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	<title> - STATE OF THE SMALL BUSINESS ECONOMY IN THE ERA OF COVID-19</title>
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	[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.]


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