AI on Main Street: How AI is Shaping the Future of Small Business

Good morning everyone. Uh, I now call the committee on small business to order, without objection, the chair is authorized to declare a recess of the committee at any time. I now recognize myself from opening statement. Uh, welcome to today's hearing, AI on Main Street, how AI is shaping the future of small business. I wanna thank our witnesses uh for coming with us today and uh and uh being part of this. Uh artificial intelligence has quickly transitioned from month from a novelty to an indispensable business tool, for main street businesses across the country. AI is streamlining uh administrative tasks that once required significant time and resources, and it's allowing small businesses to focus on growth instead of paperwork. Small businesses are using AI to uh respond quickly to customers, manage inventory, strengthen cyber security, and automate routine paperwork. As a small business owner myself, I have seen the difference these tools can make, and I know firsthand how much of that burden falls on the owner. Artificial intelligence is no longer something uh reserved for big tech companies and fortune five hundred boardrooms. Today, uh nearly three quarters of small businesses are using AI in some form, and this is uh more than triple the share from just three years ago. So small businesses are closing in on technology gap with the big corporations, faster than any prior wave of innovation. Now importantly, early data is showing that AI's rise is not coming at the expense of workers. In fact, eighty-two percent of small businesses using AI grew their workforce over the past year. Of course, real barriers to broader AI adoption remain. Uh, many owners tell us that, uh, they simply don't know how or where to start and that they worry about costs, so that they are unsure how to keep their data secure. But one of the biggest barriers in W- in Washington is cr- is created It's called uncertainty. And the Biden administration took a heavy-handed approach to AI. And October thirtieth, twenty twenty three, they released the executive order imposing sweeping regulatory requirements and compliance burdens that that threatened to smother AI innovation before small businesses ever got the chance to benefit from it. We only need to look across the Atlantic to see where that road leads. Europe uh chose to recogni- regulate first and innovate later, and today the small businesses are falling behind. and the United States cannot make the same mistake. Thankfully, the Trump administration reversed course. They re-centered the Biden approach and replaced it with a pro-innovation strategy through executive order fourteen, one seven nine, and America's AI action plan, uh clearing way for red uh doing away with red tape so that AI tools can be adopted with confidence. The SBA is doing its part by also expanding access to AI through a n- it's new Main Street AI accelerator program. And of course, the committee has led the way with bipartisan legislation such as the AI AIWISE Act, the AI for Main Street Act, and the SBA Artificial Intelligence Utilization Act of twenty, twenty-six. So together, these bipartisan bills ensure that entrepreneurs have access to practical AI and that barriers to AI adoption are reduced. Our goal is to make every small business and entrepreneur make sure they have the opportunity to succeed in the emerging age of AI. So when small businesses have the tools, they have the training and freedom to innovate, they will out-compete, they will out-build, and out-hire anyone in the world. And our economy will be stronger because of it. I wanna thank our witnesses again for joining us today. I look forward to the conversation ahead. And I now yield to a ranking member of Congress and Assistant Euros from the great state of California.

Good morning and thank you, Mister Chairman, for convening this important hearing. Artificial intelligence will revolutionize the way businesses work. and human and humans operate. AI could allow main street businesses to scale their capabilities and perform routine tasks faster and cheaper. However, AI's many risks have incurred costs for small firms, AI can produce false outputs, a phenomenon known as hallucinations. Further bias and discrimination, AI decision-making undermines its effectiveness and duly hurts underserved communities and exposes users to legal and reputational harm. And AI companies often take and use the data and information users input into their models for further training and sale to other parties, posing privacy risk. It is challenging to know exactly how to assess and address these problems, in part because AI developers through automated machine learning and and most AI developers do not disclose their models training information. I support the consideration and use of AI by our small businesses, but we need to protect our businesses from flexible flaws. Small businesses need to be ready to effectively eval- evaluate and adopt these tools. Uneven access to AI and knowledge about how to use it and avoid its risk threaten to cut whole segments of our population off from the benefits of AI. Under-served people have especially fallen behind in their understanding of AI tools, increasing the digital divide and hurting their businesses. It is this committee's responsibility to address these issues. The SBA must provide AI literacy resources to educate entrepreneurs on the risk and potential benefits of AI. This will reduce the digital divide and equip entrepreneurs with the tools and information to make well-informed thoughtful dis- decisions about whether AI is right for them what AI can and cannot do and which specific AI tools, are suitable for a specific task. Furthermore, the inherent risk of AI must be addressed through smart and sensible AI regulation. Smart, well-crafted federal regulation will minimize the risk of AI, maximize its benefits, and prevent criminal and unethical use. These regulations are are needed to protect all Americans, especially small business owners. Small businesses are crucial to the technological progress of our country. Entrepreneurs use their unique perspectives, passion and resourcefulness to support and grow our country's economy. That's why we must support our small businesses by educating them on this revolutionary technology how to use it effectively and how to avoid its risk. It is important that the federal government support small businesses developing new AI technologies with safety and security in mind. that we do not leave small businesses behind as we race to enhance our country's competitiveness. I look forward to discussing how we can better assist our small businesses in this new era. With that, I thank the witnesses for being here today, and I yield back.

Gentleman yields back. We will now move to witness introductions. First witness is Mister Jordan Crenshaw. Uh, Mister Crenshaw is the Senior Vice President at the US Chamber of Commerce Technology Engagement Center. uh before joining the chamber. He was an attorney focused on environmental issues and consumer privacy laws. Mister Crenshaw worked at uh McGuire Woods and also held roles in the Virginia Senate leadership, the Office of the Attorney General of Virginia, the US Department of Labor, and the National Right to Work Defense uh Foundation. He and both his under undergraduate and law degree from the College of William and Mary. I wanna thank you for being here and look forward to our discussion. Our next witness is Anthony Caillum. Uh, he is the president of MERS uh uh Apothecary, a locally owned small business serving customers uh across the Chicago area, and through its online store, smallflower.com, across the country. Uh, the Caillou family has owned and operated the business for decades, and under the, Mister Caillou's uh leadership, it has grown from a neighborhood uh uh apothecary into a nationally recognized destination for natural health personal care and specialty products. Mister Caillou uh, co-eminent his bachelor's degree from Williams College, one of the great schools, I might add. And, uh, I look forward to, uh, your testimony and thank you for you being here today. Our next witness is Mister, uh, France, uh, Hong. Mister Hong is the founder and CEO of Boodle Box, a collaborative, uh, AI platform that gives small business educators and workforce programs secure, affordable access to multiple premium AI models in a single, uh, workspace. Prior to start starting uh bootable box, Mister Hong served as an executive officer of US Army Special Forces company during combat deployment in Afghanistan. Thank you uh uh f- for that. And uh also s- and he also served as an associate counselor of the president under President George W. Bush. Uh and he has been uh on the founding teams of companies across the fields of law, aerospace defense, government services, and AI. He earned a Bachelor of Science degree from the United States Military Academy at West Virginia.

Thank you, Mister Chairman, it's my honor to introduce Mister Chike Agu, the Head of Innovation and Strategy at the Capor Center, a tech policy group focused on making the tech industry more diverse equitable and inclusive. He is also the Vice Chair of the Maryland Higher Education Commission. Previously, Mr. Agu was the Chief Innovation Officer at the last administration's labor department. While there, he led efforts to use big data and emerging tech to empower and protect American workers. Mr. Agu also has extensive experience in private industry, broadband access, nonprofits, and the education system. He holds a bachelor's degree from Tufts, master's degree in education in public administration from Harvard, and a MBA degree from University of Penn Wharton. Lot of education there. Thank you for being with us, Mister Agub.

Gentlemen, he is back and thank you again, all of you, for being here today. Now, before recognizing the witnesses, I'd like to remind them that their oral testimony is restricted to five minutes in length that's a big number around here five minutes, OK? Uh, and if you see the light turn red in uh uh front of you it means your five minutes has concluded and you should wrap up your testimony if you continue to go, you will hear this. OK? And it'll get louder and louder. So. So I now recognize Mister Cr- and I will say one other thing, too. You're gonna see members going in and out. It's not because anything you said or did. We have other hearings going on, so there'll be people coming in and out all the time. Uh, I now recognize Mister Crenshaw for his five minute opening remarks.

Chairman Williams, Representative Cisneros, and distinguished members of the committee. Thank you for the opportunity to testify today on how artificial intelligence is shaping the future of small business. My name is Jordan Crenshaw and I serve as Senior Vice President at the US Chamber of Commerce, where I lead the chamber's technology policy work, including artificial intelligence, data privacy, and emerging technologies. For small businesses, AI is not a distant idea. It is already helping mainstream businesses save time, serve customers, manage costs, and complete, compete with larger firms. Tools that once required large budgets and dedicated technology teams are now available to entrepreneurs, family-owned businesses, and small employers across the country. A retailer can use AI to understand demand and personalize marketing. A restaurant can improve scheduling and inventory. A professional services firm can automate routine drafting, uh, and research. A manufacturer can release waste and improve operations. In each case, AI is a force multiplier that helps small businesses do more with limited time, staff, and resources. The AI adoption trend is clear. According to the US Chamber's Empowering Small Business Report in twenty twenty five, Fifty-eight percent of US small businesses reported using generative artificial intelligence that's up from forty percent in twenty twenty four, and twenty three percent in twenty twenty three. That growth reflects a simple reality, small businesses adopt technology when it delivers practical value. One example is Henry's House of Coffee in San Francisco, a family-owned roaster that has served its community for generations. Its owner, Rod Kolebjian, uses AI to improve online product descriptions, better understand customers, and solve production challenges. He even used AI to help design a custom system to address static uh in his coffee bagging process which actually helped him save time on getting coffee outside of his uh Ecommerce uh platform and to customers. That is what AI adoption looks like on Main Street. Practical, entrepreneurial, and focused on solving real problems. AI is also creating workforce opportunities. The chamber's data shows that eighty-two percent of small businesses using AI increased their workforce over the last year. These businesses are not using AI to replace people. They're using it to help employees focus on high, high value work that requires judgment, creativity, and relationships. Small businesses are also investing in their workers. They need accessible training, strong partnerships, and policies that make adoption easier, not harder. It's one reason that the US Chamber and its foundation launched the Small Business Basics program recently, to train forty thousand small businesses across the country on AI. We also support the AI for Main Street Act and the AIWISE Act, both of which would help put practical AI guidance and education within reach of more small businesses. At the same time, barriers remain. Small businesses face cost, technical, data readiness, trust, and legal uncertainty challenges. The greatest policy threat in front of small businesses is a patchwork of state, AI, and privacy laws. A small business selling on-line should not have to navigate dozens of conflicting state rules simply to use common digital tools. Congress should establish a clear national framework for data, privacy, and AI. These frameworks should protect consumers, promote trust, preserve innovation, and provide strong federal preemption. A first step is that Congress should pass the Secure Data Act. The Secure Data Act is a comprehensive privacy legislation that is based on a consensus of state privacy laws signed into law by ten Democrat governors and fifteen Republican governors that protects over a hundred and fifty million Americans, across the country. It would give Americans the right to delete their data and opt out of certain AI profiling. With regard to AI specifically, we should adopt a risk-based, technologically neutral, flexible, and proportionate framework. Congress should also support the foundations of AI adoption, workforce development, broadband access, reliable energy infrastructure, modernized permitting, government technology systems that reduce burdens on small businesses, like uh, streamlined permitting. The question before this committee is not whether AI is going to change small business. It already is. The question today is what policies can Congress put in place that encourage the adoption of this technology and further maximize this transformation to benefit small businesses. With the right approach that provides flexibility, certainty, and a clear standard, AI can help entrepreneurs grow, compete, and serve their communities. The Chamber stands ready to work with this committee to ensure that AI works for Main Street, strengthens American competitiveness, and keeps the United States at the forefront of innovation. Thank you, and I look forward to your questions.

Gentleman Neal's back. I now recognize uh, Mister Kayyem for his five minute opening remarks.

Chairman Williams, Representative Cisneros, and members of the House Small Business Committee. Thank you for the opportunity to testify today about how artificial intelligence is helping small businesses like mine compete, grow, and create jobs. My name is Anthony Kayyem, and I'm the owner of Murr's Apothecary, a one hundred and fifty-one year old family-owned business, in Chicago. We sell natural health, personal care, beauty and fragrance products through our historic retail store, our website, and online marketplaces like Amazon. Altogether we employ more than sixty people. When I started, I believed technology could help our unique neighborhood store reach people across the country and around the world. We launched our first e-co- e-commerce website in nineteen ninety-seven and became one of Amazon's earliest small business sellers in two thousand four. Looking back, those decisions changed the trajectory of our business. Today I believe artificial intelligence represents the next major leap forward for small businesses. AI gives businesses like ours affordable access to capabilities that were once available only to large corporations, with multi-million dollar budgets. Many of these tools offer free versions or are integrated into existing platforms we use. For example, Shopify's native AI can produce on-demand sales reports in just minutes, that used to take hours to build. Over the years we've accumulai- accumulated decades of emails, spreadsheets, sales records, and operating documents in Google workspace. We can now simply ask Jem and I where something is stored and what it says, turning our historical institutional knowledge into something we can find and use instantly. In addition, AI helps us streamline repetitive administrative work, so our employees can spend more time serving customers. Right now we're building an AI agent to handle routine accounts payable work, that takes one employee more than twenty hours a week. Ours we'd rather have her helping with strategic problems to grow our business. Like many small businesses, we don't have the budget to hire a full-time Chief Financial Officer. But today I can securely upload our financial statements into AI to AI tools like, Claude or Gemini, and receive a thorough analysis of cash flow, inventory, investments, operating expenses, payroll trends, and potential financial risks. Lastly, and perhaps my favorite example of how AI is helping us, we recently hired a national sales manager for Kobo, our small home fragrance manufacturing business. This is a new position. I knew what I wanted her to learn during the first few months, but I didn't have the time to organize everything into a structured onboarding program. Using AI voice transcription and writing tools, I talked through my ideas, and the AI t- AI turned them into a comprehensive knowledge guide, along with a detailed thirty, sixty, ninety day onboarding plan. She later told me it was the clearest road map she'd ever received when starting a new job. All these examples illustrate the larger impact AI has had on our business. It has helped make us, it has helped us make better use of our employees' time, strengthen our operations, and grow. Since we started using AI, our headcount has increased by about twenty percent, from just over fifty employees to more than sixty, and we are still hiring. As Congress considers AI policy, I urge you to focus on measures that help small business adopt and benefit from AI-powered tools. First, we need a clear, balanced national framework rather than a burdensome patchwork of conflicting state AI and privacy laws. Navigating different rules across all fifty states is difficult at best, and um expensive or impossible at worst. Second, AI-powered tools are just becoming affordable and accessible for businesses like mine. from features built into platforms like Shopify to stand-alone tools like Clod and Codex. If new rules make these tools more expensive or harder to use, it could push AI-powered technology out of reach, once again making these capabilities available only to the largest companies. Lastly, Congress should invest in AI literacy. SBA programs, tax incentives, or workforce training initiatives could help small business owners and their employees learn how to use these tools effectively. Every employee who becomes proficient with AI becomes more valuable, more productive, and better equipped for the jobs of the future. Even in our business which is embracing AI, many of our employees lack formal training on how to maximize its potential. With the right support, more small businesses could help their workers use AI competently. For one hundred and fifty-one years, Mars Apothecary has adapted to changing technologies and markets. AI is the newest chapter in that story. It is helping us compete innovate, hire, and better serve our customers. I hope Congress will pursue policies that keep AI tools accessible for American small businesses and make it easier for millions more to adopt them. Thank you and I look forward to your questions.

Gentleman yields back. And now I recognize Mister Hong for his five minute opening remarks.

Thank you, Mister Chairman, Ranking Member Cisneros, members of the committee, thank you for inviting me here today. My name is France Hong. In nineteen seventy-five, when I was a small boy, American forces evacuated my family from Vietnam. That single act gave me a new life. It let me graduate from West Point, serve as an associate counsel to the president, and later deployed to Afghanistan as the executive officer of a special forces company. It also let me become an entrepreneur. Over the past fifteen years, I helped start a law firm, Fluid, a defense services company, MagAerospace, and today I run a collaborative AI company, Boodlebox. Today more than a hundred and thirty small businesses run a bootable box, and over one hundred thousand students and faculty, and more than one thousand colleges use it to teach and learn. Together the companies I founded employed more than one thousand, two hundred Americans. So when this committee talks about small business, I have lived that journey, multiple times. This committee has also, has already done real work to help small businesses, through bills like the AI Main Street Act and the AI Wise Act. That work matters. But I've learned something on the ground. Getting access to AI is no longer the hardest part. Basic AI is cheap, and it is everywhere. A small business owner in Detroit can reach more AI computing power today for almost nothing than a fortune five hundred company could buy, five years ago. The trouble is what comes next. The premium AI that delivers real results still costs real money. And a new divide is opening up between Wall Street and Main Street. There's a second problem, and it is bigger. The most powerful AI is useless if you don't know how to use it well. Most small business today are handed the keys to a Ferrari and sent down the equivalent of a muddy road. Too often, what comes out only looks finished, and when someone has to redo it, it's what now we call work slop. On Main Street today, and even more so tomorrow, the businesses that do not learn how to collaborate with AI will not just fall behind, they will fail. When I sit with small business owners, I hear the same things over and over. They're exhausted, they don't have time to learn new tools, they don't have staff to run them, and they don't have budget to hire help. And they fear that once their data goes into AI tools, it stops being theirs. They are right to be careful. It's one of the reasons we built BudaBox, to be private by design. Not only do we have best-in-class security, but we never allow our customers' data to be used to train AI models. In fact, we are one of the few platforms approved by the house's own chief administrative officer for use by your staff. Um, a small business owner deserves the same assurances. I have seen what this looks like when it's done right. The University of Michigan runs the Detroit Neighborhood Entrepreneurs Project. It serves more than four hundred small businesses a year. More than nine of nine in ten of them are minority owned. Last year they put in the hands of all those entrepreneurs with the coaching to use it well. One of them is Takia Gaines, who runs a company called GT Coffee. Through BuddhaBox she picks the right AI model for each task, one to price her products, another to build her marketing. Uh, as a result, her average order has grown from thirty-eight dollars to forty-seven dollars. AI let her grow before she had the resources to hire. She didn't outsource her judgment to AI, she amplified it. I'd like to leave you with three requests. First, fund the roads. not just the cars. Put training and real support behind the small business development centers that the committee has already strengthened with the AI for Main Street Act. Second, protect small business data. So no owner fears that using AI means giving their work away. Third, take care that the rules meant to do good do not wall out the small. Compliance that only the giants can afford will hand this technology to big companies and lock out those who need it the most. Throughout its history, America has produ- provided opportunities that let small business owners thrive and prosper. In this era of rapid change due to AI, it's our responsibility to ensure that those opportunities not only remain, but expand. To do so, we must not just hand small business owners a faster car, we must help them build better roads, better roads worth driving on. Main Street, I guarantee you, we'll take it from there. Thank you. I look forward to your questions.

Thank you and gentlemen, yield us back, I now r- recognize Mister Agu for his five minute opening remarks.

Uh, good morning Chairman Williams, uh, running members and members of the committee. I wanna thank you for this invitation to testify today and I will say, as a former congressional intern who walked these halls two decades ago, uh, it is a remarkable full full circle moment, and uh, very much proof of what's possible today uh, in America. Um, my my name is Cheekay Agu, I serve as Head of Innovation and Strategy at the Cape Horse and through the Kapor Foundation and Kapor Capital. The Kapor Center has backed more than two hundred startups and fledgling businesses since twenty eleven, that make healthcare, childcare, education and housing more affordable today in America. Few topics matter more than the intersection of artificial intelligence and the small businesses that power this nation. If you remember nothing else I say today, remember this. The rise of AI carries both promise and peril. They are both real. Our shared responsibility is to capture that promise and mitigate that peril. For small businesses the promise of AI is very clear. Generative AI and AI agents can remove many of the very barriers that prevent entrepreneurs from starting and scaling businesses, from market research, to back office capacity, to navigating regulation. Last year, Mat Rosenberg, uh, in California left his marketing job to open a Thai restaurant with his wife, a fourth generation cook from Bangkok. When a storefront lease proved unaffordable, AI serviced a rare home kitchen permit they never w- knew existed. cutting their start-up costs by more than ninety percent, and turn dense regulations into simple checklists. This February, Bangkok Rush Thai Kitchen opened in Alameda, California, uh about twelve minutes from our from our from our home office. And when Matt was asked what he would have done without AI in this situation, he simply said, " I would have just given up." Matt's story captures the promise of AI, making entrepreneurable um entrepreneurship possible for all, not just for some. But the peril is just as real. And it's three-fold and it's important in name. First is trust. Right now, AI adoption and their ranging uh definitions uh and estimates of adoption varies across small businesses and is nowhere near where I think we want it to be. And I think what we like to say at the Kapor Center is uh technology uh moves at the speed of innovation but adoption moves at the speed of trust. And right now that trust is still being earned uh by this technology in the marketplace. Secondly, concentration. uh, if AI and the knowledge of how to use it is only concentrated in the largest firms, the gap with with Main Street is going to only widen. Lastly, uh, and third, fitness for purpose. If these systems are unreliable or poorly governed, then small businesses are left to navigate these risks alone. Unable, as a w- former White House nine- uh, Deputy National Cyber Director, Camille Stewart-Gloucester has warned, they wouldn't be unable to protect their intellectual property, their consumers, or their competitive advantage. So the promise or the peril, which will we live into? It is easy to feel like this will happen to us, but at the Cape War Center we like to echo President Kennedy, where where he says, things do not happen, they are made to happen. And so, for the future that we want, how do we make it happen? And we would say that there are four parts to that answer. First, we have to ensure that small business leaders have both AI literacy and practical guidance on where AI creates the most value. The bipartisan AI wise act and the AI for Main Street act promising first steps and we hope they are only the beginning. Second, we must help firms build AI ready workforces. An AI ready workforce is one that is not just AI literate but AI native, fully comfortable working alongside these tools, but also strengthening their hu- unique human skills that AI for right for now cannot replace leadership communication, interpersonal connection and judgment. Third, we need a national framework for AI governance. We believe common sense guardrails like those in the ai civil rights act which which we endorse build trust by preventing unlawful ai discrimination requiring transparency for critical uses and providing real accountability we also need consistent rules to road on security privacy and intellectual property so that entrepreneurs this is what's so important can spend their time serving customers and not navigating ai risk fourth government must be a partner and a pioneer not a barrier government should show the way by partnering directly with AI native companies who to solve societal ills and take down the bureaucratic barriers that six percent of these companies say are barriers to their scale and to them serving communities. If those partnerships could happen and just make a two percent improvement on many of the nation's biggest challenges we could unlock over a hundred billion dollars of GDP for this nation every year. At the Cape War Center we believe that America is stronger when there are more entrepreneurs in it, not fewer. We must listen to them, make sure these these solutions reach them regardless of who they are and where they live. Uh, if these solutions that we are debating here are not felt in places like my home county of Prince George's or El Paso Texas or Appalachia or the or the Ozarks, um, we will not get the next generation of small businesses. And so I wanna thank the committee for having me. I wanna start that we believe this is and say this is a time of great pro- promise and peril and that we believe this future will not just happen it'll be made to happen. Thank you so much.

Gentleman yields back and we will now move to the member questions under the five minute rule. Uh, I'll recognize myself for five minutes. Uh, Mister, Mister, uh, merch apothecary has been a fixture on this, on the Chicago street corner, as you said, for hundred and fifty years, but through small flower dot com, you're now competing nationally, managing a catalogue of more than fourteen thousand, uh, products with a staff of around fifty. And as a national retailer, we have, uh, entire departments handling that kind of merchandising. product discovery and online marketing uh can you walk us through uh briefly AI has let your team uh take on uh uh that uh use to require the resources of a much l- larger company and where it has it closed a gap with larger competitors and where does it still fall short

yes thank you for the question chairman you know when you're running a small business as i've done for about twenty eight years uh and I've worked in the corporate world, in the corporate world you have departments who um can you know, department for every task, and in our business and in most small businesses, one to a small handful of people are wearing all of the hats across that would fall across a a lot much larger corporation. So for us, the way we use AI is often I I think of it as we're looking for ways that we can take the simple work uh and the tasks way that we have to do so that we can focus on the deeper work that helps our business grow. So that might be like the example I gave um matching bills to invoices, which is obviously important and we can't exist if we don't do that, but it isn't necessarily the best use of a human's time uh because we have a lot of other things to do. So that would be a simple example. And then in marketing, you know nowadays we're able to test our marketing across the country to all types of segments, And then we used to sit there and think, should we test this ad for this segment in this part of the country or for this group of people and it isn't really realistic to to do all the testing you need to do to succeed as a small business so now we're able to use the AI to test across a lot of different creative and uh target customers and it's been a huge help for us those are two examples.

Thank you. Mister Crenshaw, research shows that nearly three quarters of small businesses are now using AI,

Um, as we look at the data,

Mm-hmm.

um, you know, fifty-eight percent of small businesses, according to our survey nationwide, are using generative artificial intelligence. Uh, now, it, if you look at the higher adopters, that tends to be smaller tech firms, that's around seventy percent adoption rates at that point. entertainment companies that are smaller it's around sixty five percent but then when you dig down on the numbers you know you still have about half of retailers restaurants traditional brick-and-mortar uh companies are using generative artificial intelligence uh to grow and thrive um and in fact had a chance to talk with uh the owner of a skincare company in the coachella valley uh who uh has been able to use generative ai to help her cut costs by sourcing products from places with lower uh tariffs or lower costs uh due to inflation uh so she doesn't have to pass those costs on to consumers uh and so it it really is a mix of the type of companies that are using this uh across all sectors uh but at the same time uh what we have found though that the the companies that are not using generative artificial intelligence uh about a third are are worried about uh the regulatory uncertainty that's out there uh about one in five uh believe that they can't find the workers who are properly trained at this point to actually use generative ai and make it work for them uh and then another third are are really uh you know still not sure how it will work for their business uh so it's it's one of the reasons why it's so critically important uh that we uh establish uh clear national frameworks on the regulatory side like the secure data act on on data privacy uh create a national ai framework uh that's workable uh and we also have training programs in place that uh like the ai for main street act and the ai wise act uh that that help uh small businesses really get their head around how to use small business respon or ai responsibly

uh mister hong in the short time that i've got left from your work with uh bootabox what does ai literacy really realistically look like for a typical main street owner and and their employees and how can platforms like yours in the broader training uh ecosystem help them build those skills in a in a way that they it supports running the business rather than becoming another burden on their time

yeah very briefly thank you mister chairman uh i think ai literacy three components. First, domain expertise. Uh, you have to know what questions to ask, what context to provide, evaluate, be able to evaluate AI outputs. Second, AI enablement, knowing when and how to use AI. Not every problem requires an AI solution, but if it does, what are the tools and how do I use them responsibly? And third, I would argue that in this era of AI, the things that make us uniquely human are more important than ever. Critical thinking, collaboration, communication, creativity. And so those combination, those three things are what we need for today's workforce.

OK, thank you. My time is up. I now recognize the ranking member for five minutes of questions.

Thank you, Mister Chairman. You know, many of my colleagues and I were deeply concerned when we saw the President's executive order on AI published in December. There are several concerning elements to this executive order, but the most concerning is a requirement by establishing a uniform federal policy framework for AI that preempts state laws on AI as well as data centers. I support strong federal AI regulation and I think it's important that we have that. But I am worried that this EO pu- punishes states like California, my home state, that are proactive and forward-thinking enough to harness the benefits of AI while also creating guardrails against potential harms. Especially because this E EO removes all state laws without putting any safeguards in place. Mister, can you share with a preemptive what can you share why a preempting state ai laws can be harmful without any strong regulatory safeguards

sure uh congressman thank you so much for the for the question and and i think for us the k port center we very much uh think the best way forward is a is a single national framework for ai governance in lieu of that we do not think the best approach is no regulation uh we believe that right now if i cannot have national regulation then someone needs to step in and right now states are stepping forward to to create those safeguards. One can argue how optimal that is, but we would say it is more optimal than having no regulation or protection whatsoever, particularly for this topic that we're talking about today. If you talk to many small businesses about why they may not be adopting, it is because they are unclear about what the rules of the road are and what protections exist for them whether it be around their data around their security around civil rights and having those rules even if they're state-based rules can actually be a tool to increase trust which can increase adoption which I think we've all said on this panel. is to the benefit of small businesses and their communities.

Yeah, and like you said, the trust is the important thing, right? That's what's gonna allow more people to use this tool. So, Mister, uh, Agoo, uh, in your testimony you said government should be a partner, not a barrier. Uh, Rep Jack and I introduced the SBA IT Modernization Reporting Act to address challenges at the SBA in carrying out IT projects that support small businesses. I'm glad to hear unanimously passed the House and now a Senate companion is being introduced. How, how counter-productive can it be to small businesses if government agencies, like the SBA, improperly utilize AI?

Again, Congressman, thank you so much for the question and it, um, it can be harmful in two ways. One, uh, the government is, is in some ways an influencer and a leader for uh, for, for so many other types of i- of industries across the country. Uh, when there are uh, misuses at the federal level, it, it can potentially frankly incentivize and on and and and almost uh, create co-signing for those misuses in others. That's one. Two, when there are bad effects of those misuses, it creates a chilling effect for other folks who may wanna partner with AI native AI driven companies. And we think it's why the SBA, we want to be pioneering, but also strategic in terms of how they use it, so that they can actually show the way for what right looks like, instead of highlighting what wrong can look like. And we believe if that happens, more small businesses will will be able to do more at every level of government and at every sector to improve their communities and improve uh problems around the country.

All right, thank you for that. Mister Hoang, um I loved your example about the University of Michigan and how they're teaching companies how to uh use AI. Um moving forward, as you said, literacy is is very important. What role should the SBA play in this when it comes to literacy, AI ensuring that small businesses know how to use these tools and use them properly to their benefit?

Yeah, as we saw in places like uh Detroit, uh when you combine access to the tools with the training and coaching to use them well, that's when you see results. The SBA obviously has the resources and the reach to provide that type of training and resources. Uh, obviously, uh, private industry has a role to play as well, but the g- reach of the government is much greater. And, uh, particularly in, you know, urban America, in downtowns, in the, in the far reaches of past the last stoplight of rural America, I think the SBA can really uh make an impact in terms of providing resources necessary for the responsible and collaborative use of AI.

Mister Khrinchana, same question to you, what role should the SBA play in AI literacy?

Uh, we believe that SBA should play a fundamental role in AI literacy. It's one of the reasons why we support the AI for Main Street Act, uh, and the AIWISE Act.

All right. Thank you. With that, Mister Chairman, I yield back.

The gentleman yields back. I now recognize uh Miss Van Duyn from the great state of Texas for five minutes.

Thank you very much, Mr. Chairman. You know, small businesses really do drive the economy, uh, I'd say throughout the country, but especially in North Texas. Uh, and AI seems to be giving, um, entrepreneurs new tools, uh, that were once out of reach for all but the largest of companies. It's helping owners save time, make better decisions so they can focus more on serving customers, uh, and growing their businesses. And on this committee we are working Uh, we are working alongside the Trump administration to remove a lot of the barriers and to help small businesses to put these tools to work. Uh, Washington should be building on that progress, uh, without creating new uncertainty or unnecessary costs for small businesses, so that businesses of every size, uh, can benefit as American - as America continues, uh, to lead in AI. Um, Mister Crenshaw, AI is already helping small businesses, uh, compete with much larger firms. Washington needs to be careful, as I mentioned, not to regulate away that advantage. But at the same time, uh, business owners need confidence that their customer data, the financial information, proprietary work, uh, are secure. So as we consider some of these privacy concerns, what do you think that we should be looking at first? And how can we address real risks without creating new compliance burdens that will make AI less accessible to mainstream companies?

Uh, it's an excellent question and, and, you know, there's a reason that Texas small businesses are using AI. Eighty-six percent of them grew their workforce, the ones who used it. Uh, but they have concerns. Sixty-two percent of Texas small businesses are worried about a patchwork of state AI and privacy regulations. Uh, uh, creating an environment where small businesses incur the costs and, and don't reap the benefits and can't compete with larger companies. Um, I, I think there are really two things that, that really can be helpful in creating a, a regulatory environment. for uh for ai one is passing national data privacy legislation uh the secure data act is currently uh in front of the enc committee right now uh it is legislation that is based in large part on the texas data privacy and security act um and also uh along with nineteen other states across the country as a a model for privacy legislation uh that would put um um consumers in charge of of their data and give them the right to delete it correct it um But at the same time, we also do need a national AI framework, uh, as well, that that prevents a patchwork from emerging. Um, and I think as we look at that, one of the the first things we have to do is address where is AI already regulated? We need to do a gap analysis to see where, uh, the laws can already play a role in protecting people. Uh, we already have laws in the books that protect against discrimination, uh, privacy in over twenty states, uh, consumer protection laws in fifty states. We have an FTC Act that protects consumers on a national level. Um, and then at that point, uh, there needs to be a, a real discussion about a risk-based framework that's targeted and tailored for those areas of harms where the law has not caught up with the technology. Uh, one example of that is, um, the Take It Down Act, which was, uh, signed into law, which would have criminalized the distribution of deep fake revenge images, and also given consumers a right to take that, um, those images off, uh, websites and off the internet. So, that that's really where we feel a balanced approach is. Uh, and I think w- as we look at AI regulation, it's important to note, um, you know, even if there is preemption of specific AI regulations across the country, there's still a backstop of these laws of general applicability, like consumer protection, discrimination and privacy.

I appreciate the answer, by the way. I've asked a number of CEOs and founders of some of the largest AI companies, and that was the best answer I've gotten. Very complete and well thought out. I appreciate that. Uh, Mister Hong, in your testimony, you discussed the importance of both proprietary and open models to small businesses, including the importance of open models due to cost. Can you kind of expand on the current state of the closed and open model ecosystem and how small businesses use both types to operate and build their businesses?

Yeah, to be clear, um I'm neither pro open or or anti-open or pro closed or anti-open model. I believe in choice. Um choice provides competition, it provides the consumers the opportunity to use the models that are best. Um we obviously are familiar with the closed models that are kind of on the frontier edge. There's also a number of open models that are very close. Um, they're driving on the cost to access these capabilities. Um, I built my platform on this idea of choice. You can choose what models you wanna use, and collaboration, so you can get the best of models working together. Um, I think we need more competition in the sense of more access to both closed and open models. So consumers can let competition does what it does best, which is produce the best products and services for America.

Appreciate that very much. And with that, uh, Mr. Chairman, I yield back.

Gentlelady yields back. And now I recognize Mr. McGarvey from great state of Kentucky for five minutes.

Thank you, Mr. Chairman, and thank you, Mr. Chairman, for having this hearing today. I think it's incredibly important for us to be talking about AI as it relates to small businesses. As you all have pointed out, AI is not something that's coming, AI is here. Uh, we see it right now in Louisville, Kentucky. I see businesses who are successfully using AI in a lot of the ways you all described. Right? Which is actually taking some of the more, the tasks that take hours upon hours upon hours to do and then freeing up their employees to actually do the work that is central to the business so see a lot of good applications have a lot of questions too right and and see a lot of fear um from people who are afraid that AI is going to take their job entirely uh this is the kind of thing where like AI I mean could quite literally cure cancer um or or potentially be used to develop a type of biological weapon. It's the type of thing where AI can be used to help spur creativity, but we don't wanna see it ripping off the beautiful sound of someone's voice, or taking the hard work and creative energy that goes into music and products, and taking that and taking it away from us.

Mm-hmm.

How do we replace? And and how do we how do we protect people whose livelihoods are easily replaced by AI? Um, how do we balance the needs for privacy? with the needs for safety and security, and you guys talked about some of these things. So, at the root of each of these questions, I think is what I spend the most time thinking about when we think about AI right now. How do we make sure that AI is used for good? And, this is something that I think is really important work of this body right now. And, Mister Crenshaw, I'm gonna start with you, because you testified, uh, before the science committee all the way back in twenty twenty two, about the ethical development of AI, and I am not being facetious when I say, all the way back in twenty twenty two. Um, when we talk about AI, twenty twenty two was a very, very long time ago. Um, we could be talking about the beginning of this year, and it might be a long time ago in in the way that AI is developing. Um, but I wanna hear a little bit more about this, and and I wanted to hear from you, what do you think the role of Congress is in ensuring that we develop AI that is ethical, that it, that does good, and is used for good? Uh, and tell me in any way if some of your views have evolved since twenty twenty two.

It feels like a long time. Um, a lot has happened, a lot has changed uh since uh I testified in front of the house science committee. Uh, we have now seen uh the rise of new types of AI for example, and more uh news about frontier models and uh agentic artificial intelligence and, and the rise of chatbots uh over the last few years. Um, but, but I think one of the things that has been helpful uh in government um, and was actually released during the Biden administration was the release of the NIST AI risk management framework,

Mm.

which provides a great road map toward uh businesses of all sizes to uh examine and look at how they're using artificial intelligence to address risk to things like privacy and and other potential harms that could come out. Um, it's one of the reasons why the risk management framework is iterative and meant to be uh re-examined uh to make sure that uh it is catching up uh with the technology. And that's exactly what's happening right now. NIST is currently uh, reviewing and and making changes to that risk management framework right now. Um, it's also putting out profiles, uh, for different use cases for artificial intelligence. For example, uh, uh, just recently in the last year, it released, uh, a risk profile on generative artificial intelligence. It's now working on one on, uh, critical infra- infrastructure. But it's also possible that - that, uh, NIST could also, uh, examine ways for small businesses to more easily look at, um, uh how to use artificial intelligence in an ethical manner so so that's the way government's already working um but you know at the same time you know there are other things that we think that can be done uh for example Kentucky led the way on data privacy legislation a super majority of republicans and governor beshear a democrat uh enacted Kentucky's data privacy law which has rights around ai it has deletion rights uh and and we think that that is the right model for the united states in terms of passing national privacy legislation which would be a building block to getting us to understanding how data can be regulated so then we can start looking at more the broader AI pieces.

No, thank you. I appreciate you saying that and this is one where I I wish, I think all of us probably wish we had more than five minutes. And this is an issue I don't wanna see get political, but you mentioned the importance of NIST. I have to point out that that this administration, the Trump administration, has fired over seven hundred NIST employees, uh, and the fiscal year twenty twenty-seven budget requests proposing fifty-three percent of that agency's funding. I think when we're talking about how do we use AI for good, how do we have this framework, an agency like that really is important for helping us develop those tools. Um, I also appreciate you bringing up data privacy. Un- unfortunately, I am running out of time, uh, but really appreciate you guys being here, uh, appreciate the information you provided. This is something that is going to be so necessary for small business, for everyone to be able to compete, for us to develop the right framework. So, appreciate you guys being here. Mr. Chairman, you're back.

Uh, gentlemen, Neil's back. I now recognize Mister Alford from the great state of Missouri for five minutes.

Well, thank you, Mister Chairman. Good to see you and uh everyone coming in today to testify on this very important matter. Artificial intelligence is quickly transforming the way Americans live and work and nowhere is that more evident than on Main Street and that's what we're concerned about here in this committee what was once viewed as a technology only available to the largest of corporations is now becoming available and affordable for small businesses all over our great nation. Whether it's helping a manufacturer optimize production, allowing a family-owned retailer to better manage inventory, improving customer service, or reducing the administrative burden on small business owners, AI is giving entrepreneurs new opportunities to grow, to innovate, and to compete. At the same time, many small businesses still face significant challenges when it comes to adopting these tools. Business owners often tell us that they don't know where to begin. Uh, they they worry about protecting customer data. Many simply lack the time or technical expertise to evaluate the growing number of AI products entering the marketplace. We here in Congress, I think we have a very important role to play to make sure that innovation is encouraged not hindered by unnecessary regulation, while also making sure small businesses have access to the education and resources they need to use this technology wisely, to grow their businesses. Mister Crenshaw, uh, I was proud to introduce the bipartisan AI for Main Street Act, along with my colleague, Representative Scholten. And this legislation would utilize the small business development center network to provide practical AI training, cyber security best practices, data protection guidance, and technical assistance. The House passed this bill by an overwhelming bipartisan vote, because we recognize here in Congress that AI adoption is about more than simply providing access to technology. It's really about giving entrepreneurs the confidence to use it effectively. From your perspective, how valuable would this type of locally delivered technolog- technical assistance be and what additional resources should Congress consider to make sure Main Street businesses can successfully adopt AI, sir?

Uh, well, first and foremost, I want to thank you for your leadership and sponsorship of the AI for Main Street Act. Uh, it's a critical, uh, step. to ensuring that small businesses uh know the tools available to them, know how to use them in a proper and ethical manner. And it's a reason why it's so important as you look at at your home state, eighty-seven eighty-seven percent of Missouri small businesses using AI have grown their workforce. So it's this is why we need to get these kind of tools in front of them. Uh so uh we think it's incredibly important that this bill uh pass in the Senate, along with the AIY's act, uh and then also SBA has the the funding it needs in order to successfully um, uh, promote AI adoption for small business.

Thank you, Mister K., um, a, a big concern that I've heard from our constituents, uh, when I'm doing town hall meetings or coffees with people in small businesses, we're in those small businesses regularly when we're back in our district. Uh, they're concerned about AI replacing employees, uh, especially entry-level roles, and your experience, has AI replaced workers, or is it more of a tool to allow workers to be more productive and more competitive for those small businesses competitive with the big guys

Uh thank you for the question congressman. At MERS in my experience it really is uh a competition uh advantage and it's I would say even more it's a bandwidth advantage and by that I mean my in my almost three decades running a small business I've never felt that there was a lack of opportunity There was just a lack of time, money, and resources to tackle the opportunity. So for me, it feels like what we've experienced is that using AI, my team is able to go after bigger opportunities and help our business grow, even the entry-level folks.

Thank you. Mister Hoen, last question. What are the biggest obstacles the small businesses face after they decide to use AI? And what has helped your small business customers turn AI from a project into an, everyday business tool?

Yeah, I would say, um, thank you for the question. Uh, two things. First, uh, where to begin? Uh, AI, that chat window can seem like a lot of promise if you are an AI earlier adopter. For someone who is not familiar with AI, that seems like an ocean you get lost in. So, uh, it turns out AI is actually very good about teaching you about AI if you use it right. It's one of the interesting kind of, uh, components of the tool. Uh, the second is we hear a lot about prompt engineering and the need to be able to ask AI the right questions. Um, in my opinion, what I've seen the most powerful use of AI it's actually about context engineering. It's what you tell the AI before it gets started. And so educating business owners on how to use the context they're already sitting on, the customer data records, uh, your past performance, your past contracts, and how to feed that into AI in a way that's safe, secure, and private, that really unlocks the power, uh, and potential of AI.

Thank you, and I yield back.

Gentleman yields back. I now recognize Miss McIver from the great state of New Jersey for five minutes.

Thank you, um, Chairman, and thank you, Ranking Member, for convening this hearing today. I want to thank each of our witnesses for joining us today on a heat wave here in Washington, D. C. Uh, so stay hydrated. Um, artificial intelligence is often described as a tool to help small businesses become more productive and reach new customers. But its value depends entirely on the safeguards we put in place. Today's AI systems still reflect deep biases, raise serious cybersecurity risk, and operate with little transparency. While large corporations use AI to strengthen their advantage, many small businesses are left behind. We are not doing nearly enough to ensure that small businesses can access and benefit from these technologies on fair terms. AI's rapid growth depends on the massive expansion of data centers, which place heavy burdens on local communities, local electricity grids, water supplies, infrastructure, and people, especially in my district in New Jersey's tenth. These projects often move forward with little transparency or input from the communities most affected. That is why I introduced my AI data center site selection transparency act, which would bring an end to surprise AI data center construction. If we are serious about encouraging innovation, we have to protect small businesses and communities that bear the cost of this transformation. Mister Agoo, you spent a lot of time about this in your opening testimony which i can appreciate about how ai has some potential to increase productivity but it also has millions of america's workers wondering what will happen to their jobs due to increasing ai use i wanna elaborate a little bit more of what one of my colleagues talked about mister macarvey about america americans in the workforce and how ai impacts that mister how was small business

First of all, Congressman, thank you so much for the question, and I think this is a place where I think history is helpful. If you think about in the past, uh, in the manufacturing space, and you think about when someone running a factory was trying to figure out how to make the line run faster, the first place they went was they went to their employees and said, " You work on the line, tell us how we can make this line ten percent faster, fifteen percent faster." and the workers generally delivered. And I think the same ethos is is is is important here when uh business leaders are implementing AI one of the the people who must be intimately involved are the workers who particularly on the front-line who are using it one because we that that's ideally the types of workplaces that we want but secondly they have, anyways, the best ideas for how to make sure that that that that AI can be used to actually create the efficiencies that we want. What do what can I take off my plate that'll make me better able to serve our customers, grow our business, serve our serve our community. So I think that's number one. include workers in that process. And usually when we talk about these fronts, we're talking about ten people, twenty people, uh, many of which, and in many ways they, those wishes are already being created. I think the second piece is, and we've, you've heard that I think across all the witnesses, which is we have to be investing in their skills now. Again, how do we make folks AI-native so that they know how to use these tools, the same way that we expect workers to be able to use Microsoft Office or Google Docs. Same way this is gonna become that level of table stakes,

Mm.

therefore how do we invest in that proactively now, before it truly is a barrier to employment. I think the third piece, this is particularly true for small businesses, and you heard this from my example uh uh uh for Bangkok, Rush Thai Kitchen, which is in many ways, small businesses need to think about what was, what is not happening in my business that AI can help make happen versus what is the thing that's happening now that potentially could could could be done by someone else. And when you have again businesses of ten or fifteen or twenty people, there are lots of things that aren't happening because they just don't have the arms and the legs to to do it. So those are the three things that that that I would say. include workers, make sure they're trained, uh, and then thinking through strategically what's not happening in my business, that AI could help make happen.

Got it. Thank you for that. And many of you, I think each of you actually talked about the need for AI literacy, right? For businesses. Uh, in your opinion, what investments in workforce training will be necessary to help workers adapt?

Uh, I think it's two things if it's in two buckets. One is just literally training folks on the tools. Uh, again the same way that there are still classes that you can take on Microsoft Word and Excel. It, it, we need, we, we, and you have much content out there, a lot of it either low cost or no cost, which is good. I think we particularly need to make sure this gets to the frankly the most in need underserved workers and most underserved communities, whether those be urban or rural. Because that's, because those are usually the folks who get that information last. I think the second piece, and I say this as someone who used to work at the Department of Labor, is how do we make sure that those human skills, again leadership, communication, are emphasized and that's where things like work-based learning are really important.

Yeah.

You learn those skills not by l- hearing about them, learning about them,

Yeah.

but you learn them on the job. So apprenticeships, hire to train, uh hire to train deploy, um apparatus are really, really critical. So more work-based learning and then more targeted uh knowledge of how to use these tools.

Got it. Thank you so much for that. With that uh, Mister Chairman, I'm out of time, I yield back.

Uh gentle lady yields back, I now recognize Miss King-Hines from the Northern Mariana Islands, the great norm. uh the the great islands

The amazing Northern Mariana's.

uh for five minutes.

Um, thank you, Mister Chairman. Mister, one of the things that resonated with me was your statement that um,

The national.

excuse me,

Mm-hmm.

that the tool is only the car. The road is training, coaching and support. And as the Chairman has mentioned, I represent the Northern Mariana Islands and one of our biggest challenges often, just our remote geography and our very limited access to technical expertise. Um, so if Congress could do one thing to ensure that AI doesn't widen the gap for remote isolated communities like mine, uh, what would, what would that look like? What would that investment be?

Uh, thank you for the question. Uh, I would say obviously past the two acts that came up from this committee, right, the AI wise act and the AI mainstream act, uh, that activates the, you know, SBA and the small business development centers to provide that training expertise and the government reach, can reach all around the world right even to those uh territories and and states uh that are further af- afield so um i would say uh pass those acts um and and second continue to have these discussions continue to have these hearings and bring businesses small and large um the world is changing fast uh as some as one of the representatives noted if we have this discussion six months from now the world's gonna be different

yeah i agree um there's been a lot of uh i i think most of the panelists have touched on workforce development and you know that's something i'm particularly interested in as you know this new technology continues to change on a daily basis if not by by minutes right and i just kinda wanna flesh out some of your thoughts on on what we should be doing in terms of investing to be able to prepare our workforce for this new technology and i'll start with you mister crenshaw

well i i think it's important to note too in in addition to ai training um as we are looking at building out the infrastructure for uh ai we're gonna need training in that as well too um you know we've seen a rise in apprenticeship programs for things like electrical work um to to help out build out the infrastructure that's necessary for for artificial intelligence so it's a reason why many of the companies we work with uh are are working to get uh people trained in those in those uh skills as well um but it's also fundamentally important that we have small business owners trained on how to use this technology and it's one of the reasons why uh the chamber launched its small business basics program But also, uh, you know, as we're looking at education, uh, we need to begin developing, uh, programs where K through twelve has some degree of AI built into it, post-secondary education as well to, uh, building AI, uh, into those, uh, curricula and to an interdisciplinary approach in a lot of ways in, in, in higher ed. Uh, and so it, it really is gonna be a, an across the board, um, uh, strategy necessary to ensure that we have an AI ready workforce.

Alright, thank you. Mister Karim, did you wanna chime in?

Yes, um. Thank you. In my experience, you know right now we are, we're probably more advanced than most small businesses of our size in using AI, but that's because I happen to be into technology and myself and other leaders in our business have been pushing ourselves and our teams to do it. But even in our company we feel like it's a challenge to get the rest of the company to adopt it. So I think that it is important to come up with uh programs ideally through the SBA or other means that help us train workers and let them experience um the advantages that come from learning how to use these tools well.

Mister Ong, did you wanna say something as well?

Yes, thank you. Um, we are privileged to work with almost a hundred and seventy colleges and universities, uh on their teaching and learning with and about AI. Uh what artificial intelligence needs is more actual intelligence.

Mm.

And it's that combination that allows us to unlock its potential. Um, if you think about the nature of work, right, defining a problem, designing a solution, creating that solution, validating it, AI makes those middle two steps easier and cheaper than ever. But the key isn't those two steps. The key is what comes before. Am I using AI for the right problem? And what comes after? Does this solution actually work in the real world? And so workforce readiness, uh, maybe ironically enough, isn't about learning how to use AI and the tools, it's learning how to apply them to the real problems and to solve real problems in the world.

Mister Agoo, you have the rest of my time.

I think the only thing that I would add here is more real world. And you had kinda heard it in the last answer, which is again, uh, for those of us who are athletes at any point in our lives, you didn't read a book on how to do a jump shot or throw a football, you did it in the field with a coach. And I think right now, um, AI is ironically showing the need for more work true in the field, in the place of work. training and learning, so folk can learn to use these tools in real time. Classes are good, real life experience is better, in terms of learning how to use these tools because they're evolving so fast. And so I think that is the only thing that I would add here, which is how do we make sure that people, really young people are getting to use these in the field, not just in the classroom.

Thank you. I yield back, Mister Chair.

Seeing no lady yields back, I now recognize Mister Tran from the great state of California for five minutes.

Thank you, Mister Chairman and ranking member, and thank you for our witnesses for being here. AI is no longer technology of the future, it is already changing how Main Street does business. From helping a a uh family owned business manage inventory to allowing a new start-up to reach new customers, AI ha- AI has the potential to make small businesses more productive and more competitive if we use it it well. As someone who represents Southern California, I see both the promise and risks every day. LA County and Orange County are home to a booming AI and tech innovation ecosystem, and also home to thousands of immigrant-owned small businesses that are worried about what AI means for their livelihoods. There's a broad bipartisan agreement that America should lead the world in AI innovation, but leadership also requires rules of the road. That's where Congress has fallen short. We still don't have a clear national framework for AI govern- governance, and that, uh, addresses safety, innovation, and equal opportunity. Indeed, access to AI is not equal. In many minority communities, access to high-speed internet, modern devices, digital skills, and language-accessible tools remain uneven. This digital divide simply does not disappear during time of rapid AI adoption, it deepens. This is why AI literacy must come a na- become a national priority. Small business owners should know not only how to use AI, but also how to identify its risks, protect sensitive business data, recognize bias, and make informed decision about when AI should and should not be used. That education has to reach every community, including immigrant entrepreneurs who are often among the most innovative small business owners in the country. The largest corporations already have the resources to adopt AI, manage compliance, and pay for future subscription costs. Many small businesses do not. If we fail to close that gap, AI could accelerate market concentration and leave Main Street struggling to compete. We need to make sure that this doesn't happen. Congress needs to invest in AI literacy and establish thoughtful federal guardrails to ensure that AI becomes a tool for innovation and opportunity and not another barrier to success. Mister Wang, given your background, we both know the opportunities that this country provided our families, and we both chose to give back through military service before pursuing entrepreneurship. Your story is a powerful reminder of what the American dream can look like. In your testimony, you make an important important point that the challenge today isn't only access to AI, it's also readiness. You say many small business owners have been handed the keys to a Ferrari and sent down a muddy road. I never got that Ferrari key by the way. But uh can you explain how important AI literacy is for consumer uh uh and entrepreneurs?

Uh, thank you, Mister Tran, and and I appreciate your service as well, given our shared heritage. Um, let me just draw that analogy a little wider. So, we tend to think of AI like a faster car. Let's just do whatever we're doing today and just do it faster and better with AI tools. But if you think about it, a car is not just a faster horse, alright, a car requires first infrastructure, it requires training, it requires rules of the road, a car requires um, you to build the roads that can handle how fast the car can go, and most importantly, a car can go to places horses can't. And so, in many institutions, organizations, public and private, we treat AI like a faster car. We simply do what we were doing before, just do it faster. I would argue the key to AI adoption, and the key to AI in small businesses, is to rethink the roads. To ask ourselves where do we wanna go, and it may be a place we could not go to before. It may mean that a business that didn't have access to marketing tools because they couldn't afford it now all of a sudden does. It may mean that a business that couldn't expand um its market could. AI enables these new opportunities, but only if we build the better roads, only if we build the privacy, the data protections, only if we provide the training, and only if we ensure that the regulatory environment doesn't overly burden small businesses compared to large businesses.

L- let me follow up and ask you, is AI literacy a challenge right now, in this country?

Yes, it is absolutely a challenge.

Okay. Can, can I ask the re- uh, all the panelists going down, starting with Mister Crenshaw, if you agree.

Yes.

Yes.

Thank you.

Absolutely yes.

Okay, then let me follow up with this. Should there be a dedicated funding, uh, federal funding, to help bolster AI literacy nationwide? And let's go down the panel, Mister Crenshaw.

We should have public-private partnerships that work together. Except that.

I'm not an expert on how it gets done, but I know we would appreciate it in our business.

Uh, same answer here. I I believe public-private partnerships and

from a library, wherever we can get ai literacy.

Mister Gu?

Uh, yes, but we will need public investment.

OK. Thank you very much, and Chairman, I yield yield back.

Chairman yields back, I now recognize Mister Fuller from the great state of Georgia for five minutes.

Thank you, Mister Chairman. Mister Wayne, uh, and Mister Crenshaw, you may weigh in on this too. So, my my wife is a small small business owner. Um, I'm a I'm a prosecutor by trade, so, uh, I'm Uh, if you remember the old caveman lawyer, your AI world frightens and confuses me. So, one of my concerns for small businesses on Main Street and the Appalachian communities that I represent is no different than the software you may use in, in a business. You know, someone will sign a contract and then maybe a year or two years into it, maybe it's, it's not delivering, I think you used the term, um, AI adoption. Maybe it's not what they needed. Um, how can we create a uh an industry and framework to make sure that for that ai adoption on on mainstream that these businesses have the opportunity to become um get the ai ai that they need to actually grow their business and not get into um you know twenty four month contract for something that's not responding to their needs

uh thanks for the question um there's a lot of ai available uh some of it is free um a lot of it you can buy month to month uh i don't think the uh the lock-in is a problem um what is a problem is uh context right um there's going to be a fight for the context in which we provide our ais and the context emerges when we use ai and uh i believe that users should have the ability to move that context from platform we we do that inside uh my platform in the sense of like you can share context between different models so if today claude is the better model you use that if tomorrow jim and i is the better model you use that and so i think um, being model agnostic in what you create is the right path forward for industry, providing these types of tools.

And I think it's important too as as companies are looking at uh which AI to deploy, uh they shouldn't have AI be the solution for its own sake. Uh they should actually go in with an identified set of challenges they're trying to solve for and then look for uh the AI solution that's best talented or best positioned and targeted for for solving those those issues. So, uh, you know, I I think that's one of the reasons why it's so important that we do have facilitated AI training and education, so small businesses can get smarter about what tools might be better for them.

And I wanted to ask you about that, Mr. Crenshaw. So, um, when you're talking about a public-private partnership, cuz if I'm thinking about a small business in in one of my main streets, I mean, they don't have the time to think strategically and have big thoughts on like what, what are those questions to help me A, with literacy and then the inputs that I need for the AI to improve my my business uh because they're worried about hey i can't even get someone to show up for shift and that's gonna you know ruin my mother's day which happened uh to my wife where someone didn't show up to a shift i don't have the the certificate to go in and do her her shift at her business she's got to fill it on on on mother's day so for those business owners that don't have the time to think big thoughts about what ai is appropriate for them what does that public-private partnership look like So you can get that AI literacy for a small business to say, " This is what I need."

Well, I think that's one of the, the great things about the way that the AI for Main Street Act and the AI Wise Act are, are put together. They complement each other. Uh, the AI Wise Act provides a lot of online tools and online availability of information. Uh, the, uh, m- AI for Main Street Act would, uh, work with SPDC's basically to have more of those localized trainings and localized education efforts as well. Uh, it's also one of the reasons why, you know, we think it's important that the business community itself, uh, takes a role. and and providing training. We uh at the chamber have worked with local and state chambers of commerce to do trainings for local small businesses as well uh on on AI through the small business basics program uh but also too I I think it's important for individual businesses to be forward thinking. I mean I one example is Ragh Kalevjian who is the a coffee shop owner I mentioned in my uh opening testimony uh who is using AI for cutting his marketing down by about seventy percent um but what he does is he actually has an our innovation hour uh, with his baristas and his staff at the coffee shop to just go through how can AI help them, and, and kind of going through new AI solutions to get them, uh, tooled and ready even if they don't stay, uh, at his coffee shop to go on somewhere else. So, uh, it really is, uh, different, uh, aspects of, of the ecosystem when it comes to AI that have a role to play.

Thank you. Uh, Mister Chairman, are you back?

Gentlemen, he is back, I now recognize Miss Goodlander, uh, from great state of New Hampshire for five minutes.

Thank you, Mister Chairman, thank you to our witnesses for being here for this really important hearing. You know, one of the through lines in this hearing has been a very powerful point that each of you have made uh which is that getting access to AI is right now not the hard part for small businesses the hard part is actually ensuring that a family owned funeral home in Berlin or a home builder in Brookline or a daycare in Keen can actually put this technology to use and equally urgent whether five years from now or five months from now, maybe it's probably more accurate, uh that small business will still have the leverage over the platforms that they built their businesses on. Um, Mister Hwang, thank you for your testimony, thank you for your service. You know, you've you your testimony has laid out for us a really clear vision of what doing it right looks like. uh what closing the the readiness gap looks like. And I I wanna ask you, you know, our resources are limited, we're fighting tooth and nail for every dollar and and many dollars that this administration is withholding from from uh from my state of New Hampshire, uh that could actually go to solve and close this ready readiness gap. Um with limited resources, how could we scale up a model like the one you describe in your testimony, the Detroit Neighborhood Entrepreneurs Project. How could we scale this up? What would be your first concrete steps that we could take to scale up this model?

So I believe in public-private partnerships. A lot of the work we do at BudaBox is with colleges, universities. They are the front door to democracy. Uh, today's college students are tomorrow's workers, um, obviously, state and federal funding and governments, you know, are intertwined closely with higher education. Um, you know, I would like to see greater support for AI literacy at the place where it, counts I think the most right during the form of years of someone's development just before they enter the workforce.

Mm-hmm. Thank you, I appreciate that. I did wanna ask about this, y- y- you make the powerful point that we gotta fund the roads, not just the cars. To me part of the road is connectivity itself. I represent one of the most rural districts in the country, and access to high-speed broadband is for many of my small businesses, a core barrier to the adoption of AI tools. Can you speak to this in, in and the rural small businesses you've worked with, um, and can you, can you just, you agree that connectivity is part of what it is gonna require for us to build the roads.

Yeah, uh, a- absolutely representative, um, in my written testimony I talk about, um, a, a rural family in Oklahoma, they live well past the last stoplight. Because they have good connectivity, they're able to access AI, they're able to have a marketing team, a development team, a business development team, that is AI powered that they would not otherwise have access to. But obviously, if they can't access the AI, they can't have access to those potential. And so connectivity is really a fundamental foundation for this access to the AI economy.

It is. And I just wanna say the the Broadband Equity Access and Deployment Act, the BEAD program, has been so mission critical there. We've got twenty-one million dollars that's currently being withheld from the state of New Hampshire that could go to exactly this problem. Um, Mister Agot, I wanna ask you a thank you for your testimony and for the powerful points that you've made about the role of competition and the the real perils that small businesses are up against uh before I came here to Congress I was an antitrust enforcer so I think a lot about what um what the skills could h have looked like and could quickly look like for small businesses can you talk to us about examples that you've seen in your work of AI applications that have actually made small businesses better able to compete with large dominant companies.

Sure. First of all, thank you so much for the question, and I think um let me step back for a second to say I think I've seen two things that have helped us. One, um you hear a lot about transparency, for a small business I wanna be able to know, is this tool doing what I need for it to do? That is hard right now because the technology moves so quickly. So being able on the front-end to know what you mean to be have solved, And then actually how to track them on a regular basis is so important, cuz that's the first step, to know when I need to switch.

Mm-hmm.

I think secondly, when you talk, to get the answer to your question, where we have seen the biggest advantages is in a couple areas. First, uh, qualified lead generation, meaning if I'm a business who sells by getting on the phone and trying to sell, uh, my wares, getting a qualified list of who those folks might be versus just picking up the phone book, super helpful, using tool tools like LinkedIn, that's one. Secondly, back office capacity, whether it be uh, ca- accounting, tax, compliance, things like that. being able to track all that and make sure that I'm I'm on, I'm proactive versus reactive. I think the last piece, marketing. So many small businesses don't have a website. So many small businesses are not advertising in any way shape or form because they can hire a designer. AI can make those things happen.

Thank you. I yield back.

General Lady yields back. I now recognize Mister Muser from the great state of Pennsylvania for five minutes.

Thank you, Chairman. Uh, thank you to our witnesses. Um, certainly a lot a lot a lot to talk about and my apologies, we have other uh, committee, uh, responsibilities, uh, many of them today. Uh, Mr. Crenshaw, I'd like to s- start with you, please. Um, you know, in business I used to look at, uh, technology in the early two thousands as it's either either the weapon that u- is used against you or a weapon, uh, that you use to benefit your company. AI certainly fits into that category and then some. Um, what, what are the challenges small businesses are facing as far as, um, you know, of course there's privacy, uh, there's, you know, cyber ransom challenges, I mean, the the the competitive nature of AI, whether you're there or not, uh, and the usefulness of it. So maybe just give us a a quick, uh, thirty seconds on what what what are you main feedback you're getting from your, uh, members?

Uncertainty in the regulatory environment is a major barrier. Um, it's a reason why fifty seven percent of small businesses, uh, in, uh, Pennsylvania are worried about a patchwork of regulations that leads to uncertainty.

Hmm. OK.

Um, you know, I think examples of that are we have a, um, we have a good base in an in about twenty states for data privacy legislation, but we see other states that are operating on the margins and trying to take more extreme approaches to regulation. Um, we've seen those states, for example, uh, craft a legislation with the intent of only having their state attorneys general regulate to provide some certainty. Uh, unfortunately, we've seen instances where the trial bar, for example, has gotten creative and used laws never designed for consumer privacy. uh to have gotcha lawsuits uh for basic things like collecting cookies so if if you're a an auto dealer who has a a chatbot just trying to get in touch with uh you know a potential customer we've seen auto uh firms that have been sued uh with smaller ones for uh with demand letters from people who are never even customers uh using these invasion of privacy statutes that had nothing to do with consumer privacy uh we've seen hospital systems uh even sued under this uh as well in pennsylvania uh and it's it's why we need reform uh of of this type of of litigation abuse that we're seeing across the country. Um and then it it really goes to the heart of why we do need a national AI framework as well, uh if we have a state to state patchwork there, it will be highly problematic because only the larger companies are gonna know how to actually comply and compete and it's gonna leave small businesses in the dust.

So basically one of the most useful tools we've had in in a long while to create productivity and efficiencies and effectiveness one of your biggest challenges is government involvement and intervention on this primarily the state level

uh i think at this point if you look let's look at data privacy for example uh there was a great uh survey that came out from itif that showed that if we have a fifty state patchwork of data privacy laws uh it will cost the american economy one trillion dollars over ten years two hundred billion of that is gonna be incurred by small businesses uh an another example i think if you look at

mmm

the california uh consumer privacy act uh there was a rule making that came from that uh, that was finalized just last year, uh, re- regarding automated decision systems, regarding cyber audits, regarding privacy risk assessments. Uh, the, uh, agency took a one line part of the California Privacy Act and turned it into a half billion dollar AI rulemaking. When you combine that with the full rulemaking with things like privacy, uh, the agency estimated it was gonna cost small businesses sixteen thousand dollars annually to comply.

Wow. All right,

So,

well, we're all taken seriously note of what,

that's just one state.

what, of what you're saying here. Thank you. You mentioned about Basel-three, basically that access to capital is, will be a very, very important right now, particularly with what we passed in the, uh, working family tax cut portion of the BBB, uh, where we, um, uh, have better, uh, uh, bonus depreciation and better, better tax uh, incentives for investment. So clearly that's something that's important. I'm, I'm gonna, I'm gonna move on to, Mr., uh, Kajom. Um, in your business, congratulations, Mert's Apothecary. Um, yeah, what, how's AI uh helping you, and and it was interesting the way you said how it now allows you to compete more so against the so-called bigger guys maybe you can talk about that a little bit.

Sure, thank you Congressman. You know uh, I always, there's a mantra that when you study small business or you look at the business leaders out there they always say to work on your business not in your business and for most small business owners that's just like it's a dream but it's

Yeah.

never reality and I Feel like in the past year since we've been using AI more heavily in our business, it's the first time where I feel like our leadership team has been able to work on the business. And when you're a small business owner, so much of your thoughts, what I what what the reason I lose sleep is, how do we make sure something doesn't happen because it's small and you feel like, you know, a pandemic can come along, uh, anything can come along and take that away.

So the AI investment can cost prohibitive or or you you can

So Not at the moment. The privacy, uh, laws are the biggest concern about using it right now.

All right, great. Thank you, gentlemen, very, very much. Uh, Chairman, I yield back.

Chairman yields back. I now recognize Doctor Morrison from the great state of Minnesota for five minutes.

Thank you very much, Chairman Williams, and Ranking Member Velazquez for holding this hearing and thanks so much to the witnesses for being here today. Over the past years we've been talking about this all morning. Uh, we've seen rapid developments in the field of AI. um, AI tools of all kinds are readily available and some have the potential to support entrepreneurs. But I do worry that as tech giants race ahead to push out their next AI model, there's insufficient attention on the actual utility of this technology to our small business owners, and frankly to the American people. Too often, AI development narrowly focuses on finding out what AI is capable of, rather than answering the question, how can this technology be used to improve people's lives? Now we find ourselves in a situation where many people are asking, who even wanted this, and will this technology help me or will it actually hurt me or maybe even kill me? Um, mister Agoyen, your testimony, you highlight that technology moves at the speed of innovation, but adoption moves at the speed of trust, and that trust has not yet been earned. I think this is a really important part of this whole conversation. Um, you go on to highlight that this lack of trust is reflected by the Ameri- majority of Americans feeling that AI's risks. outweigh its benefits and the slow adoption of generative AI by American small businesses. Um, you know, Rep Tran touched on AI literacy. Um, Mr. Agoo, can you share steps that tech companies could take to build America's trust in AI?

Uh, first of all, thank you so much for the question, I think this is a really important point. I think, uh, I go back to a point that's been made I think repeatedly, which is one thing that creates trust is beyond any company, w- but it is having a national set of frameworks around what are our rules of the road around ai from security to privacy to bias to civil rights having a single set of rules that we all know understand agree upon and and can trust in

mmm

i think secondly um having more of collaborations between uh the public and the private sector like these companies to solve really large issues again around things like uh some examples here are things like the claude cour basically claude uh, Anthropic working with, with non-profits to, to teach them how to use these tools for the betterment of the work that they do in their communities. Small example but a good one and we'd love to see more there i- in that vein. I think lastly, um, helping small businesses pick the tools that are right for them, even if those tools are not their tools. I think that is really important so that, so that consumers and small business leaders have those choices is so important. I think right now you have to make sure, uh, it is, tempting to believe that everything is a nail and that is amenable to the AI hammer or particular AI hammer. And helping these small business leaders pick the exact hammer for the exact right nail is so important. It might be clawed, it might be chatGPT, it might be a mid-journey, it might be a notion. But how do we basically figure out what those tools are and putting that agency in the hands of small business leaders, I think is really key. Last point, um, small business leaders also reflect the feelings of their workers. So the more that workers become more comfortable, again, are involved in these decisions, figuring out how it can benefit the business, the better off their employers are gonna be, and more trusted employees will be with these companies.

Thank you so much. And I am sympathetic to this idea that we have a, if we have a patchwork of state regulations across the country that creates all kinds of complications. Could any of you give two specific examples of what a federal framework would look like for regulating AI?

One of the notes, I think important to note, sixty-eight percent of small businesses in Minnesota are worried about a patchwork. And one of the solutions can come out of Minnesota is copying Minnesota's data privacy law and making it the national standard. Uh, and so that's a first step.

Love that answer. Sorry to interrupt.

I'd say one piece that is not talked about enough is intellectual property. Meaning, uh, when lot lot of intellectual property was created, back when it was, this use was never thought of. never considered so whether i'm universal music group who regulates you know thirty has thirty percent of the world's music or candidly i am a bluegrass artist from uh from from kentucky i may never have thought of what happens if my music if my music is used by um the us and the we need a framework to govern how i say it can be licensed how i'm compensated how i wanna be compensated and by whom right now we just don't have a framework for this Back then, we didn't think that this would ever, this would be possible. So that's one example of an issue that's under uh talked about, that is really, really key and a big trust issue.

Thank you. One, I'm running out of time, but one quick last question, you know, before I ran for Congress I worked as an OB-GYN um for many years. So as you might imagine, patient confidentiality is critically important. Um, and one of the pieces of AI regulation that I think is crucial is that data privacy question um and I think it's something that people are worried about too. Um, and I know small business owners also have concerns about it. Um, how can we protect patient privacy? Mister Agoud, do you have any thoughts on it?

I know I'm over time, so I'm looking to the chairman to Sure. Um, I think candidly, uh, we already have a lot of health privacy laws and the, I think the question is how do they intersect with, with this new technology. And so I think that's the question. How do we take existing regulations and expand it to this new technology, you know, stop there.

Out of respect for the Chairman.

Thank you and thank you, Mister Chair, yield back.

Gentleman, gentleman yields back, I now recognize Mister Bresnahan for, from Pens- great state of Pennsylvania for five minutes.

Thank you, Mister Chairman, Ranking Member, and to all the witnesses for being here today. Over the past few years, artificial intelligence has become a part of nearly every corner of our economy. And small businesses have increasingly embraced these tools to help them compete and to grow. Whether it's summarizing research, analyzing data, streamlining customer service, or organizing documents, AI has allowed small business owners to compete in minutes, which used to take hours or even days. But there's no question these technologies can make businesses more efficient. But we continue to adopt AI. We also have to make sure that those gains don't come at the expense of American jobs. We need to make sure employees have the training and skills to use these tools efficiently. and AI enhances their work rather than replacing it. So I'm gonna, my first question uh for Mister Khayyam, uh congratulations to you and your family and everyone at MERS uh Apothecary on celebrating a hundred and fifty years of service to your community. My question would be at what point did you decide to take the initiative to start looking at different AI implementation and something that I hear from a lot of small businesses and coming from a small business background was sometimes, you know, the local plumber, heating contractor doesn't even know where to begin. So at what point for you in your business did you decide that, hey, in order for us to scale, in order for us to grow, we need to be thinking outside the box and finding ways to implement some sort of AI technology?

Uh, thank you for the question, Congressman, and for your congratulations. Um, you know, I I I came to the retail and uh small business this industry through the dot com rise in the nineties, so I've always been into technology and so I may be a a bit rare in that sense that I view it as my part of my role in the business has always been to stay ahead of the technology curve. So I've been following it for a few years now at least and I've been the person testing it out on the weekends and at nights to see what it could do and then bringing it to the team and saying, look at this. So I feel like, for me, I, I happen to be personally interested in it, but I know that that's not most of my small business friends, the other business owners on the block. So, I think um, you know, we do need support in that sense.

So you've been around for a hundred and fifty years. What generation are you in the business?

I, I, I'm the fifth owner in the second family to own the business.

Wow.

So.

So what was the first piece of technology that you implemented that was in the ecosystem of AI was it just utilizing language models to respond to inquiries, or to summarize research, what was like that that initial barrier that you overcame?

Yeah, you know we use some early language models are around um coming up with variations like we would write marketing copy copy and then come up with ten, fifteen, twenty variations on that. And that was many years ago, but I would say ChatGPT uh in the past few years was the first model that I started using, um kind of, you know, as an experiment on my own.

My last question would be, and then before I divert over, have you actually needed to bring anyone on that had experience in managing AI models, or has that been something that you've been able to sustain with with inside of your operations?

So far we have sustained inside of our operations and you know the models are getting to the point where when we don't know something they can kind of often guide us on how to do it so I call us sort of like you know pseudo techies in a way but um I think we're at the point now where we would like to bring someone in who has more experience because we see so much opportunity ahead.

I think that's what we need to be curtailing some of our our educational opportunities and teaching the next generation of workforce how to work with inside of these parameters. uh, but also being very conscientious of we're not looking to replace jobs, we're looking to add jobs, specifically to the skill set relating around artificial intelligence. And I think when you say AI, it's a very broad spectrum of innovation that could be implemented. So I'm gonna pivot over, Mister Hong, uh, what are the biggest challenges you see small businesses facing when they begin implementing AI and what kind of advice could I take back to some of my small businesses that are right on the cusp of considering to take the leap, uh, just to kind of give them some assurances and relieve the Ajita about taking that initial, that initial plunge.

Yeah. Thank you for the question. I'll try to be brief. Uh, the, the, the main two challenges are first just where to get started, what are the use cases, uh, AI can do so much, so what's the first thing? And I always advise businesses to start with the problem that is most at hand. What is the thing that bothers them day to day? That's where to get started. The second is AI is only as good as the information you put into it, the context. a lot of businesses are fearful of putting their proprietary data in. Um, that's unfortunate, because that's how you get the best results from AI. And so the advice I would, uh, suggest you take back is get started and find a platform where you feel uh the privacy and security allow you to use your data.

Thank you. Garbage in, garbage out, I yield.

Jim, and he yields back, I now recognize recognize Miss Sculton from the great state of Michigan for five minutes.

Thank you, Mister Chair, uh, and, uh, Madam Ranking Member, thank you to our witnesses today. Our small businesses juggle a wide range of responsibilities and tasks every day to keep their operations running. Uh, while AI offers tools to help streamline many of these needs, we know that many entrepreneurs simply don't have the time or resources to utilize this technology to its fullest. That's why I was so proud to introduce my bill, the AIWISE Act, which directs the Small Business Administration to create learning modules for small businesses to help them navigate this emerging technology. I'm pleased that my bill passed the House earlier this year. Uh, we're of course hoping to have it signed into law. Mister Agoo, how would uh an SBA resource to help entrepreneurs think about AI usage uh more effectively um uh how how would that benefit small businesses?

Uh, it would benefit it hugely, one, because again we talk about kind of the promise and the peril. Uh, you've heard, I think, from a number of other witnesses, you need certain tools and means to actually capture that promise, and li- and the first thing is knowledge. So knowing again where c- I can apply this most in my business? Should I apply it toward my inventory issue? Should I apply it toward my back office? Should I apply it to one of my marketing first? Getting guidance on where to start with that I think is really helpful, one. I think two, less small businesses are unclear, okay, how do I introduce this with my workers? Uh, that is a, that, that, that, that is a hard part of this, particularly when you're, when you were, you were in a small business,

Mm.

because there is fear, there is lack of knowledge, there is uncertainty. What does that change management look like? And then I think the third piece is, how do I monitor these tools over time? Um, the ubiquity of these tools, the amount of these tools is only useful to the extent that I know enough to switch when I need to. Therefore, what am I doing to monitor these tools over time to make sure, hey, you know what, actually it is chatgpt here versus Claude, or I need to use a perplexity here versus an- an- a another tool, or there actually isn't a gap, right? There is a gap right now in terms of in the market for what, for what I need. I think those are three specific areas, where to apply, how to do change management, how to monitor over time, where resources like this could be really, really valuable.

Mm. Yep. Yep. Um, Uh, West Michigan is home to our regional small business development center, SBDC, uh, which served over five hundred clients last year and spurred ten point four million dollars in capital formation. These centers are foundational to the success of our local economies, and on a national level, America's SBDC's partnered with Google AIU to facilitate training SBDC staff across the country to assist clients with using AI in their operations. Not sure if you're you're familiar with that. Michigan now has the second highest number of staff. trained in ai literacy in the country we're super proud um mister again how important is it that spdc's receive full federal funding and support these kinds of activities and i'll actually open it up to the whole panel i saw some heads nodding uh you know feel feel free to weigh in uh on usage there

uh uh i cannot overstate how important the resource not just the the funds but also the people because in the end what we find is most of it is people they want to talk to people

yeah yeah

about how to better to use these tools and that does require resources

Mm-hmm. Additions, additional comments or or thoughts on that?

Uh, I would echo that. I I think our team oftentimes it's not enough to just keep hearing how good it is or watch this video, I think it is it's having some structured format and people who demystify it and provide a doorway in and my experience is that once you give someone that doorway, then they can actually go really far.

Mm-hmm. Yep. Um, in my remaining time I I wanna talk uh uh about um a a different bill of mine, the SBAI adoption and reporting act. It's really important for small businesses to have the tools they need, right, to use AI effectively, uh but the federal government also has the opportunity to utilize AI for its own purposes and its own operation. The SBA is no exception, from evaluating contracting bids to improving research and programming, uh the government can take steps to ensure AI is working for Main Street in every single way from within the administration itself. That's why I introduced the SBA AI Adoption and Reporting Act, which would direct the SBA to implement AI use disclosure policies and procedures as required by law and recommended by the Government Accountability Office. How could this help address small businesses' concerns about the government's use of AI? Those people who might say, I was weeded out cuz I didn't fit the algorithm, you know, uh, or or they have concerns about that. Any any reflections from your work? I'll open it up to the panel again.

Well, a- as the um beneficiary, our business is the beneficiary of an SBA loan, uh that almost didn't happen at one point because of some of the um challenges with the banks and everything I would say that my experience would be having transparency and help along the way to make that an easier process would have been a huge help for our business and thankfully it did work out but I'd like to see more businesses get that opportunity that we had.

Heard, heard. Thank you. Thank you. Well, thank you again, gentlemen, for coming, uh, for your time and most importantly for your incredible work uh in small businesses across the country. Thank you. Yield back.

Gentlelady yields back. Uh, right now I recognize Mister Jack from the great state of Georgia for five minutes.

Thank you very much, Mister Chairman, and I'd like to begin my line of question by recognizing someone in the audience with us Alex Mueller. is in the audience with us from Houston, Texas, the great state of Texas, so I'm delighted that she had a chance to get to see how committee processes work. And I would like to start my first line of questioning with uh, Mister Khayyam. And um, you know, a question I have for you, and it's something that I hear a lot within my district, is there's a natural fear that AI could replace workers and um, especially within entry-level roles. And I'm just curious in your own experience, Has AI replaced people or has it helped you bring more people in? Um, what's your perspective?

Thank you Congressman. Um, in our experience, AI has helped us bring more people in, it's created more opportunity. So, I look, you know, AI right now is the, this new, it um, exciting potential big advantage for small business but ultimately it will be software and it will become a commodity. And I think humans are the durable advantage that you have, so To us, we we look at it as way as a way to or as a method and a set of tools to help us increase our capacity and then bring more people on and when we're serving our customers better and in a specialty business knowledge we we speak, I think, ten languages on our staff and have experts across various fields including pharmacists makeup artists uh certified herbalists you name it. So that is not going to be replaced people like to talk to people. So we see it as a creative opportunity.

Thank you very much. Mister Hoang, same question to you.

Yes, if uh you're a small business of one to five employees, there's not many people to replace, right? AI actually enables you to grow your business faster and employ more people. Um, I also like to note there's this interesting concept called the Jovens paradox. Uh, what it says is if you look at a broad enough time horizon and you look across enough industries technology ends up creating more jobs over time than it replaces. It technology will replace jobs. Um, but, as we saw w- past technological revolutions, right? New jobs emerge. Um, I have an eleven eight in a six year old. I think I heard the statistic that sixty-six percent of the jobs that a ten year old's going to have don't even exist yet.

Hmm. Thank you very much. Um, Mister Crenshaw, I'd like to speak specifically about an initiative, um, specifically the President Trump's SBA in collaboration with Perplexity AI recently launched. As you may be aware, the Main Street AI accelerator, which offers computing credits to small businesses that hold SBA backed loans. Do you believe that a program like that is the right model, uh, when approaching the AI gap? And what would make, uh, assistance in this capacity most useful to owners who need it most?

Uh, we think it's incredibly important that, uh, there's AI training, uh, and AI accelerators. So I, I think, um, this is a, an opportunity where, uh, small businesses can grow. Um, you know I think, and I wanna really kinda echo what the points of of some of the other panelists, is that you know as we look at AI, AI uh is doing much like what we saw at the turn of the twentieth century, where the turn of the twentieth century technology brought about an industrial revolution. Well, now we're seeing technology create an entrepreneurship revolution, where small businesses and small companies can get off the ground and run, uh and and grow. And and eighty-two percent of small businesses in Georgia grew their workforce the ones who are using artificial intelligence. Uh, uh, this is confirmed in many ways too, we've seen some great studies as well by ramp, uh, came out recently that showed that the more companies are investing in artificial intelligence they're they're growing their headcount at faster rates. And then, and then finally I think it's really important to note too that the Federal Reserve uh has put out really great data over the last few years. And, and as you see the number of small business applications over the, uh, last few decades, it's pretty stagnant up until about twenty twenty. That number skyrocketed. after twenty twenty many thought that that was in large part due to covid and and, and people kind of starting out on their own. But those numbers have continued to go up post uh introduction of uh chatgpt and generative artificial intelligence, and that's been a sustained increase in new business starts. Uh and and so when you look at all of that I think we're optimistic about the impact of AI but it's important that we also have a training and accelerators for small businesses uh to ensure they reap the full benefits.

Wonderful. In our closing forty seconds, you mentioned Georgia, both my colleague Clay Fuller and I represent uh districts that in some places need broadband access could you speak to how imperative it is that we're able to ensure that all of our constituents across the country have access to broadband internet that enables them to potentially enjoy some of these resources.

Uh broadband is essential to operating a- and the twenty-first century economy uh as a small business cannot compete without access to connectivity and to data.

Wonderful. Mr. Chairman, I appreciate you convening this hearing and I yield back.

Uh, gentleman Nils Beck, I now recognize ranking member of Alaska and the great state of New York for her five minutes.

Thank you, Mister Chairman, and thank you to all the witnesses for being here. Um, and I'm sorry I wasn't when you were uh making your statements because I was participating in another hearing on financial services. Uh, Mister Agu, I concur that transparency uh in AI and information on AI is crucial. Um and for members of this committee and other committees of jurisdiction regarding AI policy, accurate data is important in order for us uh to make uh effective AI policy. Um estimates for small business AI adoption rates vary widely. The SBA's Office of Advocacy estimates the rate is eight point eight percent, but the US Chamber estimates that it is at fifty eight percent, a nearly fifty point uh gap. Why does this difference exist?

Uh, well, a l- probably a long answer, but candidly, it depends on what you, how you define adoption. Uh, is adoption an employee who uses chatGPT to answer a question once, twice a day, or is it kind of working s- truly side-by-side with a number of AI tools to do your work? That's a why definition. What I would say is when I think about the two hundred businesses that we support,

Mm-hmm.

or even ask any CEO a- in the private sector currently, no one will say that AI adoption is where they want it to be. All of them would say that their workforce is not where they want it to be to get the full value for their business and for their community. And so the question is, how do we increase that, that adoption? And I think the, it that goes to the trust questions, that goes to the infrastructure questions, it goes to the literacy questions. But I think right now it depends on how you define adoption. But if you were to ask a CEO, what do they want from adoption, they want, I want my people using AI to do the things that people shouldn't be doing. And so that they can do the things that only people can do, so that our business grows, we make more revenue, and we help our communities and grow jobs.

Thank you. And bias and discriminatory decision-making are major AI risks. How can this harm small firms and incur legal and reputational costs?

I'll I'll use a very specific example, this actually comes from my time when I was serving federally, um but we would hear from small businesses who are using AI driven uh resume and hiring tools uh to comb resumes to begin to kind of sift out people for that, for that first round and what they began to find, this is particularly became an issue during the pandemic was at times people who could do the job were unintentionally screened out which of course business created a problem of an there's an empty billet of someone who could have done a job um and now that job is not is not being done. That's one very specific example where not only do we do the does that type of bias um offend our values but it also goes against kind of common sense in the interest of the business. So the key is how do we make sure that um we mitigate bias not just for our values but for the sake of the business who's actually trying to get the benefit. That but that it's the right thing to do but it's also the smart thing to do.

So, can training data be uh adjusted to reduce bias?

Uh, the answer is yes, but it's the important thing is that that is not on the small business. It can't be.

Yeah.

They're not making the tool.

Mm-hmm.

Uh, if I i- this goes to the thing frankly the largest folks who are making these tools, and the and the key thing that I would say is it's in their interest to do such. If I'm a small business and I'm creating a tool, I want it to reflect my community so I can serve my customers better. Uh, tools that don't do that? are not gonna help me serve my customers. So if I'm a a provider, an LLM provider, a hyper scaler who's trying to create a tool, you wanna help your customers help their customers. And having representative uh data that actually reflects reality and the outcomes that it produces, is best for everyone.

Thank you. Mister Hon, you write in your testimony, the principle behind the AI wise act, that federal support should remain neutral among specific tools and vendors is exactly right. Why? What are the consequences if the SBA and other agencies favor certain vendors over others?

Yeah. Uh, thank you, uh, ranking member, for the question. Uh, we are in the very early days of AI. It's too soon to start picking winners, uh, and not winners.

Mm-hmm.

Um, in our own work with hundreds of organizations, we see that different tools are right for different purposes, and that, uh, organizations like CIC don't just rely on one single AI tool. they they use different tools, they combine them, they bring humans. I truly believe the future of of work and teaching and learning are multiple AIs and multiple people working together in a collaborative environment.

Thank you. Thank you, Mister Chairman, you're back.

Gentle lady yields back, and I'd like to thank our witnesses for their testimony today and for appearing before us. It's been great dialogue. Without objection, members have five legislative days to uh submit additional materials and written questions for the witnesses. to the chair which will be forwarded to the witnesses. I ask the witnesses to please respond promptly. And if there is no further business, without objection, the committee is now adjourned.