is that we will continue to see an increase in the
efforts to try to make sure that people have a livable wage or
a minimum wage that reflects where we are in society.
I want to associate myself to the remarks of Mr. Crow and
reiterate the fact that this is not something that takes place
next week or next year. So I know we are in the middle of
COVID, but it might be a little bit of a mischaracterization to
use that backdrop to place this issue as if it is going to
happen right away. It doesn't really completely happen until
2025. So, for the record, I just thought I would rhetorically
ask myself the question, if not now, when? So when has been a
long time coming.
I do want to go back to Mr. Fairlie's remarks and Ms.
Kerrigan's, as you have sort of given us a 30,000-foot view of
what is going on as a result of the impact the pandemic has had
on small businesses in general and minority businesses in
particular.
In just a couple of minutes, could either or both of you--
and I don't have much time--just indicate, from your
perspective, when do things get better? Do they get better when
we open up, or do they get better when we are able to get rid
of the disease?
Ms. KERRIGAN. Where I start, I think it is both. I think we
can, you know, move in kind of a parallel track. And when we
open up, I think that will definitely help small businesses.
But certainly, the whole vaccination issue and getting rid of
the disease, you know, will give consumers the confidence, you
know, to go to stores and to, you know, get back to sort of,
quote/unquote, normal economic activity.
But, again, Congressman, I just have a lot of optimism for
all these new entrepreneurs. That is the opportunity in the
marketplace, based on where consumer trends are going right
now. And to the extent that we can encourage those
entrepreneurs to move forward to innovate and keep our economy
competitive, no matter what the normal may look like, the new
normal moving forward, I think is vital.
Mr. MFUME. Thank you. And Professor Fairlie?
Mr. FAIRLIE. I think that we need three things: One, we
need to get that vaccine out. We need to get it out faster. We
need to get it out evenly across the country. So there are some
equity issues about that, of course. That is really important.
Customers need to feel comfortable. They need to feel like
they can go into a small business and not worry about getting
the coronavirus. That is essential. And, of course, once that
happens, we can start opening up everything, which is really
important.
But the third thing, though, that I would not underestimate
is this kind of trend toward shopping online. People are just
becoming much more accustomed to doing it. I don't think it is
going to go away forever. And small businesses somehow need to
have more of an online presence.
And so I gave some ideas there about how search engines
could prioritize small businesses in their local area instead
of just the big box stores or bigger online retailers. That
would be one way that we could do that.
Mr. MFUME. Thank you. Thank you very much. Mr. Schoaps, I
really empathize with your situation out there in the Midwest.
To see a 92 percent reduction in your revenue in 1 year is sort
of unfathomable, and I can only imagine what you and your wife
are up against, in terms of swimming upstream.
I am glad to know that the December stimulus bill, in which
we did correct this whole issue of the EIDL loans, helped you
to some extent, and that I look forward to President Biden's
current stimulus bill----
Chairwoman VELAZQUEZ. Excuse me.
Mr. MFUME.--in terms of pushing you a little further down
the road in terms of your own survival.
I want to underscore two things, one of which dovetails on
what the professor just said. Innovation is one of the biggest
enemies that many small businesses face. We saw it with the
newspaper industry a couple of decades ago. We are seeing it
now with movies, as it relates to Netflix and On-Demand and
Pay-Per-View, which affects both television and other losses.
Madam Chair, were you trying to----
Chairwoman VELAZQUEZ. Yes. Your time has expired. We are
discussing with the Ranking Member in a minute if we are going
to go to a second round, and then you will have an opportunity
to have Mr. Schoaps answer your question.
Mr. MFUME. Thank you very much. Actually, it is he and Ms.
Pinder. So I will await the decision of the Chair and the
Ranking Member.
Chairwoman VELAZQUEZ. Thank you.
The gentleman from Pennsylvania, Mr. Meuser, is recognized
for 5 minutes.
Mr. MEUSER. Thank you very much, Madam Chair.
Thank you to the witnesses. I appreciate your being here
with us. The PPP, the Paycheck Protection plan, was very much
of a success. Nationwide, there were 5.5 million,
approximately, small businesses received loans. $557 billion in
forgivable loans were issued, with an average of approximately
$100,000. So that was really the sweet spot. That was the
intent. In Pennsylvania, my home State, it was very much the
same sort of metrics, 200,000 loans for $22 billion, so about
$110,000 per business.
The EIDL loans were also very successful, the Economic
Injury Disaster Loan, particularly in Pennsylvania. The SBA
worked extremely hand in hand with me and with us. 3.6 million
loans for $200 billion, which works out to be about $6,000
each, which, again, was right on the mark.
Nevertheless, that is about a trillion dollars. And with
another $3 trillion that was put into the economy, that is $4
trillion thus far over the past year. And yet, one in four
small businesses still predicts they are going to go out of
business within the next 6 months, and most of them are
restaurants. So it is almost that there is almost no amount of
money that is going to buoy and allow small businesses to
survive except the free marketplace itself.
So, Ms. Kerrigan, I will start with you, please. You know,
there is some talk here about business planning and how somehow
government is supposed to provide innovative ideas. Anybody who
has been in the private sector for more than we will say a year
knows that that is ridiculous. Entrepreneurs figure those
things out on their own.
What government does is create a competitive business
environment for small business and large business to do their
thing and be competitive and deliver the best products and
services at the lowest prices.
Nevertheless, Ms. Kerrigan, I would like to ask you about
access of capital outside of all of the forgivable loans and
all and the additional that we are going to provide. I am not
sure there is--in fact, I am sure there is no alternative to a
safe and smart opening that is driven by the entrepreneurs and
the small businesses themselves, where their ideas are applied,
to assure that their customers and their staff are safe, yet
they stay open.
And I would like to get your comment on that, Ms. Kerrigan
and Mr. Schoaps. Am I saying it right? Mr. Schoaps.
But first just a quick answer on access to capital. Do you
have any suggestions for us as to what we should be looking for
outside of the EIDL and the PPP and standard lines of credit
that banks have or that businesses have?
Ms. KERRIGAN. Well, you know, one of the areas that we have
been very involved with since the Obama administration is the
whole area of investment crowdfunding. And we are beginning to
see a big surge in that. Obviously, investment crowdfunding was
made legal. It took 4 long years, you know, for the rules to be
written on that.
But now I see this huge surge in investment crowdfunding I
think which is really great. It is truly democratizing access
to capital. Minority-/women-owned businesses are tapping into
this capital. And what I think the beauty of it is is it
leverages local capital and local investors.
And there are new rules now at the SEC that are going to
lift the limit from $1 million to $5 million and some other
things that will strengthen equity crowdfunding.
I think we could work with some tax credits there. I mean,
the U.K. has, with investment crowdfunding, put together
actually a fund where if an individual raises, you know, up to
$250,000 or more--I forget what the actual cap is--that through
a fund the government will match that, that it will have to be
paid back.
So I think what we need to start looking at is ways that we
can, on the capital formation front, tie the capital and, you
know, leveraging what I think is a lot of capital out there.
And investment crowdfunding is the way to do that, one of the
ways to do that.
Mr. MEUSER. Thank you. I would love to follow up with you,
if I can, afterwards and discuss that further.
Quickly, Mr. Schoaps, I have very little time, what would a
$15 minimum wage do to your business right now?
Mr. SCHOAPS. It would, as most small businesses, it is
going to hurt somewhat. It is not going to force us to close.
It will force us maybe to raise prices, to look at ways and
cutting back in other areas. It is not going to close us, but
it will put some more hardships on us.
But at the same time, I would--we hire mostly entry-level
students, the young people. I would like to see some kind of
maybe a minimum--some tier of minimum wage that addressed that
kind of entry-level position.
Mr. MEUSER. Thank you very much. I am out of time. Madam
Chair, I yield back. Thank you very much.
Chairwoman VELAZQUEZ. The gentleman's time has expired.
Now we recognize the gentleman from Minnesota, Mr.
Phillips, Chairman of the Subcommittee on Oversight,
Investigations, and Regulations.
Mr. PHILLIPS. Thank you, Madam Chair. Greetings to my
colleagues and to our witnesses.
I want to address a couple things quickly that a couple
colleagues have brought up, starting with the fact that
Governors around our country, both Democrats and Republicans
who imposed lockdowns did so to save American lives, in the
absence of a strong Federal response or even support or
guidelines.
I know how economically painful it was. I can attest to it
firsthand. But I simply ask my colleagues and remind all of us
it is incumbent on us in this committee to now help small
businesses recover. So I invite everybody to invest our time
and energy in repair and revert rather than regression.
Relative to the $15 minimum wage which has come up a number
of times today, I own a chain of small coffee shops. And we pay
a $15 minimum wage, not because we have to, but because I want
to. I know the implications, how it helps employees and how
challenging it is for owners.
But I think it is fair to say that we all, Democrats and
Republicans, share the same objective. We want more prosperity
for everybody, especially those who work hard and are trying to
make ends meet.
I think we should balance these minimum wage increases with
the EITC, earned income tax credit, so we don't reduce
employment, we don't further hurt businesses, especially in
rural areas. And I invite my colleagues, anybody who is
interested, to speak with me about that, because I want to work
together.
Now, the numbers and stories we have heard today from our
witnesses are staggering and painful, to say the least. We know
that businesses that survive the crisis are going to have to
adapt in a post-COVID world and with higher relative costs and
with less working capital than ever.
We know how many small businesses entered the crisis with
low financial resilience. About a third were either operating
at a loss before COVID or breaking even. So we know it is going
to only get worse over the coming weeks and months before it
gets better.
So, as briefly as possible, I want to ask each of our
witnesses to simply share with me and our committee how we on
the Small Business Committee can most impact small business
recovery moving forward, particularly for businesses in rural
areas, minority-owned firms and women-owned firms.
Perhaps we can start with you, Mr. Fairlie. What is the
best way? Where do you want to see us focused?
Mr. FAIRLIE. I think the best way is to really promote
trying to get the vaccine out, right? I think that that is the
key. That is going to make customers feel comfortable going
back into small businesses. And, as I mentioned before, the
online presence part I think is crucial.
Mr. PHILLIPS. Thank you. Ms. Pinder.
Ms. PINDER. I believe that capitalization is I think the
most important thing that can be done. And so I talked about
no-interest loans, zero-interest loans, being cognizant of the
need versus the demand of it. And providing capitalization I
think is the greatest thing that can happen.
Mr. PHILLIPS. And, Ms. Pinder, do you believe existing
programs, either amplified or in their current form, are
enough, or do you think it is incumbent on us to consider new
programs?
Ms. PINDER. I think it is incumbent upon you to consider
new programs and look at existing programs to see how you can
leverage it there. Like the Defense Production Act, you know,
how do you do investments? Just new ways and innovative ways of
how we make investments in businesses that are pivoting,
businesses that are trying to survive, but, you know, bringing
them to the table and understanding it is not a cookie-cutter
approach, but how do we approach that need, based on industry
or based on whatever that need may be.
Mr. PHILLIPS. I appreciate it. Thank you.
Ms. Kerrigan.
Ms. KERRIGAN. Well, access to capital I think is vital. And
I agree if we could supercharge and work with the existing
framework of programs, whether it is SBA loans or with
investment crowdfunding and the platforms that exist there, I
think it would be really important to do so.
Look, technology is so important, and making sure that the
SBA resources in the programs are really focusing on
technology. And we are going to move into a 5G world, right? So
things are going to change again, and our businesses are going
to have to pivot and adapt again. There are a lot of
opportunities out there.
And lastly, you are right, access to broadband, that has
been one of our top issues. If you don't have access to
broadband, you don't have access to the tools or opportunity.
So that I think is a very important piece to focus on.
Mr. PHILLIPS. And one more quick question, Ms. Kerrigan:
Are you familiar with any countries, any nations around the
world that support their small business kind of ecoculture, if
you will, in ways that we can learn from?
Ms. KERRIGAN. Well, I think there is a lot on the microloan
front. I mean, certainly over in the U.K. they are--you know,
how they are supercharging investment crowdfunding there, both
through the tax credit and also a match program, I think is
something we can learn from. It has been highly, highly
successful.
So we have a regulatory framework there. You know, they
have this great program. I think if we can look at that and
perhaps emulate that or least to explore it, I think it would
be really important, particularly during the recovery period.
And the fact that, you know, we are going to have to
leverage private sector capital, you know, we are going to have
to do that in order to get through this--to move to full
recovery.
Mr. PHILLIPS. I appreciate it.
And with our limited time that we have left, Mr. Schoaps,
anything that you want to add, anything that you haven't shared
that would be helpful to the SBA that we can be focused on and
help the rebirth of small business?
Mr. SCHOAPS. Well, I think one of the main things is
somehow we have got to get the communication out to small
business owners of what is available. When I first got my EIDL
loan, I mentioned it to several of my friends in the community.
They didn't know what it even was. I think that we have got to
somehow get that information out to the people that are in
need.
And then I have to go back to what Dr. Fairlie said. The
number one thing that would help us is to get the vaccine
widely distributed and to get us at least people believing that
we are going to get back to normal.
Chairwoman VELAZQUEZ. Time has expired.
Mr. PHILLIPS. I am grateful. Thank you.
Mr. SCHOAPS. Thank you.
Chairwoman VELAZQUEZ. The gentleman yields back.
The gentleman from New York, Mr. Garbarino, is recognized
for 5 minutes.
Mr. GARBARINO. Thank you, Madam Chair. Thank you to all
these witnesses that we have today.
Mr. Schoaps, I just had some questions for you. Can you
share with The Committee how many employees you had before the
COVID-19 pandemic and how many you have now?
Mr. SCHOAPS. Yes. We averaged about 12 employees before the
epidemic, and--the pandemic--excuse me--and, right now, we have
my wife and I, and that is it.
Mr. GARBARINO. Okay. And, before the pandemic, what was the
average age of your employees other than your wife, not
including your wife and yourself?
Mr. SCHOAPS. Probably about 17 to 18.
Mr. GARBARINO. And the average wage you paid those
employees?
Mr. SCHOAPS. Average wage was $8 an hour.
Mr. GARBARINO. $8 an hour. We have heard a little bit about
today how the increase of the minimum wage could be $15 an
hour. That won't happen until 2024, but it starts--it goes up
to $9.50 this year. That would be a pretty big increase from $8
an hour.
Would that prohibit you from bringing employees back this
year, especially if you didn't have access to the PPP?
Mr. SCHOAPS. No, it would not. We would--we are going to
bring them back--we are going to open our business one way or
the other. We are going to bring employees back. If it means
our costs go up, we will have to figure out a way to increase
our revenue to offset that, and our community will have to
understand that it may include a price increase, it may include
other things that we try to do to supplement what we do right
now.
Mr. GARBARINO. Do you think you would--do you have to
compete with other major chains--I know--I believe you are a
small business--like Regal or AMC, or United Artists theatres?
Do you have to compete with them? Are there any near you?
Mr. SCHOAPS. We have one about 20--we have one 20 miles
away and one 15 miles away, and I don't think--we are really
not in competition with them. We employ mainly local high
school, local junior college employees, and they want to stay
locally. So I really--we are not in competition for employees,
no.
Mr. GARBARINO. But my question is, if you had to increase--
if you had to increase ticket prices or the costs of your
concessions to cover the increase in minimum wage this year to
$9.50 and then all the way up to 15, would--are you concerned
that your customers would go to other major chains because it
might be cheaper for them to go there?
Mr. SCHOAPS. I am always concerned that our customers are
going to go to the major chains, because they can offer more
than we do even with--not even counting the minimum wage issue.
They will be under the same minimum wage requirements we are,
and I think that, yes, of course I am always concerned about my
competition. However, I think that we have a--in a small town,
we have a very loyal following, and I think we will be able to
get through it.
Mr. GARBARINO. One more question. Did you have--have you
tried to bring back any of the 17- or 18-year-old employees
since you were allowed to reopen? Have you tried to hire
anybody back and they have refused to come back?
Mr. SCHOAPS. No, we have had no one refuse. As a matter of
fact, we had everyone eager to come back.
What has happened was we opened back in--I think it was
June or July, we opened, tried to open, and there was just no
product. Movie theatres are a specialized small business
because, without the movies there, we have nothing to sell.
And, without the new movies being released by Hollywood, we had
nothing really to present. We tried using old, classic movies,
old blockbusters, and that just did not pay the bills. We were
forced to close down again.
But, even now, we--when we are talking about possibly
opening again in a month or two, we have already contacted our
employees, and nearly all of them are eager to come back.
Mr. GARBARINO. Okay. Thank you very much.
And, Ms. Kerrigan, I have a question for you. It is
something that I have heard back in my home State of New York,
and I am wondering if it is something you have heard in your
dealings, that the PPP and the extension of the increased
unemployment insurance, $300 or the $400 a week extra, are
counterproductive because they compete with each other.
Businesses want to bring employees back, but employees
don't want to come back because they are making more on
unemployment. That is something I have heard a lot in New York.
Is that something that you have come across?
Ms. KERRIGAN. I think, initially, you know, at the
beginning of that program and, you know, somewhat into 2020, as
we moved to a more normalized environment and with the economy
opening up and I think with employees thinking about sort of,
again, you know, the long-term prospects, you know, after these
programs are done, it has become less of an issue right now in
terms of more employees wanting to go back to work, and then of
course--and employers, you know, offering them incentives to do
so.
So, I mean, I can ask more of our small business owners
about that now in terms of the current state of play where they
are and what their issues are, and I will be more than happy to
get back with you on that.
Mr. GARBARINO. Thank you very much.
Ms. KERRIGAN. To see how that stacks up in terms of some of
their other concerns and whether it is still a major issue.
Mr. GARBARINO. Thank you very much. I yield back.
Chairwoman VELAZQUEZ. The gentleman yields back, and now we
recognize the gentlelady from Georgia, Carolyn Bourdeaux, for 5
minutes.
Ms. BOURDEAUX. Okay. Thank you so much, Chairwoman
Velazquez, and thank you to the witnesses here for testifying
on behalf of our small businesses.
I am from Georgia's 7th Congressional District. It is a
very, very diverse community. Twenty-five percent of the people
in my district were born outside of this country. And we have a
vast swath of small businesses, many of which are women and
minority owned, and they have really struggled during this past
year to try to stay afloat.
I just want to cut to the chase, though, and get to some
questions. One, and this could be for Ms. Pinder or Mr.
Fairlie. We have talked a lot about issues of disparity in
terms of getting out the PPP loans, the outreach through the
EIDL program, and things like that. But one of the things that
has come to our attention is disparity in the administration of
the funds, and one of our concerns is that it seemed from a
quick survey that we did of some of our small businesses that a
lot of the Black, other minority owned businesses were having
to pay back the loans, whereas some of our White businesses
seemed to be more likely to be able to find ways to get the
loans forgiven.
And I wanted to see if that was something, Mr. Fairlie,
that you have come across in your research, and for Ms. Pinder,
something that you are hearing from minority communities about
as a particular issue, and, if so, what we might do to address
that?
Mr. FAIRLIE. I guess I can go first.
So, in some of--I haven't actually researched this directly
myself, but I know that there are a couple of projects that
have looked at discrimination in terms of, you know, when you
have a minority lender coming in or a nonminority lender coming
into a bank to get a PPP loan, but there was definitely some
issues there.
And I think that that is really important, right, is that,
if we don't have kind of an equal system from the very
beginning, from getting information, from going into a bank and
asking for help, or into going into somewhere else or looking
into a fintech, that is a real problem, and I know that there
is some evidence that that did occur early in the stages of the
PPP program.
Ms. BOURDEAUX. Thank you.
Ms. PINDER. Congresswoman, we can certainly validate that
that is absolutely true. Part of what we have been doing at the
council and our MBDA centers is addressing issues our minority
businesses have found themselves in relative to obtaining PPP
loans, and then just a whole mystery around the payback of
them, right? And, because it is a revolving door, the rules
kind of shifted in midstream. It is very hard to get a handle
on it.
And so those things that were problematic in terms of how
we were able to even get the loans--we have had to make phone
calls to banks to ask them to look at--to consider these
particular companies, but we also saw a difference when money
from--whether it was State level or money that was done from
foundations or private-sector organizations, that they were
much more successful in getting directly to the folks that were
having the problems with the Federal funds.
Ms. BOURDEAUX. Okay. I just think this might be an area for
further investigation and trying to understand sort of what has
happened out there and sort of what is happening as these
programs are going through the process.
One other question that has come up a lot is we have a lot
of small businesses that have--they need to make investments to
improve ventilation to make their businesses appropriate for
COVID and to allow them to stay open and operate in these
situations. I know that some local governments gave grants to
small businesses.
But do any of you all have a sense of the needs out there
to make further investments in getting their operations to be
COVID safe?
And I will start with you, Ms. Pinder, since I know that
you have that--a very good perspective from the minority
communities.
Ms. PINDER. I am sorry, Congresswoman. You said--what was
the last part of your question?
Ms. BOURDEAUX. Do you have any sense of the additional kind
of infrastructure needs that small businesses have to make sure
that their businesses are safe and able to reopen at least
partially safely right now?
Ms. PINDER. But, you know, part of it is just an education
process of how do you safely reopen your businesses, right? It
is also from the legal perspective, what is your liability
around when your employees come in? Do you require them to have
vaccinations? So a lot of it--what I am finding and what we
have found is just an education program or education
perspective of what are the rules?
And so there is absolutely the need to prepare our
businesses or provide those resources so that our businesses
can understand what they are liable for, how they can assist,
how they can then--you know, what are the compliance efforts
that they have to undertake in order to get that done? And, for
some businesses, it is actually also where can they reside,
because they can no longer afford their places of business.
Chairwoman VELAZQUEZ. Time has expired.
Ms. BOURDEAUX. Thank you.
Chairwoman VELAZQUEZ. Thank you.
Ms. BOURDEAUX. Thank you.
Chairwoman VELAZQUEZ. The gentlelady from California, Mrs.
Kim, is recognized for 5 minutes.
Mrs. KIM of California. Thank you, Chairwoman Velazquez and
Ranking Member Luetkemeyer, for holding this very timely
hearing. I also want to thank the witnesses for taking the time
to join us to share your experience and your relevant and
important data.
As a small business owner myself, I am thrilled to be part
of this Committee, and I look forward to working with my
colleagues to support our small businesses during and after
pandemic, because small businesses are the lifeblood of our
economy and cannot be forgotten.
You know, in my district, California Authority 9, which is
a suburban district, 99.8 percent of California businesses are
employing over 7 million workers. Unfortunately, COVID-19
shutdowns in my State of California have increased the number
of small businesses closing, and I have witnessed many of them
myself in my district.
More than 19,000 California small businesses have shut down
permanently due to COVID-19, and every small business that
closes takes away jobs, causing economic stress to families and
communities.
Obviously all industry are badly hurt during the shutdown.
So I want to ask--but, you know, all industries, but retailers
in particular. So I would like to ask a question for Dr.
Fairlie.
In your testimony, you mentioned trends in shopping habits,
especially the mood towards online shopping. Do you believe
small businesses are prepared for this trend to become
permanent, and can you elaborate on some of the recommendations
you mentioned in your testimony?
Mr. FAIRLIE. Yes. I would be happy to. I think that it is a
trend that is not going to go away. I mean, I think that
there--there could definitely be some pent-up demand where
people are really excited when the vaccine is rolled out more
completely and they want to go back to downtowns, they want to
go to those vibrant communities, different shops, restaurants.
But I think that there is also this other, you know, trend
happening, which is we are just more used to buying things
online. We are used to that convenience of having, you know,
UPS deliver a package to our house. And often, almost--well, I
don't know if often, but very likely that package is not from a
small business; that package is from a big-box store or an
online retailer. And so we need to do more to get small
businesses online.
You know, we talked a bit about broadband access could be
essential for rural businesses and businesses in other areas
that don't have good internet access. Certainly web page
assistance might be another thing that the Federal Government
can help out with.
And then of course, you know, anything that can help, you
know, with search engines or any other kind of information that
allows customers to find small businesses and buy from them
online.
Mrs. KIM of California. Thank you.
As small businesses recover from this emergency, what
should Congress concentrate on in order to create a small
business environment that focuses on entrepreneurship and
innovation?
This question is for Dr. Fairlie.
Mr. FAIRLIE. Okay. I wasn't sure if it was to me.
I think there are a lot of, you know, different ways.
Certainly, you know, we have talked about financial capital as
being one of the most important. I think that is kind of
crucial, especially for firms that are creating innovative
products that are kind of expanding on what we already have,
that are giving America real strength, right? And so that can
be crucial, as that kind of funding that helps them with
scientific discoveries and innovative products.
Mrs. KIM of California. Thank you.
I have a question for Ms. Kerrigan. As Congress discusses
next steps when it comes to COVID-19, what recommendations do
you have for this Committee?
Ms. KERRIGAN. Well, when I talk to business owners, I mean,
what they are really looking for is a period of certainty and
policy stability. You know, last year was very, very tough in
terms of the uncertainties, and, you know, obviously sort of
the massive revenue reduction that they saw last year. So, to
the extent that we can have a--sort of a period of stability,
policy stability and certainty, I think that is very, very
important.
I mean, obviously the whole issue that we talked about in
terms of capital formation, access to capital, that will remain
to be an issue, not only for existing businesses, but also for
the start-ups and the new entrepreneurs that we see--just, you
know, the surge in new business applications that we saw last
year and that continue to this day, is what can we do to
support them? Again, it is policy stability. It is, you know,
access to capital.
And I have to say, you know, in terms of----
Chairwoman VELAZQUEZ. Ms. Kerrigan, I am sorry, but we are
running late, and the gentlelady's time has expired.
Mrs. KIM of California. Thank you.
Ms. KERRIGAN. I am sorry. Okay.
Chairwoman VELAZQUEZ. Thank you.
Now we recognize the gentlelady from Texas, Ms. Van Duyne.
Is she here?
Ms. VAN DUYNE. Yes. Thank you. Thank you, Chairman
Velazquez and Ranking Member Luetkemeyer, for holding this
important hearing today.
As a former mayor and businesswoman, I have spent my career
with people from a wide array of backgrounds and experience who
fought tooth and nail to grow their businesses only to see
their doors closed forced by the heavy hand of government due
to coronavirus pandemic.
Since being sworn into office one month ago, I have been
fortunate enough to speak with a number of small businesses and
franchise owners in north Texas to learn more about their
experiences in the face of the global health crisis and their
struggles due to government restrictions that followed.
Just last week, I held a roundtable discussion to hear from
these businesses in our community. Many expressed similar
concerns, but one thing they all had in common, similar to what
Mr. Schoaps has referenced in his testimony today, is that they
are doing all that they can, everything in their power, to
ensure their businesses weather the storm.
While loan programs, like the Paycheck Protection Program
and the Economic Injury Disaster Loans Program, were critical
in keeping their businesses operational, the pandemic has
brought forth new challenges. And, over time, it became clear
that these programs needed additional resources and support to
uplift small businesses and entrepreneurs.
In north Texas, our economy is made better by the
innovation and entrepreneurial spirit small business owners
provide. In talking to the business owners in my community, I
learned that they are hurting and needing help. They are scared
that the powerful few in Washington will make politically
expedient decisions that may force them to permanently close
their doors.
Instead of calls to hike the Federal minimum wage to $15 an
hour, which will kill many small businesses, we should be
discussing how to improve programs, like the Paycheck
Protection Program, that could keep them open past the
pandemic.
Unfortunately, this administration stands ready to hand
down destructive policies that will force north Texans out of
business and demand many change the standards of who they hire.
I hope the calls for unity thus far are not shallow. Small
businesses needed us to come together as a Congress, as a
House, and as a Committee to fix the programs, keeping them
alive, address their unique situations, and reopen the stores,
the restaurants, and service centers that keep our communities
running.
I look forward to working with this Committee to oversee
the programs that have aided so many small businesses thus far
and, as we move past this pandemic, advancing legislation that
will allow America's entrepreneurs to prosper once again.
I thank all of the witnesses being here today.
And, for Ms. Kerrigan, an October report from the
Government Accountability Office concluded that the streamlined
process that the SBA implemented to administer COVID-19 loans
has increased susceptibility to fraud and abuse. Are there any
activities or program features that you believe we should be
examining more closely in our congressional oversight of these
programs?
Ms. KERRIGAN. Yes. And--yeah, that is a big issue, and
obviously of concern. I actually read the recent SBA's IG
report that was released on this very issue, and they have some
very good recommendations in that report in terms of what can
be done on the front end to ensure that there is not--in terms
of the money does not get disbursed to people who may be or
businesses who may be ineligible, and things that they can work
on with Treasury--for example, the do-not-pay data source that
they have over there--again, to sort of, you know, catch this
fraudulent activity before the money goes out the door.
So I was happy to see that SBA IG report, the
recommendations, and also the SBA following through on some of
those recommendations, but more oversight and follow-up
definitely needs to be done.
Ms. VAN DUYNE. All right. I appreciate that.
One of the biggest concerns for small business owners that
the pandemic has exasperated has been providing healthcare to
some of our frontline workers. Our smallest businesses employ
low-wage workers and can't afford to pay for healthcare,
especially with revenues dropping. But, due to the pandemic,
workers are scared to go to work without that safety net.
So, Ms. Kerrigan, I am going to ask: How would you like to
see the issue of small business healthcare addressed for our
smallest of small businesses?
Ms. KERRIGAN. Well, to the extent that you can provide the
incentives and support to the workers themselves in order to
access health coverage, to allow for more, you know,
flexibility, one size doesn't fit all, certainly when it comes
to healthcare. And I do think some of the initiatives of the
last administration, you know, have been helpful. I do believe,
you know, the pooling initiative, you know, for allowing small
businesses to leverage their numbers in terms of accessing
healthcare, was very important.
But one other critical thing that I see is that we want to
be able to incentivize. When it comes back to vaccines,
employers, you know, are looking not to mandate, but to
incentivize employees to get the vaccine, and we joined a group
of our allies in sending a letter to the EEOC to make sure that
proper guidance is put out there, that we are not running afoul
of any laws. And so those----
Mr. MFUME. [Presiding.] The gentlewoman's time has expired
unfortunately. Thank you so much. I do anticipate there will be
a second round, but I don't want to get in front of the Chair
on that. She will be back momentarily.
So, Ms. Kerrigan, if you would suspend, I would like to
acknowledge Ms. Craig, who has been in the cue and who is up
next, to be recognized.
Ms. Craig.
Ms. CRAIG. Thank you so much, Mr. Chair. Thank you for
yielding.
Before I get to my question, I just want to welcome new
members to the Small Business Committee. Looking forward to
working with all of you. I have been proud of the work on a
bipartisan basis that we have been able to accomplish. And I am
happy to serve on this Committee with members of the Minnesota
delegation as well.
Thank you again to our panelists for being with us today
and for your insightful testimonies.
As I am sure is true for all of my colleagues, many of the
issues discussed today have greatly impacted my constituents.
I would like to address my question to Dr. Fairlie first.
Thank you for your important research and specifically
addressing the negative impacts that COVID-19 has had on
minority owned businesses.
In your testimony, you touched on the issues that
restaurants have faced as well amid the pandemic. We are seeing
the consequences of government-ordered shutdowns on, in
particular, hospitality and restaurants.
On top of the financial losses and shutdowns, people are
anxious to know that it is safe before they return to
restaurants, and that is not going to happen until vaccines are
more broadly available in each of our communities.
The combination of these issues has devastated the
restaurant industry, and the relief grant program for
restaurants to address these unique challenges was widely
supported by my colleagues on this Committee last Congress,
including Chairwoman Velazquez.
As we roll out vaccinations, do you believe a targeted
relief grant program, which would go to independent
restaurants, similar to last Congress' RESTAURANTS Act--120
billion would go to the industry in grant--would that assist
the recovery of these smallest and hardest hit Main Street
businesses, help them to stay open, and accelerate the recovery
of our Main Street businesses?
Mr. FAIRLIE. Yes. I think it could help a lot. I think it
is important that we save our restaurants. Certainly, you know,
just going around my own town, I have seen a lot of them closed
up, and they have closed up permanently. You know, they have
put up signs saying that they are done. They--you know, they
are not going to reopen at any point in time.
And it is sad, right? You sort of--like we really
experienced these downtowns as part of, you know, what makes
America great, and, you know, is that being able to go and walk
through a town with a lot of diverse restaurants and shops, we
need to provide that assistance to them. And I think directed
assistance, especially financial assistance, so that they can
weather the next couple of months to get that vaccine out is
crucial.
Ms. CRAIG. Well, we see that light at the end of the tunnel
for sure.
I want to open this up to, I guess, any of our panelists
here just as we circle back around to this topic of the second
round of Paycheck Protection Program forgivable loans obviously
did a much better job of assisting minority owned businesses.
But one of the challenges that I saw in our community is that
minority owned businesses don't always have access to the same
information. There are language barriers, et cetera.
So any thoughts on how we can encourage, really, at the
local level--how the Federal Government can support making sure
that the communication and the dollars are getting to these
minority owned businesses?
Ms. KERRIGAN. Congresswoman, I can start out with that.
One of the things--it has been great to, by the way, engage
with the SBA already early on in the administration where they
are already having this discussion about how you use local
organizations, community organizations, sort of a navigator
approach to actually reach those types of businesses, because
many of them don't think they are eligible. They are unaware of
the program. They have technical issues to overcome in terms of
the financials and all those other things that they need to
apply for these loans.
So I think there is--and they have some good models that
they shared of how this worked in certain areas of the country,
and I think using that nationwide, I think, would really be
beneficial----
Mr. MFUME. Ms. Kerrigan, I am sorry, but the gentlewoman's
time has expired. I don't want to always have to interrupt you.
It is----
Ms. KERRIGAN. I am sorry.
Ms. CRAIG. I am sorry. I would have done that for you. I
thought I had 20 seconds left, so apologies to the Chair.
Ms. KERRIGAN. All right.
Mr. MFUME. Don't worry. We will roll it over with interest,
Ms. Craig, trust me.
Ms. CRAIG. Okay. Thank you.
Mr. MFUME. The Chair would like to recognize the gentleman
from Florida, Mr. Donalds.
Mr. DONALDS. Thank you, Mr. Chairman.
First of all, to the panelists, thanks for taking the time
out of your day. This is obviously a very important subject
matter facing our country through a very important time.
I am not going to get into speeches. I want to just kind of
get right to it in the interest of time. This actually--my
first line of questioning is really for Professor Fairlie.
Professor, I was going through some of your testimony here,
and the one thing, especially with respect to the closure rate
of minority owned businesses, specifically Black-owned
businesses and even Latin-owned businesses, in your research,
did you take into account the actual location of these
businesses, like where they actually reside around the United
States, or does your research pay no deference to that?
Mr. FAIRLIE. I did look into kind of regional differences,
and I found that it was pretty consistent across, you know,
broader regions of the country. I wasn't able to look at--there
is a lot of concern that urban areas were hit the hardest,
right, in terms of closures and also customers being very
careful about going back to small businesses when things
started to reopen. Unfortunately we don't have the data on
that, and that was difficult.
But the kind of thing that I did look at with the
California tax data is different types of businesses, and that
is where, you know, the numbers were just devastating. You
know, 91 percent of hotels closed down. More than 50 percent of
clothing stores, more than 50 percent of restaurants closed. A
lot of those are owned by minorities and immigrants in
California, and so that is the real concern, is, you know, what
is happening there.
Mr. DONALDS. A quick follow-up on that point. So, you know,
since you have such rampant closures obviously in the State of
California, could you specifically attribute that to the
emergency regulatory environment put in place in California by
Governor Newsom and, with respect to that, local city councils
and local mayors in the State of California?
Mr. FAIRLIE. Well, it is attributed to two things, yes. One
is the mandatory shutdowns for a lot of nonessential
businesses. But the other is customers. Customers were nervous
about going to businesses. Often they were very nervous about
going to small businesses, small restaurants, places where they
thought they might catch the disease.
And so that is where, you know, as I mentioned before, this
kind of shift to online shopping has occurred, that, you know,
individuals are worried about it, they are waiting to get the
vaccine, they are waiting for this to get under control before
they start to go back to small shops and small restaurants and
back to kind of downtown areas.
Mr. DONALDS. My last question really is more so for the
panel. I could get into $15 minimum wage, but I think it has
been covered pretty extensively here, and I--you know, I think
it is pretty clear in the record of what happens when you make
major shifts to your minimum wage in a short period of time,
even in normal economic circumstances, not to mention the
current economic circumstances.
But what I would--my last question is really for the
overall panel. Does the overall panel think it is appropriate
for emergency regulatory orders to be essentially cast across
an entire State with no reflection on whether it is an urban
area, suburban area, or a rural area? And do you think that the
impacts on suburban or rural areas in particular provide just
as many disastrous impacts to small businesses as they would in
an urban area?
Anybody can answer that one.
Mr. SCHOAPS. Well, I think that the effects of the COVID
pandemic across the State--in our State, rural or urban, has
been terrible, of course. I don't think the shutdowns would
have affected us any more than they would have in a rural area
or an urban area. So I don't--I don't really think there is any
difference there. It is going to affect all small businesses
the same.
Ms. KERRIGAN. I would just say on that, the one-size-fits-
all approach, you know, that is--I mean, obviously that is a--
that is a big problem, both when it comes to government index
regulation, and certainly when it comes to this, is that it
would be--would have been ideal if local governments and
localities were given a little bit more flexibility and
authority, you know, to make decisions based on local
conditions.
So, anyway, one size fits all is--you know, obviously hurt
a lot of small businesses in areas where the pandemic situation
was much different than it was, say, in urban areas.
Mr. DONALDS. All right. I will yield back the rest of my
time.
Thank you, Mr. Chairman.
Chairwoman VELAZQUEZ. [Presiding.] The gentlelady yields
back.
Now I will recognize the gentlelady from Florida, Ms. Maria
Salazar.
Ms. SALAZAR. Thank you very much.
Chairwoman VELAZQUEZ. Five minutes.
Ms. SALAZAR. Thank you, Chairwoman Velazquez, and thanks to
all of you, and to all of the panel--the panelists that are
willing to donate their time to enlighten us.
I come from Miami, Florida, district number 27, where 70
percent of the constituents are minorities, 80 percent of my
businesses have less than ten employees, and 70 percent have
less than five people. So obviously the impact has been brutal,
specifically for the minority owners.
For that reason, I promised my constituents something that
is very unusual, but I think very necessary as time passes--
something called a prosperity center, and what is the
prosperity center going to do?
Well, basically three things. Helping everybody find a new
job or find a job, helping my constituents to learn some--learn
something new. If they lost their job at the restaurant and
they wanted to become a welder or an electrician, I could help
them find those courses.
And, third, and for me the most important, the one that is
closest to my heart, is to become a client of the Federal
Government. I am sure that you guys are aware that the Federal
Government has $175 billion available to be bought from goods
and services made by minorities or for minority businesses.
So what we are going to be offering in the prosperity
center is a variety of services that includes roundtables, job
fairs, job training courses, offering the constituents
computers, personal guidance for my staff, for them to be able
to regain their economic lives.
So my question is for the overall panel: If you were to be
in my shoes, what else would you be offering in that prosperity
center in order to help those small business owners get back on
their feet?
Ms. KERRIGAN. Well, I will just start by saying information
is power, education is power, and I applaud you, you know, for
putting this center together.
Ms. SALAZAR. Yep.
Ms. KERRIGAN. I would say that there are a lot of self-
employed minority businesses, individual entrepreneurs that do
not know they are eligible for PPP, EIDL programs, and that
type of support. And, also, there is a lot of tax credits and
tax incentives as well. To the extent that you can provide the
technical information and the training to access these
programs----
Ms. SALAZAR. Yep.
Ms. KERRIGAN.--I think would be vital.
Ms. SALAZAR. So, when you tell me tax credits and technical
training, could you please expand on that?
Ms. KERRIGAN. Well, yeah. So, you know, in the CARES Act
itself and in the year-end package, there--for PPP and both for
individuals, there are--well, let's start with tax credits.
There is tax credits for employers, but also there is tax
credits for self-employed people. With PPP, there is rules for
employers, and then there is rules for self-employed people.
Ms. SALAZAR. I want to stop you there for a minute. So what
you are telling me is that the government will pay the employer
to hire the employee?
Ms. KERRIGAN. Well, no. To maintain--well, and to hold on,
you know, to their employee, right, so the employee retention
tax credit, that they held onto that employee despite a drop in
revenues, okay?
Ms. SALAZAR. Correct. So that means that the person keeps
the job. So that is what we want.
Ms. KERRIGAN. That is exactly right. And so--and those tax
credits became even more valuable, and they have been extended
through June 30, I believe, of this year. But, also, individual
self-employed people have access to these tax credits as well.
But they--again, many of these entrepreneurs and small
business owners, they just need the technical expertise and the
accountants and, you know, the people to help them get through
these very complicated--not that it is complicated, but just
the forms that they need, the financials that they need in
order to take advantage of these programs.
Ms. SALAZAR. So the information is power, like you said, so
now we got to another layer where we are going to be providing
them sort of accounting for legal guidance so they----
Ms. KERRIGAN. Correct.
Ms. SALAZAR.--know how to find their way through the maze.
Ms. KERRIGAN. Through the maze, and then all the way, if it
is a PPP loan, through the forgiveness process as well.
Ms. SALAZAR. Now, you kind of--that is one of the most
important information that we could provide, PPP loans, or the
info that comes with it, and where to look for opportunities--
for tax opportunities?
Ms. KERRIGAN. That is right. There is a lot of them in, as
I said, the CARES Act, and then things that were put in at the
year-end package as well that was signed into law.
Ms. SALAZAR. We are going to make the Kerrigan Prosperity
Center Division. Thank you.
Chairwoman VELAZQUEZ. The gentlelady's time has expired.
Now we are going to go to a second round.
Professor Fairlie, so much has been discussed here
regarding the impact that the minimum wage increase will have
on small businesses. I would like to relate for the record here
that, since nearly 70 percent of our economic activity comes
from consumer spending, raising the minimum wage will put money
back into consumers' pockets, back into our main streets, and
back into our economy.
In fact, the Boston Federal Reserve data demonstrate that
raising the minimum wage leads to increased spending on
groceries, household necessities, and at local restaurants.
Many of the businesses are saying that they need foot traffic,
and that they need consumers to walk through their doors.
The reality is that, unless we successfully vaccinate most
of the people in this country, consumers will not feel safe
going into a restaurant, going into a mall, and spending their
money.
There has to be synergy between being successful at
vaccinating most of the people in this country and increasing
the minimum wage so that we increase consumer spending. The
people that are going to benefit from increasing the minimum
wage are not going to go to Florida or Arizona and purchase a
second home. They are going to go into the grocery store. They
are going to go into the gas station or local restaurant. Small
business owners see and know that this is the reality.
So, Mr. Fairlie, do you see any interconnection between
being successful in terms of a national strategy of addressing
and crushing the pandemic, the virus, and also infusing money
into people's pocket so that they will go out and spend?
Mr. FAIRLIE. Yes. I mean, I think that, you know, one of
the issues that we have been discussing in this conversation is
about increasing the minimum wage, but the fact is the minimum
wage has gone down over time. If you adjust it for inflation,
what we have done is we have let it slip. And so the goal here
is to bring it back to where it was in the past.
It is one of the only things the Federal Government does
that is not indexed for inflation. You know, some other
benefits are often indexed for inflation, but the minimum wage
is not. And, when you look at the numbers, someone getting paid
at the next round, you know, a little over $9 an hour, you
multiply that by a full-time worker over the entire year, they
are still under the poverty line--the Federal poverty line.
So there is issues there about, you know, well, what is a
reasonable amount of money that someone should get in a job?
And, if they do get that reasonable pay, then they will put
that money back, as you are saying, in the local economy. They
will spend it. That will increase their income, and it will
just shift some income over to these--you know, these low-wage
workers.
Chairwoman VELAZQUEZ. Thank you. Thank you.
Now I recognize the Ranking Member, Mr. Luetkemeyer.
Mr. LUETKEMEYER. Thank you, Madam Chair.
And I would like to thank the witnesses today, too, for
hanging in there. I appreciate your time and your expertise.
You have been great.
This responds to a couple of comments that were made by
some of the members. A couple of them talked about the fact
that the Raise the Wage Act was phased in, and I mentioned
that, or at least I--in the report that I asked to put into the
record, which is an NFIB Research Center report, it is a report
on the Raise the Wage Act, which is phased in. But the report
takes into account the phase-in of the minimum wage, and still
winds up with 1.6 million jobs being cut and a real output loss
of $2 trillion.
You know, I understand the need for the minimum wage, and I
think, to me, it is a testimony on the lack of an economy. When
you see the economy going down or stagnating, that is the time
whenever there is the need for--that is where the argument can
be made, anyway, for the need for a minimum wage. When the
economy is growing, you don't need a minimum wage.
We had 1.2 million more jobs right before the pandemic hit.
They needed people to fill them, and we didn't need a minimum
wage. Why? Because there was a competition for the workers. The
wages were going up. That statistically shows that, across the
board, every demographic was improving wage-wise as well as
with unemployment numbers going down.
So we can have an argument on the minimum wage for a long
time. I am more than happy to get into that.
Dr. Fairlie mentioned in response to my question a while
ago with regards to the lockdowns, do populations live
differently between New York and Florida? I didn't have time to
really go into a response to that.
But my response to it is: Yes, they live in a--perhaps a
little differently the way they are spread across their State,
but Florida had or New York had twice as many people die from
COVID as Florida did, and yet their own survey--New York's own
survey shows that the cause of the cases of COVID were not from
businesses. 1.4 percent from restaurants, less than 1 percent
from personal hair care folks.
That is my point, is that the lockdowns were minimally
effective, at best, with regards to keeping COVID cases down,
and yet the suffering by the small business community is
devastating, as given by my State, Missouri, which did not lock
down anytime after November, or mid-May. Some communities did.
Some of them didn't. But, in the process, we have got a 5
percent increase in revenues and a 4.4 percent unemployment
rate.
So that is my point in making this, is that it goes back to
leadership in the States and the devastating effect that it has
on small businesses and the jobs that are there for those small
businesses.
With regards to my question to Mr. Schoaps with regards to
his banking relationships, I appreciate his comment. Obviously
he has got a good relationship with it--with his banker, but
perhaps part of it could be because, in the first COVID bill
and the second bill as well, we had provisions in there to
suspend the TDR, troubled debt restructuring rule, which helped
banks and credit unions be able to accommodate more lenient
terms for their customers with regards to how they can approach
this, with regards to the regulators not going in and forcing
the banks to foreclose on people.
So I think--you know, Ms. Kerrigan, I have gone on here a
little bit, but I wanted to clarify some of those things,
because I think it is really important to understand the
precise problems that we are talking about here and the
solutions that were in the CARES Act, for instance, with
regards to the troubled debt restructuring rule and CECL, for
instance.
So can you explain to me what you have seen or what you
think is happening here with regards to the small businesses
being worked with as a result of the TDR extension and banks
and their customers?
Ms. KERRIGAN. I think that a lot of the changes that have
been made to PPP have just been very, very important for small
businesses, really responded, you know, to many of their needs.
And so, you know, we, you know, applaud the Congress and this
Committee's leadership, you know, for making that happen.
And moving forward, I mean, I think it is just really
important that we continue to identify [inaudible] as well as
opportunities, you know, in this next round as it goes out the
door to make other changes, and maybe--as they may be needed
where we are in the pandemic right now. So--and I look forward
to working with you on those.
Mr. LUETKEMEYER. My time expired. Thank you.
Chairwoman VELAZQUEZ. The gentleman's--the gentleman yields
back.
I now will recognize the gentleman from Maryland, Mr.
Kweisi Mfume, for 5 minutes.
Mr. MFUME. Thank you, Madam Chair. At this time, I will not
take the whole 5 minutes. You were very gracious.
I would like to go back to the point I was making with
respect to innovation and finding a way to create more capital
opportunities, and I didn't get a chance to get to Ms. Pinder.
And, Ms. Pinder, thank you very much. It is good to see you
again. I appreciate, whether it is this Committee or other
Committees, your willingness always to come before members of
the House and to share your perspective.
Some of the numbers you gave are a bit startling. I guess
for those of us who have watched this closely, maybe not as
startling, but the number of minority owned businesses that are
Black, Latino, Asian, that have pretty much gone under, those
that are facing severe budget drains, and those, quite frankly,
looking for capital--innovative capital initiatives coming out
of the government.
The Mentor Protege Program is something that I originally
wanted to talk to you about, but hearing your testimony, I
wanted to go into your suggestions that we look at the Defense
Production Act, which the current administration is looking at;
specifically, Title III with respect to targeted investment
initiatives that would create the kind of wave under the small
businesses that we are talking about that will allow them to
sail into the future.
I assume you have got some specific ideas there, and if you
could take a moment to talk to the Committee about some of the
things you think that we ought to be arguing for and making a
case for under the Defense Production Act, specifically Title
III, as this administration looks at enacting that. That would
be very helpful.
Ms. PINDER. Thank you, Congressman.
I think that part of what we can examine is showing a
preference--using that vehicle by showing a preference for sole
source provision and 8a.
I am having some audio issues. Can you hear me okay?
Mr. MFUME. I can hear you.
Ms. PINDER. Okay. By expanding use of sole sourcing with
provision under 8a, I mean using that act to do that.
It is an opportunity to look at, as we--as we talked about
businesses pivoting as a result of COVID, the manufacturing
industry, of which, under the Defense Act, has supported in the
past, you know, can we take the opportunity to help engage
minority businesses in manufacturing? An idea that we have been
discussing is looking at maybe some foreign investments in
order to do that, looking at companies that would want to
invest in U.S., having that partnership, whether it is through
teaming agreements and joint ventures, with minority
businesses, and having that as an entre into the manufacturing
world.
And so it is looking at that and looking at Buy American as
to how do we pivot some of these companies to help with--I am
sorry--to help with supporting our minority businesses.
The other thing that I think we need to take into
consideration, Congressman, is the partnering with the private
sector. You know, my organization, the Capital Region Minority
Supply Development Council, which is part of a national
network, is--you know, I think that partnership in with--with
private-sector organizations can help in writing what some of
our businesses are doing with support of capital.
I do apologize. I am having all kinds of issues here.
So that is--that is basically what I was talking about.
Mr. MFUME. Okay. Okay. Thank you.
Before you conclude--and the Chair will interrupt in just a
second, because time is running out. You had mentioned Title IV
also of the Defense Production Act, which concerns me, because
I think it is something a lot of people are not looking at, and
what you have talked about specifically was reworking the 8a
program.
If you could get back to the Committee in writing with some
of your thoughts, suggestions, or ideas are in terms of
rewriting or reworking that 8a program, that would be very,
very helpful, and I would appreciate it.
Ms. PINDER. No. I appreciate the--I appreciate the
opportunity.
Chairwoman VELAZQUEZ. Gentleman's time----
Mr. MFUME. Madam Chair, I yield back.
Chairwoman VELAZQUEZ. Thank you. Oh, he left?
Okay. Well, thank you again to our witnesses for the
testimony. We appreciate all you have shared with us. As
Congress continues to debate additional COVID relief for small
businesses, it is clear the time to act is now. Big and bold
relief is needed, and it should be targeted to small firms and
industries that need it the most.
As we continue to vaccinate more and more Americans, we
move closer to the end of this crisis, but we are not there
yet. Until that happens, small businesses will struggle to
return to pre-pandemic performance, and they will need our
support.
That is why targeted EIDL grants for micro businesses left
out of PPP, supporting those hardest hit sectors of the small
business economy, and improved entrepreneurial development and
government procurement programs are so vitally important.
I ask unanimous consent that Members have 5 legislative
days to submit statements and supporting materials for the
record. Without objection, so ordered.
If there is no further business before the Committee, we
are adjourned.
[Whereupon, at 12:35 p.m., the Committee was adjourned.]
A P P E N D I X
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
[all]
</pre></body></html>
|