Oversight of SBA’s Office of Entrepreneurial Development

Uh, before we get started, I I want to uh uh ask everybody to stand up and uh for the pledge and the prayer.

Now you may start with the project of the

Good morning, and uh welcome to today's hearing titled " Oversight of SBA's Office of Entrepreneurial Development". I now call the committee on small business order and with objection the chair is authorized to declare a recess of the committee at any time I now recognize myself for my opening statement. First I wanna thank Associate Administrator Fitzpatrick, uh, for joining us today to discuss how SBA's Office of Entrepreneurial Development is serving America's entrepreneurs, and how this committee can better ex- uh, ensure taxpayer dollars are spent effectively and responsible. Uh, as a small business owner myself, I know firsthand the rewards and challenges of entrepreneurship. Starting and scaling a business requires long hours, difficult decisions, and the resilience to overcome setbacks. Entrepreneurs rarely succeed alone, and along the, along the way they need, and they need trusted guidance, practical tools, and partners who understand the challenges they face. That is why the Office of Entrepreneurial Development and its nationwide network of resource partners are so important. Through counseling, training, and technical assistance, the OED helps entrepreneurs start, grow, and compete. In twenty twenty five, the SBA's resource partner network provided counseling and assistance to hundreds of thousands of entrepreneurs, including women-owned uh businesses, rural entrepreneurs and veterans. Uh, this outreach, uh, supported businesses that contributed to more than two million jobs nationwide. The Women's Business Center network is one part of the OED's entrepreneurial outreach. Through the WBC program, OED has been able to support, uh, uh, three hundred and forty thousand jobs and sixteen billion in wages. That means every federal dollar invested in the program generates approximately six dollars in business revenue and seven dollars and fifty cents in private capital. Under Administrator Loeffler's leadership, the SBA has embraced a new era of modernization, so the SBA can meet Main Street where it is today. To advance this mission, the SBA has recently announced a reorganization designed to bring related further uh functions together, reduce duplication and strengthen coordination across its programs. And we look forward to discussing what this uh organization means for the OED's operation, and more importantly for the small business and entrepreneurs who rely on these programs every single day. Now to gather those changes, uh present an opportunity to serve this uh with greater clarity, efficiency and impact. OED has led to uh uh le- efforts to modernize its great management team, and during that process the committee heard from uh numerous grant recipients whose payments were delayed creating real challenges for these organizations. So the committee understands SBA's efforts to modernize an approach that payments have since and payments have since resumed. So we look forward to discussing uh lessons learned and what safeguards are being put in place to prevent the problem from happening in the future. And throughout the hundred and nineteenth Congress, this committee has worked in a bipartisan manner to advance legislation. This strengthens key entrepreneurial development initiatives and ensures that America's small businesses have uh access to the resources they need to succeed. So today's hearing is an opportunity to examine both the success and the challenges facing OED and I look forward to discussing the administration's efforts. to uh improve these programs and deliver better value for taxpayers and small businesses alike. I wanna thank you again for being here today, and I now yield to my friend and ranking member from New York, great state of New York, Miss Velasquez, and a and a wet New York.

Thank you, Mister Chairman, and welcome to the committee, Mister Fitzpatrick. America's thirty-six million small businesses are the foundation of our economy. They account for nearly two thirds of new jobs, and are the driving force behind wealth creation, economic growth, and innovation in communities across the country. Launching a small business requires courage, determination, and resilience. While transforming a great idea into a successful thriving business can be incredibly rewarding entrepreneurs often encounter obstacles that test their commitment and perseverance along the way. Their ability to overcome these challenges not only determines the success of their businesses, but also the success of our economy's, our country's economic growth. That is why Congress established SBA's Entrepreneurial Development programs. Through these programs, aspiring entrepreneurs and small business owners receive free or low-cost counseling, training, and technical assistance to help them overcome the challenges of starting and growing a small business. The services are delivered through the small business development centers, women business centers and SCORE. Together they counsel approximately one million small business owners every year. And this program has proven successful by consistently delivering a strong return on investment and improving outcomes for entrepreneurs and fostering long-term economic growth. Unfortunately, these services reach only a small fraction of our nation's small businesses, and too many entrepreneurs, particularly those in underserved communities, get left behind. Many minority-owned businesses face significant barriers to growth, because they lack access to experienced mentors. Without that guidance, entrepreneurs miss valuable networking opportunities, industry, insight and advice on raising capital, making it harder to compete, grow and create jobs in their communities. But rather than focusing on the immediate challenges facing small businesses today and leveraging the resource partners to unlock that on top potential, the Trump administration has proposed to eliminate funding for these programs altogether. They have also improperly withheld congressional congressionally approved funds for political reasons. These actions are disrupting the delivery of services that entrepreneurs all across the country rely on to launch and grow their businesses. Concerns has also been raised over SBA consolidation of the Grant Management Specialist in the office of Chief Financial Officer, and the effect this will have on the issuance of timely reimbursement. And to make matters worse, small businesses have been navigating significant uncertainty with Trump's tariffs, persistent inflation and rising energy costs. At a time when Main Street needs our support, this administration's actions demonstrate a profound disconnect from the challenges they are facing. It is important to note that for years I have been imploring this committee to reauthorize the entrepreneurial development programs. By partisan legislation to reauthorize these bills, easily passed the House of Representatives in one in the one hundred sixteen one hundred seventeen congresses in which I was chair of the committee. Unfortunately, it is unlikely that legislation will pass with the time remaining in Congress, in this Congress. Today I hope to get straight answers to my question and a strong commitment that you will implement these programs according to the law and congressional intent. I look forward to hearing your testimony. Thank you.

Lady Heels back, and now reintroduce our witness, Mister Paul Fitzpatrick. Uh Mister Fitzpatrick serves as Associate Administrator for the US Small Business Administration's Office of Entrepreneurial Development. He oversees the SBA's nationwide network of resource partners, including small business development centers, women's business centers, and SCORE. Prior to his uh work at the SBA, Mr. Fitzpatrick uh served as CEO of the seventeen ninety-two exchange and held senior roles in Capitol Hill where he served in the offices of Senator then uh or uh office of then Senator Kelly Loeffler and a congressman, Mark Meadows of North Carolina. Mr. Fitzpatrick named uh and earned a a Bachelor of Arts in Political Science from Trinity College in Connecticut and a Master of Business Administration from Marymount University in Virginia. I want to thank you again for being here today. Look forward to our meaningful conversation. Now, before recognizing the witness, I would like to remind everybody here that your oral testimony is restricted to five minutes. Uh, if you see the light turn red in front of you, it means your five minutes is has include has concluded, and you should wrap up your testimony. And then if it gets so bad, we have to do this. You know, OK. And then I now, so with that in mind, I now recognize Associate Administrator Fitzpatrick for his five minute opening remarks.

Chairman Williams, ranking member of Alaska as in distinguished members of the Committee on Small Business. Thank you for the opportunity to testify today on behalf of the US Small Business Administration. My name is Paul Fitzpatrick and I serve as the Associate Administrator for the Office of Entrepreneurial Development. America's entrepreneurs don't just create businesses, they create jobs. build communities, and drive our nation's economic growth. The Office of Entrepreneurial Development exists to manage the public-private partnerships providing aspiring and existing small business owners with access to counseling, training, technical assistance, capital, and resource partners. Under the pres- under the leadership of President Donald Trump and SBA Administrator Kelly Loeffler the Office of Entrepreneurial Development has delivered measurable results for taxpayers while equipping America's job creators with the tools to compete and grow. Across our nationwide network of resource partners, we are helping entrepreneurs start businesses, access capital, expand operations, create jobs, and strengthen local communities. At the same time, we are holding ourselves accountable for responsible stewardship of taxpayer resources and measurable program performance. In fiscal year twenty twenty-five, the agency took significant steps to strengthen oversight of entrepreneurial development programs. We conducted comprehensive reviews to ensure taxpayer dollars are being used ef- effectively, improved internal accountability across our grant programs, and rooted out waste, fraud, and abuse. Additionally, we inherited a grant management and payment system from the previous administration with significant record management and turn- and internal control deficiencies. For that reason, we move quickly to implement a new grant management system, ahead of schedule, which will lead to improved transparency and reliability in grant administration. We also delivered on our commitments to America's entrepreneurs by working to distribute approximately three hundred and forty million dollars in grant funding that had been delayed by the prior administration ensuring our resource partners could continue serving small businesses without interruption. These investments support counseling, mentoring, technical assistance and business development services that help entrepreneurs launch, grow and compete. At the same time, we are aligning entrepreneurial development efforts with clear measurable outcomes for the small business owners we serve and the taxpayers bearing the costs. Resource partners across the country are moving beyond one size fits all workshops and instead helping entrepreneurs line up capital break into new markets and improve their position in global supply chains, consistent with the Trump administration's broader focus on "made in America" and " fair trade". These efforts complement SBA's record capital delivery in fiscal year twenty twenty-five, and ensure that counseling and training are directly connected to growth, job creation, and long-term competitiveness. We're also proud of our new Manufacturing in America Growth Grant program. Designed to help develop the next generation of America's skilled workforce by expanding small business access to hands-on training, entrepreneurial education, technical assistance, and capacity building opportunities. Combined with the SBA's broader efforts to expand access to capital, reduce unnecessary regulatory burdens, strengthen domestic manufacturing, and promote Made in America, these investments are helping to build a stronger pipeline of entrepreneurs prepared to meet the demands of the modern and future economy alike. Entrepreneurial development efforts complement the SBA's broader accomplishments in fiscal twenty twenty five, including historic capital delivery, strengthened program integrity, record investment through the small business investment company program, rooting out waste, fraud and abuse, efforts to eliminate unnecessary regulations that burden small businesses, and rapid disaster assistance. I can say with full confidence that these initiatives reflect a renewed commitment to SBA's core mission of helping America's entrepreneurs start, grow, and succeed. Thank you, and I look forward to your questions.

Thank you, and we will now move to the member questions under the five minute rule. I now recognize myself for five minutes. Mr. Fitzpatrick, earlier this year the SBA set out to modernize the grant management system, and uh during this time, payments to its resource partners paused. Uh, can you tell us more about how the SBA's new grant management system improves accountability and transparency uh going forward?

Mister Chairman, thank you for the question. Uh, when we we arrived last year, we realized that our grant management system needed to be upgrade uh upgraded. But when we dug deeper, we were frankly shocked. We found a system that was not auditable with inconsistent processes. that were not accountable to the taxpayers. And when we dug deeper we realized that the prior administration had a system that relied upon a series of emails and disconnected spreadsheets with inconsistent processes. And so it's it's not a surprise that they had trouble dispersing funds. Um and so what we did is we rolled up our sleeves and we worked with the grant uh solutions team and developed an integrated system so the grant system is now connected to our finance system. And we simplified and harmonized the processes and the codes, so that now we will be able going forward, be able to disburse funds and have proper controls, but also we actually will be able to do it faster, so that we believe the pause was necessary for the sake of the taxpayers.

So, a follow-up on that, what what uh safeguards uh are going to be put in place to make sure Congress is notified about any potential pause of appropriated funds before they go into effect?

Well Congressman uh, Mister Chairman, thank you for the question, uh SBA will always appropriately notify Congress. Um and what we also have done is we have proper in-contr- internal controls now, so that if we see a problem happening, we're gonna know it sooner rather than years later, and so we will be in the position to notify Congress.

That's good. Uh my last question is part of the OED's program oversight efforts. SBA identified a service center operating under the Illinois Small Business Development Center, the Bain National Institute of Human Development, that maintained an office in Guatemala and reportedly directed services toward individuals who were not eligible recipients of SBA assistance, while receiving approximately a hundred thousand annually in SBA funding. So the question is, how was this issue identified and what steps has OED taken to strengthen oversight and to ensure entrepreneurial development funds are being care- uh used solely to support eligible American small businesses and entrepreneurs?

Mr. Chairman, thank you for the question. And that's really our obligation, is to make sure that Ameri- that taxpayers go to serve the the folks paying the taxes and the American citizens. Um, and what we have done is reviewed many states, and in the normal course of reviewing Illinois, because we had concerns about fraud, we came across the web site of the Binational Institute of Human Development. As you said, uh, this organization had an office in Guatemala, was receiving a hundred thousand dollars in taxpayer funds. Um, it's resources on its web site appeared to be solely focused on immigrants and illegal immigrants. Um, and these are, and they also said that they would serve anybody regardless of immigration status. And these are in clear violation of the terms of their agreement that they signed, this cooperative agreement with SBA. And so we, we let, we alerted the state of Illinois and that organization was disconnected from the program.

Uh, one of this committee's priorities is ensuring that SBA programs deliver results for entrepreneurs while being responsible. stewards of taxpayer dollars, we've talked about that. And as you look ahead, what are your top priorities for OED to improve program performance, reduce unnecessary administrative burdens, eliminate inefficiencies, and ensure that federal resources are directed where they can have the greatest impact for America's small business owners?

Uh, Mister Chairman, thank you for the question, under Administrator Loeffler we've we have some major overarching priorities. At SBA when it comes to specific industries, we're talking about manufacturing, we're talking about uh food supply, um and we were talking about actually areas, rural communities, which have really been devastated over the recent decades. And so what we're we've been working to do is align the resource partners' efforts with those priorities. Uh but we're also encouraging other, those organizations, the resource partners, to raise funds from other sources. These are public-private partnerships and the ones we find that are most effective actually have raised other source uh funds from other sources and not solely depend upon the federal government. The other thing that we're doing is we see the most effective help for small businesses when there's an ecosystem of resource partners that are collaborating these are federally funded organizations state funded organizations county municipal chambers of commerce, and so we are encouraging that collaboration so not reliance we're not relying just on federal dollars in in these private public-private partnerships but multiple organizations. And the other finally what I'd say uh Mister Chairman is that we are working with underperforming centers to help them get up to speed And if not, then we'll move them out of the program.

All right. Thank you. Uh, gentlemen, Nils Beck, I now recognize the ranking member for five minutes of questions.

Thank you, Mister Chairman, and thank you, Mister Fitzpatrick. Uh, the administration's budget proposes to eliminate funding for fifteen of the sixteen counseling and training programs. What evidence do you have to justify cutting these programs that assist nearly a million small businesses each year and generate billions in GDP.

Uh, Madam Ranking Member, thank you for the question. Uh, we fully support the President's budget and the President's willing to make the hard decisions uh when we have forty trillion dollars in debt and we have challenges economically and globally.

That that wasn't a a that wasn't a a problem or

And so

a concern when we you pass and republican pass the big ugly bill was that a an issue about

uh

not uh tell us what is the rationale for the administration to cut all all those program

um madam ranking member the the administration has to make uh priorities we can't fund everything and uh by our estimates the the resource partners are funding

taxes for the billionaires in this country. The resource partners have experienced significant delays in ra- reimbursement. For example, Score did not receive full funding for more than a year, resulting in a seventy percent reduction in staff and significant cutbacks to services provided to small businesses. Why did you withhold the fund? And what specific legal administrative administrative or policy reasons do you claim to support your decision of withholding those funds?

Uh, Ranking Member, thank you for the question, uh first, uh we're in communication, regular communication with the resource partners, we have not heard of any that have laid off staff, so I'm not sure where you're getting that statistic. I'd love to have you send that to our office.

What about score?

But, but we S- excuse me?

Did you withhold funding for score?

Uh Uh, Exactly. ranking member of Alaska's, what we did is when we came to Washington and we saw that the score had a bloated program, and what they had done is they had two staffers making three hundred thousand dollars between their two organizations, and yes, that organization had sixty-six staff members, uh, and it was bloated, so we, we didn't cut their budget. They actually made decisions, they had new leadership that came in and realized it was bloated, and so they brought efficiency, which we support that. But what they also realized, and what we've heard around the country, is that yes there are many fine score mentors who are really helping a lot of um entrepreneurs tremendously but there are also many who are are frankly wasting the time of some entrepreneurs

did you withhold money for other programs for other counseling programs did you

uh reik and velasquez uh we paused payments as we were upgrading the system that was broken

you paused and and you paused yeah and you paused

we paused all payments

with total disregard

all payments

all total disregard as to the impact that posting those fundings will will have on those uh partners, resource partners. That is how much you care about assisting small businesses. Did OMB ask you to delay the disbursement of those funds?

Uh, Ranking Member Velazquez, I would say our team works tirelessly to serve small businesses

Yes or no, did did OMB did OMB if you don't mind

and no, Ranking Member, no, OMB does not tell us what funds to disburse.

OK. No. OMB released the remainder of fy twenty-five funds in march twenty twenty six at about the same time the s. v. a. closed grant solution for nearly three months given the backlog in reimbursement why didn't oed process some of the payments before shutting down funding was that a coincidence

uh ranking member we've been working diligently for a year and a half to upgrade systems and frankly what we're doing

OK, you're not gonna answer my question. On July sixth, SBDC directors receive an email which stated, and I quote, SBA will post the notice of funding opportunity, no fault, for FY twenty-seven funds after Congress passes legislation that includes appropriation for the program. Will SBA post the note if there is continuing resolution, yes or no?

Uh, ranking member Velazquez, um, that that would be up to if the funds are appropriated and then apportioned to us.

That

So if we have the funds we will, of course, if the funds

Yes. That's Well, I'm I'm I'm glad to hear that.

Thank you, ladies. I'm sorry. General Lady yields back, uh, and now recognize uh, Mister Elzey from the great state of Texas for five minutes.

Thank you, Mr. Chairman. Uh, thank you, Mr. F- Fitzpatrick for being here today. Uh, as part of the Small Business Administration's reorganization announced this past June the Office of Entrepreneurial Development will now be administering the Office of Native American Affairs Center for Faith and the Sta- Estate Trade Expansion Program or STEP. I was proud to be a Republican co-lead on Representative David's bill, the Native American Entrepreneurial Opportunity Act, which would codify into federal law a small business administration office of Native American Affairs. I was also proud to support funding for the Office of Native American Affairs and FY twenty-seven Financial Services, uh, and General Government Appropriations Bill. Uh, as a member of the Appropriations Interior, uh, subcommittee, I've had the opportunity to learn about tribal issues firsthand from leaders of the American Indian and Alaskan Native communities. I appreciate the work this committee has done to support tribes for bills such as the Native American Entrepreneurial Opportunity Act. So ensuring that tribes have opportunities to start businesses is very important to me, and I know it is to you too. So can you walk us through how integrating the step grants under your office will reduce duplication and improve service delivery to entrepreneurs?

Congressman, thank you for the question. Uh, really what what we've been doing since, uh, remember Administrator Loeffler is a business person, and when when we came in we had offices, uh, we had functions that were spread out, such as HRIT w- within different offices. And And no company would operate that way. By the same token, we had some some programs and some grants programs dispersed throughout the agency. And so what we're doing is is frankly bringing groups together, like groups that have similar functions. Um and so while our the step program is has cri- has critical connection to our Office of Capital Access, for example, um and our our trade, Office of Manufacturing and Trade, really what we're doing is we're putting together the program's staff that are actually doing the hard work day in day out of processing grants. Um, and part of that is to drive efficiency. Um, what we had before is we had staff spread out and they were, sometimes they're busy, sometimes they're not. Now they're being cross-trained and so they can surge where there's a demand. And so that'll happen with STEP and other programs.

And what do you think the metrics, uh, measures of effectiveness will be?

For STEP in particular?

Yeah.

Uh, we're really look like, we look at the dollars of exports for businesses and then businesses that are new to exporting. Those are really, for that program, that's really the heart and soul.

And so under the current budget framework, do you have enough money, do you have enough staffing, where you can pull this off?

Uh, thank you for the question, Congressman. Yes, we believe we do.

OK. And so what reforms would you recommend for us today to improve the efficiency, reduce administrative costs, and maximize the impact of the taxpayer dollar?

Uh, I wou- I would, thank you for the question, Congressman, I w- I would say, um, for Congress to give us the freedom to uh to make decisions to direct the resources to where most needed and uh guided, but we are we're happy to work with Congress on legislation all the time to improve these programs to help small businesses and our Office of Legislative Affairs would be happy to work with you.

Great. Thanks a lot. Mr. Chairman, yield back.

Uh, gentleman yields back, I now recognize Mister McGarvey from the great state of Kentucky for five minutes.

Thank you, Mr. Chairman. Uh, thank you, Mr. Fitzpatrick, for being here today. I'd like to follow up a little bit on the SBA SCORE program because SCORE is one of those things, it provides mentoring, it provides personalized one-on-one opportunities for entrepreneurs, people who are putting themselves out there, they are risking it all, it is tricky, it is difficult, it is hard, it's something that you know, we know you're not as successful if you're truly trying to do it alone. Um, uh SCORE's work is provided basically free or at low cost, right? It's staffed with tons and tons and tons of volunteers, people who who want to help us succeed, who know the importance of starting a business, growing the business of the importance that small businesses have to our overall economy. Um nearly ten thousand business advisors serve in this program across all fifty states. And it's the federal support from the SBA to the SCORE program that enables it to keep running. Right, so you've got all of these volunteers, tens of, I mean literally ten thousand volunteers who are mentoring uh three hundred thousand individual people. Uh, this is what we're talking about, the backbone of the American economy, and they're, they're doing it and they're providing, you know, uh access to expertise in everything from AI and digital commerce to financial management to emerging technologies to just the stuff you have to deal with, when you're trying to open up your own business. Um, I've always said there's a difference between government spending and government investment. And when we invest in growing our small businesses, that is not only something we should be doing, every dollar we're putting into the score program, it is returning forty-five dollars to the US economy. And so, I really am curious as to why when you have this program, over ten thousand volunteers, over three hundred thousand individual participants, one dollar we put into it yields forty-five dollars to the American economy. And for all of these people who are doing it, tens and hundreds of thousands of people, it has a ninety-four percent satisfaction score. Um, That's kind of unheard of, when we talk about the SBA and the size and scope of this program. So, why is the administration concluding that the program should no longer receive federal support?

Congressman, thank you for the question. Um, we, as I've said, we support the administration's budget of making hard decisions with limited discretionary budget.

But you just said a minute ago,

And so

and I I wrote it down, you said, we've po- quote, we've paused all payments for a system that was broken. Those are your words, not the administration's words. Why? For a program, tens of thousands of volunteers, hundreds of thousands of people utilizing, a ninety-four percent satisfaction score, and one dollar that we put into it from the SBA, forty-five dollars back to our economy. Why do you think, why did you stop, I'm pauses government speak, so we don't have to do government speak in here. You stopped all payments, you stopped giving money to this program, and you said it was broken.

Uh, Congressman, thank you for the question, yeah, our system, our grant system was Uh, I also alluded to challenges within score, but our grant system is broken and we we're accountable first to the taxpayers. And on the numbers, uh

But you said it was bloated. I mean there's, you've gone from seventy employees to twenty employees across all fifty states with three hundred thousand people trying to participate in this. You've stopped all payments. Why?

Congressman, thank you for the question. No, we again, like I said, we're, we, as Secretary Besant said in recent days, it is easier to prevent waste, fraud and abuse than to claw funds back. And so that's what we're doing across all programs, that's why we're upgrading our systems and moving forward, we can now get the funds out to the organization. Ninety four percent satisfactory. And we have gotten funding to score. They're,

Yeah.

they're in good shape, working, we're very, working closely, and the other thing on the numbers.

So, you could tell me, I mean, where has the Inspector General identified waste or fraud in spring? Look, uh, I mean one thing you, you're in front of a committee where we want small business to succeed. Nobody wants waste or fraud in government. No party owns that issue. Where is the waste or fraud in a program with a ninety-four percent satisfaction rate?

Congressman, thank you for the question. We've talked to s- we we we've talked to small businesses,

You don't have to thank me every time. I'm just like, where is it?

excuse me, um, and we've talked to other resource partners, and we've talked to our field staff. And, s- as I said, some of the SCORE mentors are tremendous, and they've gotten great credit. But some of them are not, they're not great, and the organization is working to move them out.

Right, but is that fraud?

No, uh, that's not fraud.

OK.

Waste, waste is different than fraud and abuse.

So, so how are you determining which, I mean, so you're cutting the staff, you're stopping all the payments, right? You didn't say you were stopping the fraudulent payments, you said you're stopping all the payments.

God, let it go a little, a little.

Why? That's not fraud, that's stopping a program that's successful.

No, actually, since we've turned the, the f- the uh, started, restarted the payments, we have a hundred and twenty-five million dollars out the door. But again, SCORE is a separate non-profit organization. We're a public-private partnership. They are free to raise funds from other organizations. I would say the actual most effective women's business centers and SBDCs are the ones that raise more money than we actually require them to do in the match. So that's, that's one. We want organizations to be independent of the federal government. But they are actually, they're, the score management is doing a good job of improving, and we're work, we're happy to work with them.

Ye- you thanked me for my questions, but I'm not sure I got good answers. Mister Chairman, I yield back.

Gentleman yields back. I now recognize Mister Finstad from the great state of Minnesota for five minutes.

Thank you, Chairman Williams, for holding this important hearing. today and thank you to our witness, Mister Fitzpatrick, uh, for being here. In my district we're lucky to have two s- uh, great small business development center, uh, regional offices, one in Rochester and one in Mankato. These centers provide counseling, technical assistance, and guidance to entrepreneurs and business owners who are looking to start, grow, and expand their businesses and are necessary to connect federal resources with local business owners. Mister Fit- Fitzpatrick, on December twenty third, twenty twenty five, the SBA announced it was pausing grant to SBA resource partners in Minnesota citing fundamental breakdown in the public trust of Governor Walz and the broad concern stemming from fraud schemes taking place uh in Minnesota. My staff met with SBA on January sixth, twenty twenty six, after hearing from affected organizations that they had been not given a clear explanation of the funding pause. Once the decision was made to pause the disbursements, what process did SBA follow uh to communicate with the affected organizations?

Congressman, thank you for the question. Uh, yes, I I think we all saw what was going on in Minnesota, leering centers, et cetera, rampant waste fraud and abuse, and it was prudent of Administrator Loeffler to pause all payments, until we found out what was going on in the state. And and uh the SBDC in Minnesota is one of the seven that is actually state-hosted. Uh so other state, you know, the most others are at universities. Um so the same state that would be administering the some of the other programs where there was fraud would be administering the SBDC program. So what we did is we followed up with that organization, um, but we actually took our, had our program team go back five years and review just to make sure the documents were clear. We looked at annual reviews, semiannual reviews, we looked at their accreditation reviews, our financial exam reviews, their quarterly, literally every quarterly report, um, and we reviewed their websites. And so that's the process, and, and we communicated with them, we had several meetings

So were were these organizations, uh, you know, after that thorough review provided any corrective actions, uh, that they could, that they had to satisfy before the funding would, uh, Mm. resume?

Congressman, thank you. Uh, we, we told them that, that they actually were clear. I don't remember. There may be each state had one or two small records within, within their files, but, um, we did not find, thankfully, fraud and abuse at the Minnesota SBDC, and their team was, uh, very good to work with and we appreciate them.

Good. Well, I'm happy to hear that. Uh, they have been a, a huge, uh, asset to southern Minnesota. Uh, I've seen them in action in communities all over the state and, uh, It's good to hear that they they passed the test. So, uh, making sure that these centers and programs are funded, it's important to me and the communities that I represent. I'm thankful that the SBA has worked trying to combat waste, fraud, and abuse. What steps can be prev- uh, can be taken to prevent another funding pause? And how can we here in Congress be helpful?

Uh, Congressman, thank you. I, I think what we're doing now of, of building this new system, and, and I would add that like any new system, this is a major systems upgrade and expansion. the team is learning how to use it, we're gonna get better, we're gonna add features and functions in the future, um, so we will get better and faster with better controls and accountability. Um, so I, I think that's the key. I think certainly at the individual level program, just as long as they comply with the terms, uh, and communicate with us, I don't see any reason for any delays or pauses, sir.

So I have about a minute left and I, I would just maybe just uh shoot from the hip here a little bit, but you've talked about upgrading the systems and we've seen this government wide where we're still operating systems that uh are on nineteen eighty platforms I mean, you can play Oregon Trail on some of these things. What have you seen uh in in your uh tenure at SBA that you know should really wake us up to say listen there is a need for internal controls and systems within government to uh to meet the the the state of the times that we live in right now what are some of the archaic systems that you've uncovered and what steps have you you all been taking so i you know you've talked about the uh the different uh grant disbursement systems and some were relying on emails i mean uh are we using spreadsheets are we using excel are we using like modern day drop-down box easy to use software platforms

uh i was just gonna thank you no that's exactly the the the grant system we had a grant system that's a system of record uh but but no the rest of it was emails and spreadsheets with with different tools with different uh nomenclature and etcetera. But yes, we we have five year old laptops. Our operating system when we got here was probably eight years old. Uh, so is and our technology on the lending side, different office than mine, is being upgraded, very archaic as well.

Thank you. I yield back.

Gentlemen, it yields back, I now recognize Mister Cisneros from the great state of California for five minutes.

Thank you, Mister Chairman, and uh, ranking member for convening us today. for this important hearing. Uh, Mister Fitzpatrick, after over a year and a half, thank you for finally making an appearance before this committee. I hope we can take this rare opportunity in direct engagement with you to get some real clarity on and solutions for our entrepreneurs nationwide, the look to programs under your purview of resources, counseling and training to launch and grow their small businesses. There is a wonderful small business and, uh, small business and development center at the University of Luverne in my district, that plays a critical role in fostering growth for small businesses and the broader local economy. I strongly support SBDC's, but I also support the other resource partners that work with them. I need to stress that small businesses are are hurting and that this is not the time for the administration to recklessly eliminate programs that are critical to the success of our small businesses the president's tariffs have cost Americans over three hundred and seventeen billion dollars. I keep hearing from small businesses about rising costs and uncertainty. A recent survey by small business majority saw seventy four four seventy four percent of business report an impact from rising fuel and transportation costs. Eighty eight percent said cost of raw goods and materials have increased this year. Eighty nine percent said health care premiums are up. Seventy two percent said commercial rent costs are up. Bankruptcy filings for small business during the first half of two thousand twenty six, now. represent a fifty percent increase over the same period a year ago. It is important the- more important than ever to support our small businesses through the counseling training and mentoring that entrepreneur development programs offer that help entrepreneurs successfully launch and grow their businesses. We shouldn't eliminate programs, we shouldn't withhold funds for programs, we shouldn't subject them to meaningless audits, and we shouldn't blindly shuffle and and reorganize who oversees them. I also think that it's unfortunate that my Republican colleagues have refused to work with us on entrepreneurial bulls, bills that have been bipartisan in the past on this committee, and I encourage them to come to the table and let's start working on some of these bills that will benefit our entrepreneurs. So, Mister Fitzpatrick, you say in your testimony that you hold yourself accountable for responsible stewardship of taxpayer resources, Have you found any evidence of fraud in any of the programs you oversee, and if so, which ones, how much, and how do we legislatively fix it?

Gosh, but thank you for the question. I've I've Excuse me. First and foremost, I want to say uh you you alluded to tariffs and challenges. Uh we are d- we are thankful that we have a president who has the courage to fight for the safe streets lower taxes reduced regulations fair trade and capital markets,

That that w- that wasn't, Mister Fitzpatrick, that wasn't my question.

and

OK.

Do I need to repeat it?

OK, well, yeah.

Because the tariffs, I keep hearing from my, from my uh constituents, the tariffs are killing them. And right now that the tariffs that the, the president just said, the fifty percent, it's gonna have an even more impact than the ones that he just put on Canada, where a lot of our paper goods come from. So, coffee shops in my district, uh ice cream shops, anybody who uses any paper product, they're now gonna have to pay higher costs. But back to my question. Have you found evidence of fraud in any of your programs you oversee? How much? Which ones? And how do we fix it?

Congressman, I mentioned the Binational Institute of Human Development as an example. Uh, we have uh, women's business centers that we have put uh, a susp on a suspension. And we have other programs that are just not complying. But we don't have, I wou- I'm glad to say, we have not found massive fraud and abuse in these programs, uh, in part because we are looking at quarterly reports. and finances with them, and so that's good. Uh, and I will say that the strength of the organizations are when they have other partners, uh, not just rely on the federal government, but they have other funders, in part with the match requirement, uh, that does also help to bring accountability. And so we're thankful for that. And we are, as I, I said earlier, we are always happy to work with, uh, Congress to provide technical assistance.

Mm.

And our Legisl- Office of Legislative Affairs, happy to work with you on progr- on ways of improving the programs, to help small uh more small businesses.

Well, I'm glad to see that this uh overall fraud investigation that you say has really kind of shown no fraud. Um, I will say, you know, California has an outstanding reimbursement of a hundred and forty-four thousand a hundred and s- one hundred forty-four thousand dollars, um, that needs to be resolved and this is with the state trade expansion program. Um, you know, a program that is thirty to one and we're still looking for those resources to come back to our state. Uh, but right now, um, I will submit my other questions for the record. And I thank you for your time and I yield back.

Gentleman yields back. Uh, now I recognize Mister Schmidt from the great state of Kansas, for five minutes.

Thank you Mister Chairman, and thank you Mister Fitzpatrick, I just wanted to talk about a Kansas particular matter, uh, it's on my mind, so our small business development center for the state is out of Fort Hayes University, now in Northwest Kansas, the university has decided they don't want to remain the host. we have other at least one other location in Kansas would like to host, Pittsburgh State and my district's interested. There might be others, I don't know that. My understanding is that the state of play uh is that there is an an application process by which a new host could proceed, but they tell me they're not able to do that until the appropriate notice uh funding opportunity has gone out, that that hasn't happened yet, and that it may be over at OMB. Can you tell me this?

Congressman, thank you for the question. Yes, I'm very familiar with the situation in Fort Hayes, and we're excited to find a new partner in uh in Kansas. Um, no the, what it is is, is we don't have the funds. We we need the funds, the fiscal twenty-seven funds, so when Congress passes a budget, appropriates the funds, then we can issue the notice of funding opportunity.

Well that's gonna create a little bit of an issue, right? Because uh, unless I'm mistaken, and then tell me if I am, the end of the calendar year is when uh the shop closes at fort hayes the new applicant or applicants uh depend on how it is have to have sufficient time to put their application together get it submitted and get a bow put on it uh prior to the end of the year so that things don't shutdown people leave get employed otherwise um and you know with all respect to my own institution i'm not anticipating uh the appropriations process concluding before the August recess and who knows what'll happen in September. So, what options do we have? The bidders can't bid, the applicants can't apply until they know the conditions in the NOFO and they can't know the conditions in the NOFO until they see it. Um, what options do we have to at least enable that process to start moving?

Congressman, thank you. Yeah. Excuse me. One, I would say the Fort Hayes team has been really good about this during this transition and and serving small businesses so I I want give credit to them. Um the uh we are happy to work with anybody who is is interested in applying um because it is not gonna be a dramatic change of any application then the the terms in this notice of funding opportunity so an organization could be getting ready in advance uh s- and and we will move very quickly because it's a we're not gonna have hundreds of applicants so we'll be able to make a decision very quickly but we do appreciate that it's it's gonna be tight. Uh, we understand that. Um, and we're hopeful that maybe even Fort Hayes could could bleed over into the, if there's a couple of weeks into the new year. Uh, but, uh, we're we're confident that we'll be able to move quickly.

OK. Well, I appreciate that, so would the appropriate advice for me to give to the folks that are interested at Pittsburgh State or otherwise in Kansas if they wanna talk to me, uh, to connect them with your team, uh, timely, so that those discussions can commence and they can do whatever preparatory work may be necessary to move quickly when things break loose?

Yes, Congressman.

We will follow up with your team and I thank you very much. And, Mister Chairman, I yield back.

Uh, gentleman Neils Beck, and I recognize Mister Tran from the great state of California for five minutes.

Thank you, Mister Chairman and Ranking Member, for holding this important oversight hearing. Mister Fitzpatrick, thank you for being here today. In my district, I've seen firsthand the impact of Orange County Small Business Development Center and the Orange County Women's Business Center, that's what is hosted in my district. Uh, Take Miss Jessica Gutierrez, the owner of Stamp and Ship in Orange County. She had a simple dream to start a small business, but like so many first-time entrepreneurs, she ran into obstac- obstacles, securing a commercial lease and finding startup financing. With guidance from the Orange County SBDC, she turned an idea into a successful neighborhood business. Or look at the Orange County Women's Business Center, which recently graduated dozens of entrepreneurs. from its in-home licensed child care program. These graduates are starting businesses that provide desperately needed child care options for working parents. So I struggle to understand why the administration claims that these programs are wasteful and fraudulent, especially when I've seen how they contribute to the local economy. As the administration tries to eliminate SBDCs, they have also delayed funding that Congress already approved. My office spent months working with the Small Business Administration to recover nearly three million dollars that was owed to the Orange County Inland Empire Small Business Development Center. It should never have taken congressional intervention to release funding that Congress had already appropriated. I was happy to hear that you reported that your office has improved that grant, uh, improved grant management, but I know there is still lots more we can do to strengthen accountability. sba's resource partners collectively serve nearly one million entrepreneurs each year they provide business counselors technical assistance and support for local entrepreneurs for entrepreneurs in my district and across the country sba's entrepreneur development programs are often the difference between a dream that never leaves the kitchen table and a small business that creates jobs and grows our economy i hope today's hearing helps us separate rhetoric from reality as we continue to serve the small businesses across this nation. As mentioned in my opening, my office successfully fought to release nearly three million in SBDC funding to my, to the community, after the admin- administration withheld it. You mentioned safeguards that are in place with the new system to inform Congress of pauses, but I wanna know what safeguard is the SBA providing to ensure that grant payments to resource partners are delivered on time and without unnecessary political, or administrative delays.

Congressman, thank you for the question. Um, um, I c- I can assure you there's never been a political delay. Um, our obligation is to first it was to fix the broken system that we inherited, and then that will then help us to get funds out faster, uh, and we're doing that. But, I - I would say on - in certain situations when a resource partner submits for a reimbursement for example, uh, that's not the end of the story. Typically about a third of them have errors, so our team has to follow up with them. So I don't know that that's particular payment that you're speaking of. I'm glad it was rectified, but that's that's not uncommon. Uh, but, but what we're doing is making our teams uh, nimble, uh, just like any business would do. So, we're crossed, as I mentioned, we're cross-training staff, so they can surge to where the demand is. So if there's more activity, payments, things such as that in the SBDC program, prog folks in the WBC program could go over and help on that. Um, and, and what we're doing is trying to make sure we get the funds as quickly as possible, but in a to the right folks.

But

And I, I didn't say by the way that there was rampant fraud, and the administration hadn't said that. Uh, and we've, we've done reviews and we're thankful that we haven't found rampant fraud.

I didn't even talk about that in my statement or my question,

Yep.

Administrator, but, you know, a consistent theme that we're hearing is, uh, these safeguards that are not being provided to ensure notice to our grantees. Like, I, I wanna know specifically what you're working on to provide those safeguards. We heard it from Mister Finstad, we heard it from the Chairman. I wanna know what these safeguards are.

By safeguards you mean we just we are in communication with the resource partners, and if they submit and we review, we can we can pay as quickly as possible, and that but there's several steps. Remember, we have obligations and we have payments. So there's those are two separate steps, and we're we're happy I'm happy to talk more, but we are committed to moving as quickly as possible, and reimbursing and and obligating et cetera.

Yeah, I I hope you would commit to making sure that um, programs are healthfully healthfully funded and as we continue down this path uh we continue to give notice to grantees and to members of congress when there is impacts um that's happening in our district. Mister Chairman with that I yield back.

Gentleman yields back, I now recognize Mister Petronas from the great state of Florida for five minutes.

Thank you Mister Chairman. Paul, great to see you, thank you for coming and spending some time with us. Um, members, Paul has been such a a fantastic public servant, so many different capacities. I got the opportunity to serve with him years ago when I was in the state of Florida, and and um it's just great to see folks that care about the future of our nation come back to be a servant in this process. So um thank you for your sacrifice and leadership. Um, I wanna focus on um taxpayer dollars and cracking down on fraud, waste and abuse. Um, um, I think I pretty much already know the answer to this, but I think it's important to all of my colleagues to, to hear you uh expand upon your, your successes. Um, so can you highlight some of the actions the SBA has done to uh improve oversight, insure the taxpayer dollars are reaching only eligible Americans who are needing to use these systems, especially when it comes to the creation of small businesses.

Uh Congressman, thank you. Congratulations on uh entering the body. And thank you for your service here too. He's a, he's quite a restaurateur. Um, w- we are, it, it, we're really trying to do, pull every lever we can when it comes to accountability. We've got our field teams, we're improving the way they're doing their reviews of the resource partners. We're training our program teams and our grant teams. What we have done is we've actually simplified the documents and the terms, making sure we're dialing up. the oversight side and the compliance with executive orders, again to make sure only those who are eligible receive and to make sure uh dollars, uh millions of dollars went like in the last administration to DEI programs and other divisive programs um and so we we are also then working to improve the accreditation process for example with the SPD C's and we are making sure that our teams are thorough and reviewing and and the I would say the other piece is uh it was alluded to on the um, to a part of our reorganization, having our grant pro- grant staff, the grant managers move to the CFO's office. That's actually a good thing. They were distributed, uh, and now they're integrated. They're, those are the people with the warrant. So actually their name is on the line when they sign up for a hundred thousand or five million. They are integrated with the CFO's team, where they should be. Uh, so those are the kinds of things that we're doing. We're really trying to run more like a business. Uh, but thankfully, as I've said, we We, you know, we have waste, fraud, abuse are different things. Um, we wanna drive efficiency to eliminate waste. Um, and we're, we're making sure there's not fraud, uh, and we haven't seen rampant fraud, thankfully.

Mm-hmm.

Um, so that, if that answers your question.

And if, um, give me, if you have a, a specific example of something that you, I mean, you, you've touched on the efficiencies, um, but a, a specific example that you're, you're most proud of?

Congressman, I, I think the, the, the simplifying and harmonizing the documents and the process. Every grant program was run with different rules, different documents, w- and even within prog- there were silos, um, but with, even within the Women's Business Center program, there were two program managers sitting next to each other who had different processes. That's what we inherited. And so, we have to, we have to, we're building the foundation, and so we're really proud that we're harmonizing the documents and the processes, so then our team can work more efficiently. But frankly, we'd rather not spend a lot of time talking about documents and processes.

Yeah.

We'd rather work with resource partners to help them be more efficient and productive, to help more small businesses, cuz it's really a, it's about the small businesses, not the resource partners, though we we appreciate the hard-working staff at the resource partners, a- absolutely.

Well, again, thank you for taking time out of your day to be here with us. Um, thank you, Mister Chairman. He's a great witness to bring before us, and I yield.

Chairman Neal is back. I now recognize Miss Goodlander from the great state of New Hampshire for five minutes.

Thank you, Mister Chairman, and thank you, Mister Fitzpatrick, for being here today. Ninety-nine percent of our businesses in New Hampshire are small businesses and they employ about half of everyone who works in my state. So when New Hampshire's small businesses are hurting, our whole state is hurting. Your office has one important job that I wanna focus on. in my questions this morning, and that is helping small businesses to start, grow and compete, including in markets beyond our borders. So I wanna start with a program that we've talked about a bit today, that your office runs, the State Trade Expansion Program, or the STEP program. So, STEP helps small businesses sell their goods abroad, and I want the record to reflect the numbers, because they're pretty remarkable. Since the year twenty ten, STEP has helped more than fifteen thousand small businesses break into international markets, and the return on investment from this program is more than thirty to one. In a single year in twenty twenty-four alone, STEP supported nearly twenty-two thousand jobs. So this is a program that works, and I've seen it firsthand all across my state. So the entire pro- purpose of the STEP program is to help small businesses trade. Is that right?

Congresswoman, thank you. Yes, it it's to to expand exports or get or begin exporting.

May I? So here here's a question I wanna ask you. Um, can you tell this committee plainly what tariffs the Trump administration has imposed that a New Hampshire small business has to navigate today?

Congresswoman, thank you for the question. Uh, we fully support the administration's policies to fight for fair trade.

That's not my question. Uh, this is a factual question. I I get this question from my small businesses every day. So can you, can you please answer the question? What tariffs that have been imposed by President Trump does a New Hampshire small business have to navigate today?

Congresswoman, when it comes to the minutia of tariffs you you probably have the wrong witness,

This is, this is not a, a minutia question.

when it comes to fighting for

Thank you, Mr. Fitzpatrick. This is obviously not a minutia question. But I'm asking it because I'm not sure that anyone can answer this question cleanly cleanly anymore and that is The core part of the problem, we've got IEPA tariffs. We have Liberation Day tariffs. We have section two thirty-two tariffs. Section one twenty-two tariffs. Section three O one tariffs. It changes by the week. This week alone, here's what we're seeing, the section one twenty-two tariffs expires this Friday. A new twenty-five percent tariff on Brazil took effect today. Earlier this week, President Trump announced a fresh set of tariffs against Canada under authority that's never been tested before. So my point is that if the associate administrator for the very office that is charged with helping small businesses trade cannot keep it all straight or offer a clear answer how on earth is a small business in New Hampshire supposed to do that? And the answer is they can't right now, and that is a core part of the problem. Small businesses shouldn't be asked to hire an army of attorneys to navigate a constantly shifting set of tariffs and barriers taxes on their own bottom line, just to try to get by, but that is the situation that you have put small businesses all across New Hampshire in. Now I wanna ask you, uh, I've been very focused on the IEPA tariffs, and in February we fought those tariffs at every level, in every court. The Supreme Court declared them un- unconstitutional in February. How, how, how many, how, how many, how many dollars have been returned to small businesses who were unconstitutionally taxed by President Trump?

Congressman, thank you for the question. Uh, the Office of Entrepreneurial Development does not, is not responsible for that. What we are responsible for is helping the small businesses that want to grow. Mr. Fitzpatrick. And I would say ninety-eight percent of small businesses are manufacturers. They are, we're going around the country, and they're telling us they're having opportunities to compete now, finally, because there's not cheating going on from other countries and our competitors. So those are the ones that we're talking to. We understand we're in a transition as we try to re-industrialize America, but we support the President's policies, cuz he's fighting for that. it's time that we fight for the small businesses in New Hampshire and every other state.

Well, we are fighting for those small businesses, and one of the things I'm, I spend a lot of my time doing is trying to get those small businesses, who are unconstitutionally taxed. Do you, do you, do you acknowledge that these were tariffs declared unconstitutional by the United States Supreme Court?

Congressman, thank you for the question. I, I know what the Supreme Court decided, but we are fighting for fair trade.

Thank you, and and, and right now, I hope you will join me, and everybody in this body, who is fighting to make sure that unconstitutional taxes are reimbursed to the small businesses who are hurting because of the decisions made by this president which are chaotic and have been extremely costly to my state and to our small businesses. Thank you and I yield back.

General Leite yields back. I now uh recognize Miss King-Hines from the Northern Mariana Islands for five minutes.

Thank you very much, uh, Mister Chairman, and and thank you so much, Mister. Patrick for being here today. I really appreciate the SBA support for the CNMI SBDC. The team uh the CNMI SBDC team has been phenomenal, they're a rock star. So there's a lot of military contracting that's happening in the CNMI right now with just uh military expansion in the region and unfortunately we we still don't have an apex accelerator but what the what SBDC has been doing is is filling in the gap and so i just wanted to say thank you for that um several months ago i met elizabeth habib i think she is the administrator of sba s office of women's business ownership is that you right there yeah hi um when i met miss habib she was incredibly enthusiastic about uh potentially finding you know creating an opportunity to have a a wbc in the cni um so i was kinda surprised when a couple of weeks ago we learned that the competition was limited to applicants from florida louisiana pennsylvania tennessee texas west virginia wyoming and the us virgin islands um can you explain how the sba decided to limit application to just these states and one territory because for guam and the cni our closest wbc is a seven hour flight away in honolulu um which you know makes it kind of difficult to to access that opportunity.

Congressman, thank you for the question and thank you for recognizing the uh the incredible talent that Administrator Loeffler has uh attracted to SBA uh including uh Assistant Administrator Habib. Um we have limited resources and we are really excited about the Women's Business Center Modernization Initiative. And what that is about is building a wrap-around services um, really model on the, the, the population-based funding formula of the SBDCs, uh, and with a statewide focus. So that's just, uh, for everybody's benefit on the, this initiative we're excited about. But it is limited resources. And so we, we had to go through and the team went through and, and identified several that did not have services. Uh, several states, that is. These are, these are four states that were underfunded and four states that had no WBCs. Uh, but the, the good news is we have, a lead center and two service centers in the SPDC network for CNMI and and that's they're doing good work as you said and so we're excited that they can serve male and female entrepreneurs in CNMI.

I guess I just wanted to kinda understand the criteria so that you know the, that opportunity is provided to the CNMI as well in terms of just selection, the selection process. But I think that's something that a conversation that we can we can have off-line and and will flag for you so you know um the the step grant has been the step program has been mentioned and so um you know as i stated the svdc has has done a a great job with the uh innovation incubator and you know you you have all these young entrepreneurs um creating products and you know one of our biggest challenges in the cmi is just you you don't have access to the customers right and so people are looking to to export um like you know coconut oil for the body uh hot pepper noni um so um one of the challenges that we are hearing is that you know they're having to navigate these very complex uh requirements in these foreign countries like in japan or or south korea for example and so i just kinda wanted to kinda get a better understanding from you you know if these compliant costs are already allowable use under the the step grant funds and and how can we work together to be able to open up these markets to these small businesses who are looking to export

Congressman, thank you for the question, no those kind of for example health type regulations that's not the kind of compliance cost that the step program is currently design designed could cover, it's for uh Trade missions, trade shows, marketing, translation, those kinds of things. Uh, but we're happy to, our, our team is happy to, anytime, work with you, uh, provide technical assistance, uh, to help improve. Uh, we have to see when it comes to the, the, think of the impact financially on the program. It is limited. It's, it's twenty million dollars a year, uh, in current appropriations. So there are limited dollars. Um, I, I would say the team just let me know. We had eight million dollars just got uh obligated and

All right, thank you. I'm out of time. I yield back, Mr. Chairman.

Channel eight yields back. I now recognize Miss Sculpton from the great state of Michigan for five minutes.

Thank you, Mister Chairman, and uh thanks to my my teammate Miss Kim Hines uh for uh tossing over a great uh toss to me we played softball together and uh that tees up perfectly a lot of the questions that I had um for you about uh a bill that I just introduced yesterday, the Women's uh Business Center Improvement Act of twenty twenty six, along with my colleague Cherise Davids. This is a bipartisan bill that would address so many of the issues uh that that we were just discussing in the last question line. A bipartisan bill in the last several congresses, you know, we don't have to work on this alone, invite you to to take a look at the bill, get on board and would love the administration's help in in championing this bill, and getting it across the finish line. We can address so many of these issues. This bill would increase the authorization level for women's business centers, add program integrity provisions, and increase the grant amount a W that WBCs can receive from a hundred and fifty thousand to three hundred and fifty thousand. Is that something you could support?

Congressman, thank you. Excuse me, we're always happy to provide technical assistance and, and work with you with the through the Office of Legislative Affairs. Really one of the challenges frankly is is program design when it comes to Women's Business Center program and so you're addressing some of that but it's also we have duplication and and ultimately where these centers are located and and how they're dispersed for example right now California has twenty-one Texas has three uh and so you know what would that's that's an issue uh that we have to address but it also comes down to efficiency and is this an efficient use of funds with smaller groups and should Congress talk about uh combining all these resource partners into one, have one grant per state. And that, what that would do is, it would have lower costs for, for SBA and actually lower administrative costs for the resource partners. For example, the WBC's, one of them told me their compliance cost is sixty thousand dollars a year. We give them a hundred and fifty, they raise a hundred and fifty, the average has a couple of employees, sixty thousand dollars going to compliance costs. That's not efficient, so it, we have a program design issues.

Yeah. And and I I would agree with you there and our office is very happy to to work with you to see the ways in which we might be able to improve this bill. Team mate, uh, we we wanna get you on board, uh, as well. She's like, " I'm outta here." No, I'm kidding. Yeah. Uh, but, uh, truly, you know, uh, this is not something that, you know, we're we're doing just for messaging bills. This is this is a great bill that has been bipartisan in past congresses. We would love for, you know, y- your office to take a look, get on board, see where we may be able to improve some of those efficiencies. But I am gonna circle back to my question, would you support lifting the cap from a hundred and fifty thousand to th- to to three hundred thousand eh you know the the economic uh advantages are are so significant?

Congresswoman, we we support the President's budget that's making the hard decisions when it comes to these discretionary programs.

I I I wanna move on to talk a little bit more about some of these uh outstanding payments uh to the women's business centers uh our our ranking member has has touched on this before and I would like uh to introduce for the record uh a a letter from the association of women business centers uh dated july twenty first twenty twenty six um and the data collection results uh that they have here which which goes to something specifically that you had said. Twelve million dollars. Twelve point six million dollars to be specific. This figure reflects an in outstanding payments. Do you think that's acceptable?

Congresswoman, uh as you've heard uh testified, we we inherited a broken system. And actually Women's Business Center program had had some of the worst records and processes.

But how, I mean,

Um,

we're,

and so we had to pause to bring clear,

we're really far into this administration, I do,

and we,

I,

and we've actually in the last year dispersed fifteen million dollars to WBCs,

but it's like, I'm sorry, Mr. President, give me, give me one second please.

yeah.

So, we, we, we respect that this was maybe not something that in- initiated with this administration, but you guys are in control, so, I mean, do you find this acceptable? Do women not deserve to get paid?

Uh, but, well, Congressman, thank you, but that's a ridiculously, a ridiculous assertion. We, we pay everybody. Uh, the resource partners.

Uh, I mean, if it's, i- i- i- answer,

Um, and so, so, so,

answer the question, there's twelve point six million dollars in outstanding payments.

if w- w- w- we've dispersed,

You guys are in charge.

we've dispersed fifteen million dollars this fiscal year to women's business center. So that's not nothing. And payments have resumed. And we are working very quickly. But, but frankly, if you think about it, we've had, we've lost twenty-five percent of the time in this administration between the the shutdown and the pause.

In my remaining thirty seconds, I wanna ask, you said there have been no layoffs as a result of delayed payments uh or uh you know grants not getting out these notice of funding opportunities how do you know that

Congressman now now frankly I misspoke when I I did not well I was not thinking about score and so I I misspoke on that but score what the score new leadership did they realized yes yes I uh yes that was my mistake

ok so you're correcting your record about that ok alright

but um but score's leadership team admitted that they were it was bloated so and their board admitted that it was bloated so that that is clear

Can we have your commitment to get these women paid?

Well, we're not paying women, we're paying the organization, some of which are run by men.

I- i- it's it's the Women's Business Center,

General Lee, time is up.

so let's not be pedantic about it. All right, thank you. Yield back.

General Lee yields back. Can I r- recognize Mister Fuller from Georgia for five minutes.

Thank you, sir, one of the things that drives me insane as a career prosecutor is when questions are asked about, of a witness and they're not allowed to give an answer. So, pardon the pun here, but I'd like to give you the opportunity to give some fuller answers here. Um, I know that uh, one of the things that you talked about, you, President Trump, Administrator Loeffler, and you inherited an absolute mess from the prior administration. You've talked about the bloated agencies, you've talked about salaries that people had in your organization that would shock the conscience of Americans, you've talked about outdated systems, And despite all of that that the Biden administration had in place, uh, you put in your testimony that there were three hundred and forty million dollars in grant funding that was delayed by the prior administration, delayed by the Biden administration. Can you tell us a little bit about how you overcame those delays and those issues that you inherited from the Biden administration and what those fixes were?

Congressman, thank you for the question, and I appreciate the opportunity. Um, yes, our our team inherited about fifteen hundred payments, but three hundred and forty million dollars that, that they hadn't processed, and partners, we don't know exactly we'd, I, I, I think they had some staff that were well-meaning but they didn't have good leadership, they didn't have good technology, they didn't have good processes. And so what we've had to do is roll up our sleeves and get it out. So, as I mentioned, we've lost twenty-five percent of our time in processing obligations and payments because the shutdown and because the pause that was necessary. So we have to work through their three hundred and forty million and our three hundred and thirty million. And, and the team is working very, very hard. All of the team at all levels. Um, and so we're, we are committed to doing it as quickly as possible. But, as, as I said, Secretary Besson said the other day, it's easier to prevent waste, fraud, and abuse than to claw the funds back. And so, we are working day in and day out. Um, and we're, we're very thankful that our resource partners, uh, have been patient. And the other thing is, the important point is that we don't wanna see these organizations solely reliant on the federal government. That we wanna see them raise additional funds above and beyond what we require them to. Uh, and by the way, those are the organizations that are the, we find are the most innovative, and they're also gonna be the most resilient. So that should in the future there be a reason why we have to make a pause, I don't anticipate that, they will be able to continue providing their services. And one point, that I, I do wanna make one point of order, uh, when it comes to this, these programs, because of the handcuffs that we put on the resource partners, we do not get back the names and contact information that we can use to verify who the clients are. And so we don't know what the numbers are. People have said a million people are served. Well, if you look at the resource partners on our data, it's seven hundred and thirty-three thousand. But we know that many actually go to multiple resource partners. So we estimate we're actually about a half a million. So about a percent are clients of the resource partners, but actually less than a percent are actually getting counseled. So it's a very small percentage. So We love and admire our small businesses. They, they present the grit, the determination, the doer, the builders and risk-takers, as Administrator says. Uh, but we are actually, these resource partners are actually not serving that many. We're thankful for those that they're serving, but it's a very, very small percentage of all entrepreneurs.

No, and, and thank you to, um, you, uh, for the work that you've done in, in fixing all those problems that you inherited, and to Administrator Leffler as well. One of the problems that you inherited, they were, uh, communities.

Congressman, thank you. Yes, I I would say the prior administration had a had a did not equally treat rural America, if you look at where dispersion of where the the resource partners are that they located um you know you had certain you know in Los Angeles you you you you go a couple blocks and you hit a women's business center um there's clearly not equal dispersion and so this under this administration President Trump and Minister Loeffler are committed to small businesses and entrepreneurs and every American in in rural communities and and you're right the Biden administration energy policies really were energy suicide and have decimated uh Appalachia. And so we are committed, and we know you have a service center, uh small business development center, service center in your district. And uh we have every, every confidence that, that the Georgia network is doing a good job. But we're happy to work with you uh should you need any help with that service center up there.

No, and thank you so much for that. Uh, we love our service center in Rome and I see Miss Habib in the audience, I think the last time I saw you was in Rome. So thank you so much for your work and Mister Chairman, I yield back my time.

Gentleman Neal is back. I now recog recognize Doctor Morrison from the great state of Minnesota for five minutes.

Thank you, Chairman Williams and Reggie member Velazquez for holding this hearing. Thank you, Associate Administrator Fitzpatrick for being here today. Uh, not to beat a dead horse, but this is um an issue that the small business community is really struggling with. The number one thing that I'm hearing about from small business owners in my district is the difficulty of navigating the uncertainty. created by the president's tariffs. Many small business owners are facing shrinking profit margins, disrupted supply chains and severe planning uncertainty because of these tariffs, jeopardizing the future of their businesses. The president's fiscal year twenty twenty-seven budget proposing eliminating fifteen of the sixteen entrepreneurial development programs including the STEP program, uh which we've discussed some this morning, which assists small businesses in entering or expanding into international markets. One of the consequences of the President's tariffs has have been retaliatory tariffs against the United States from other countries, causing even more uncertainty for small businesses interested in participating in foreign trade. Throughout last year's the President's placed tariffs on Canadian cars, aluminum, steel, and lumber. Canada responded with retaliatory tariffs against the United States, restricting exports to our neighbors to the north from Minnesotan small businesses. Now we wait to see how Canada will respond following the President's new fifty percent tariff on Canadian goods. Given the administration's interest in increasing US exports and supposedly balancing trade deficits, I have to question the decision to eliminate the step program at a time when small businesses need more assistance navigating trade uncertainty, not less. So how is the Office of Entrepreneurial Development helping small businesses in the international marketplace, navigate retaliatory tariffs.

Congressman, thank you for the question. As I've said, we support the administration's policies fighting for fair trade, which is fighting for small businesses. We have seen, as we go around the country, businesses that are adding shifts. They're getting contracts now, before. I, I met with a business in Wisconsin, that normally

Mister Fitzpatrick, I'm sorry to interrupt you, but how does your office plan to continue to help small businesses increase their exports. How are you planning to help small businesses increase their exports, amidst retaliatory tariffs, if the step program goes away?

Congressman, thank you for the question. We have limited resources and, and we support, w- uh, we will follow the law, we'll disburse the funds as Congress uh, appropriates them to us.

Okay, so,

And so if they go to the step program,

respectfully, sir, if you're not gonna answer the question,

we will certainly manage that program.

I'm gonna move on. Um, I was honored to co-lead the Native American Entrepreneurial Opportunity Act, legislation that codifies the Office of Native American Affairs into federal law and establishes an assistant administrator role that reports directly to the small business administrator to oversee its operations. This bipartisan bill, we've also touched on it this morning, unanimously passed the House in June, indicating cross-party support for ensuring Native American entrepreneurs have access to the SBA's entrepreneurial development lending and contracting programs. I thought it was interesting to see that under the SBA's recently announced reorganization plan the Office of Native American Affairs was relocated to the Office of Entrepreneurial Development. Will the Office of Native American Affairs have the same level of authority, staffing, and access to senior leadership at the SBA under this reorganization?

Congressman, thank you for the question. Really you have two things going on here. When it, when you look at the Office of Native American Affairs, and we're certainly committed to those programs, um and that office, what, what we do is two pieces, one it has a grant function, and as we've said, what we're trying to do is pull the grant functions together, so the staff can share and serve and other programs. So you're not gonna have dedicated staff just doing programs for the Office of Native American Affairs or staff or others. so that, so that we have greater efficiency, just fewer taxpayer dollars on, just frankly, paperwork, um, and we can surge and cross-train staff.

OK.

But two, we're a small agency, and I would say that

Excuse me, sir. I'm gonna reclaim my time here. Native American owned small businesses create jobs in tribal communities and strengthen local economies, often in rural areas. Just like my house colleagues from both sides of the aisle, I wanna make sure that SBA is fully committed to helping Native American entrepreneurs succeed. So who is leading the office? I have just a couple of just very straightforward questions. Who is leading the office?

Congressman, thank you for the question. We're we're currently recruiting for leadership of that, and it is,

OK.

it's fully integrated.

How many SBA employees are dedicated to the office before and after the reorganization?

Congressman,

You know.

uh, thank you for the question, uh, there, there are no headcount impacts on, uh, from this reorganization.

OK, so we don't have a number. How is your office helping Native American entrepreneurs overcome barriers to access and capital counts? counseling and contracting.

Congressman, we're actually about to uh release a a a new grant opportunity for workforce development in uh through tribal colleges.

Gentlelady's time is up.

Thank you, Mr. Chair, I yield back.

Gentlelady yields back and now recognize Mr. Alford from Green State of Missouri for five minutes.

Well thank you, Chair, and thank you, ranking member Velazquez. Uh thank you, Administrator uh, Associate Administrator Fitzpatrick, good to see you again. Just couple of weeks ago I was sitting where the chairman is and we had a special round table. uh, with the Kauffman Foundation of Kansas City, and you were on the panel. I appreciate uh your hard work at the uh SBA. Uh, as chair of the oversight subcommittee, I was really disturbed with the SBA's recent discovery of roughly three hundred forty million dollars in unpaid grant obligations that you basically inherited from the previous administration. Uh, this discovery demonstrates why strong oversight, modern financial systems and accountability are just as important uh as funding these programs. Sir, how far back does this backlog go?

Commissioner, thank you for the question, and that that was great to be here on that panel. Um, when we arrived, just for example, just in the Women's Business Center program, we I got with their team and I said, " OK, what are the payments and how far do they go back?" That program, they went back five years. And that was a, you know, we had just been here a couple weeks. Um, and that was at least twelve million dollars. And so that was just that one program. So, uh, there were about fifteen hundred payments in that three hundred forty million dollars so I don't know the details but I have to assume four or five years.

Is more being discovered as you dig through this, uh, balance sheet, basically?

Yes, sir, yes.

What, what's the timeline for, for getting these funds out the door?

Well, we're we're committed to getting them out the door once we make sure we can verify that this is a qualifying program, that we have all the paperwork, the obligation was appropriate, that we can verify that this organization is doing what they're supposed to do. But I would say some of the delay payments, some of the a- old payments, um, are, the program has not submitted. They have not complied with what we've asked them to do. Maybe if they're missing a quarterly report, or maybe their submission f- their request for reimbursement, is lacking either minor information or maybe substantial. And, and every time what happens is you have to then follow up with them. So that's fifteen hundred, in many cases, follow-ups with organizations. Not every one of them requires that, but, but we're finding, uh, some, some are perfectly fine and appropriate, but, but some are not. We're, we're having to dig to make sure they are.

I'm really encouraged by, uh, the operation there now, uh, especially juxtaposition of the previous administration, Administrator Loeffler and yourself have done to uh uh number one to get people back to work uh number two to to try to right size uh the organization and and number three I think to get more uh the SBA out in the heartland of America including uh our district. I also appreciate that this committee has continued advancing bipartisan reforms including my AI for Main Street Act which would allow small business development centers to help Main Street businesses responsibly evaluate and adopt artificial intelligence tools. Um, Mister Fitzpatrick, how important is it that the SBA's counseling network is equipped to help small businesses understand these tools and implement them so that they can grow their workforce and compete with the big guys?

Congressman, thank you for the question. I, I, we do think it's, it's very important. Uh, that's one of the reasons why, for example, SCORE is, uh, is working to make sure their mentors are are up up to speed, cuz some of them are not, but I would say the the uh it's very good that the SBDC network is committed, they received a a grant from corporation, from Google in fact, to develop a pro- a curriculum to train, it's a train the trainer curriculum, to train their counselors, they've got thousand uh couple of thousand counselors, I believe two thousand have been trained, if I'm not mistaken to to a base level, about five hundred are fully certified, they've been through all five classes. Um, and what that means is you're gonna start seeing thousands of small business owners trained on AI. Now again, the, this is gonna be base level, help me understand it, but, but we're, it's just very early, sir, in the program, but we're starting to hear some success stories of companies applying and using AI. So we do think that's gonna be a critical service that resources provide, resource partners provide, and others out there, or in the community.

There's a lot of fear out there that AI is going to take jobs away. is it your uh estimation that that's actually going to help businesses grow and therefore really uh increase workforce in some small businesses?

Congressman, thank you for the uh for the question, I don't claim to be an AI expert, but what we are seeing is small businesses driving efficiency, which so that then then they're putting their time into others, maybe it's developing, it's R and D, it's serve, it's sales, it's it's fixing their operations in other ways or supply chains and so in many ways, especially in for example, that's dramatically increasing their reach in marketing. That's usually where small businesses first start. So we see it as a a positive.

All right, we're out of time. I yield back. Thank you.

Gentlemen, yield is back. I now recognize uh Mr. Osefsky for the, from the great state of Maryland, for five minutes.

Thank you, Chairman Williams, and to ranking member of Alaska as Associate Administrator. Fitzpatrick, uh, thank you all for being here today. I appreciate your willingness to represent the Small Business Administration and the Office of Entrepreneurial Development. before Congress. America's more than thirty-six million small businesses are the backbone of our economy. They create jobs, they strengthen our community, they drive innovation. Programs like the Small Business Development Centers, Women's Business Centers, SCORE, and the State Trade Expansion Program ensure entrepreneurs have access to the counseling, mentorship, and the export assistance that they need to succeed. That's why I'm deeply concerned about this administration's handling of these programs. Specifically, SCORE and STEP recipients have reached out to my office to discuss how they have faced significant delays in receiving the resources Congress already approved. These delays are not just administrative, they have real-world consequences. SCORE chapters have been forced to reduce staffing and limit the free mentoring and counseling services that thousands of of uh thousands of entrepreneurs have come to depend on each year at a time when small businesses are already navigating higher operating costs, inflation, rising energy prices, and uncertainty created by this administration's new tariffs, reducing access to one of the nation's most successful small business mentoring networks is exactly the wrong approach. The delays to step are equally troubling. For export-driven states like Maryland, step funding helps small businesses reach new international markets, diversify their customer base, and compete globally. Maryland's economy is built not only on federal contracting and technology, but also on advanced manufacturing, life sciences, ag, and our ports. Small businesses across my state rely on export assistance and p- to participate in trade missions attend international trade shows, and connect with oversee buyers. When step grants are delayed, businesses don't simply postpone these opportunities. They lose them altogether. Trade missions are canceled, international contracts are missed, and small businesses are left at a competitive disadvantage while their foreign competitors continue to move forward. All of this is especially frustrating because Congress has already made the determination on a bipartisan and bicameral basis that these programs should exist, and be funded. Which leaves the head-scratching question. Why has it taken so long for these grant recipients to receive their payments? Congress appropriated these funds, yet p- resource partners report months-long delays in reimbursement for work already completed. They deserve better than canceled trade shows, trade missions, training, and other services for small businesses. So, um, I guess I'll start, um, with asking the question, why were these grants delayed to States?

Congressman, thank you for the question. Uh, we inherited a system that was broken and there were no controls, it was inconsistent between programs, and so we owed it to the taxpayers to to build. We had to i- build a system that was integrated, the grant system to the finance system. Um, and as we've said before, as Secretary Besson said, it's it's better to prevent fraud, waste waste, fraud and abuse than try to claw funds back. But we and we are working very fast to get the funds out. And I would say we just just in the last weeks we actually obligated about eight million dollars to uh step. And so these programs are coming back on. We didn't want to make a pause. This was necessary. Uh, we are, we appreciate there's impact. We, we know there's impact. But we're working very hard and very fast to resume obligations and payments.

Well, i- if fraud was such a concern, do you have documentation of where that was eligible, what those system changes were? Is there, is there a public reporting of that, cuz I, in this role I've yet to see anything shared with this committee or with me about why, what systems were of concern, what fraud concerns might be out there.

The conversation

And, and in fact, I, I, I think just sort of, uh, uh, on the communication point, Um, I think part of the challenge too is that there was a, really a lack of communication with your partners about the delays, and even why you were doing it. So I, I think as people are trying to plan and work, can you speak to why this, these delays and these, these changes weren't communicated to partner organizations and businesses?

Congressman, thank you for the question. But, different programs have different communication levels. We have for example, every two weeks we've got, or every month actually, the SBDC program has a call with the network directors every other week, they have a, we have a call with the association, the board, uh women's business centers have, women have uh office hours weekly, so we're communicating with these organizations. Uh the step we work very closely with actually the SIDO, their association, um what what when I say, when you look at fraud, if you look at what SBA has had to do system-wide, we we sent five hundred and sixty-two thousand loans to D- Treasury and DOJ worth twenty-two point two billion dollars, that that the Biden administration had flagged for fraud but didn't do anything about. So it's understandable that we, I know these are smaller dollars we're talking about in, in our office, but we have to make sure there's not fraud. I didn't say there was fraud, I just wanna make sure there's, we have a system that would prevent fraud.

Well, a- as we head in the, the new year, I hope that you can provide more flexibility to grantees, um, but I'll follow up with additional questions as my time has expired. I yield back. Thank you.

Now, gentlemen, uh, now, now I recognize uh, Mr. Bresnahan for uh, from Pennsylvania, the great state of Pennsylvania, for five minutes.

Well thank you, Mister Chairman, Ranking Member, and to Mister Fitzpatrick for being here today through the uh arduous small commi- uh small business committee hearing. Uh the Office of Entrepreneurial Development is the SBA's front door for entrepreneurs and small businesses across the country. Whether it's providing safety training resources for manufacturing businesses in Carbondale uh or technical assistance for restaurant Pitson to strengthen its online presence, OED programs give small businesses the tools they need to succeed. Uh, I've met with many business owners in northeastern Pennsylvania who rely on the small business development centers at Wilkes University and my alma mater, the University of Scranton. So, my first question is where do you see OED's highest priorities in the next few years and where could Congress be

Congressman, thank you for the question. A- actually it's it's uh it's appropriate. Within the last, I think it was about six weeks, um I did a a visit in eastern Pennsylvania, roughly the eastern half, um and visited many many women's business centers, uh SBDCs, all three of those networks. Um and and what was exciting is is we had resource partners that are working hard, but but The great part about it is what we saw as ecosystems. Um, as, as, this, if you look at the EDP budget, three hundred thirty three thirty million dollars, we're, we're serving under a, under, as far as counseling, under a one percent of all entrepreneurs. Um, so we have a role, but what I saw in eastern Pennsylvania were, there was this ecosystem of state funded, local municipality funded, you had universities, you had FET, you had our, our role with the public-private partnerships, you had chambers of commerce, you had private equity, um, these ecosystems were really, really strong, and we were w- only one partner at the table. And so, one of my objections would be to try to figure out how did that happen, how can we help replicate it, cuz it's not the federal government's dollars making all the difference. They were great people, providing great services and advice and counseling to these heroic small businesses. And so that would be one priority. I would say uh to help the nation re-industrialize. I th- I think manufacturing, food supply, as I've mentioned these are core uh priorities of the administration, so that those would be priorities to the extent we can encourage the resource partners to provide those kind of services.

Well I appreciate that, and something that uh we really prioritize in northeastern Pennsylvania, Pennsylvania, eastern, northeast, with a little little sliver up there, Paradise, uh but we had heard a lot of concerns um, relevant to the state trade expansion program or the step program, which moved under OED following the June twenty twenty-six reorganization. Can you provide an update on the step following that transition, and do you believe OED has a personnel and resources needed to administer the step alongside its existing responsibilities?

Congressman, thank you for the question. Yes, yes we do. Um, and yes, as, as I've said, what we're trying to do is have like functions work together. So, our program managers who are making, working on SBDC program for example, can bring their insights and their tools and techniques, and their ideas to the step team who are sitting right next door and were in in similar meetings. Um, we've already seen that for example. The score program benefited from that. It was really not, uh, up to the same standard. It wasn't h- our team, the prior Biden administration didn't team, didn't hold them the same standard, but our SBDC team helped them get up to the standard. And so we'll do the same with the STEP program.

Uh, I know there was a period of a backlog or where the program was uh essentially on a a small hiatus. Is there anything that Congress or this committee could be doing to prevent future backlogs or log jams in the administration of those programs? I mean, these are programs that our small business community and entrepreneurs really depend on. So I wanna make sure that we're doing every single thing within our power, uh, to provide you the resources to make sure those kinds of frustrations don't happen again.

Congressman, thank thank you for the question. We I think um added complexity or added mandates would would actually uh hinder our efforts to drive efficiency. So uh we we've got a professional team and Administrator Leffler has brought in a great professional team of of frankly, I would say mostly business people. Uh my colleagues are remarkably successful business people and and they are help helping to bring efficiency and productivity, improved outcomes, and so I I think we're in good pla- good place, but we are always happy to work with Congress, provide technical assistance on any ideas and develop ideas.

Well help us help you help us. So with that, Mr. Chairman, I yield.

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

Thank you uh so much Chairman and thank you to the ranking member for convening today's hearing and thank you to Administrator Fitzpatrick for appearing before this committee. Uh, America's entrepreneurs battle against odds that would break most people, and they do it for their families, their communities, and the promise of a fair shot. For decades, the SBA's entrepreneurial development programs have been a major help to them, one of the few tools that actually help level the playing field for entrepreneurs. Let's be clear, Administrator. This administration is not just neglecting entrepreneurs, it is actively trying to destroy the very programs that give working people a shot at building something that's their own. That is why this week I introduced the Small Business Development Center's Improvement Act of twenty twenty six to defend and strengthen one of the last remaining tools for equal equal economic opportunity. And New Jersey's tenth, our New Jersey Small Business Development Center at Rutgers University has helped countless entrepreneurs. These are real people, real jobs, and real communities on the line. Small business owners are being squeezed from every direction right now. Congress should be fighting to expand resources to them and not gut them. And also the president and your department, your agency should be doing the same. Administrator Fitzpatrick, do you support the administration's proposal to eliminate funding for the Small Business Development Center program?

Congressman, thank you for the question, and we support the president's budget that's

Once again, do you support, cuz I I know you're gonna like do this whole thing and I don't really have that much time, to play around like this. Do you support the elimination specifically about the Small Business Development Center program?

Congressman, we will administer the funds that Congress appropriates and we'll follow the law.

So I'm guessing, so I'm gonna take that that's a yes. Um, because you keep telling me what you support of the president and I'm specifically asking you about programs within your agency. Um, What do you have to say to the more than three hundred and seven thousand entrepreneurs that launched over seventeen thousand new businesses and helped small businesses access more than six billion in capital last year because of this program? What do you say to them when you're supporting the president's budget that includes eliminating this program? What do you say to them?

Congressman, I would say that they are heroic and we both agree there's very few people are as heroic as small business owners. And I would say when they wake up, they have a challenge. Very few of them say, I hope the federal government comes and helps me. They are heroes and they're fighting overcoming challenges every day.

Be, be, being, uh, thank you,

And we're

thank you, Mister Minister, I'm gonna reclaim my time. Being heroic is not enough. Heroic doesn't pay the bills necessarily. It doesn't keep businesses open. It doesn't create new business owners. That's not enough, it, a- at all. Um, I think a- as your role, can you publicly support reauthorizing, do you s- do you publicly support reauthorizing and fully funding the SBDC program?

Uh, congresswoman, thank you. We support the president's budget.

So, you don't have the audacity as the administrator to say to the president, this is a great program, we should support this. Can you not do that as a administrator, as a leader?

Uh, thank you, congresswoman. We support the president's budget.

Once again, that means you can, which means that you're more interested in serving the president's agenda than really helping the American people. So thank you for clearing that up. With that, I am going to go ahead and yield back because I I've heard very clearly from the administrator he supports whatever the president wants to do despite what is good, and right for American businesses. Thank you.

Uh, gentlelady yields back. I now recognize Mr. Reed, Mr. Weed from the great state of Wisconsin for five minutes.

Thank you, Mr. Chairman. Thank you, Associate Administrator Fitzpatrick. for being here today. It is uh refreshing to hear that you are focused on driving efficiency and you are uh putting business people in this agency. It it is refreshing and appreciate uh the better outcomes that you're getting for small business owners. Uh as you mentioned, SBA conducted a reconciliation of grant payments and found the the backlog of approximately three hundred and forty million dollars in unpaid grants that were inherited from the Biden administration. We've observed similar issue at the Department of Transportation where there was over thirty-two hundred unobligated grants announced by the uh Biden administration. Uh, we've been able to chip away at that. The Department of Transportation has been able to chip away at that backlog over the l- the last year and a half. Administrator Loeffler e- even pointed to a four million dollar grant during the Biden administration, um, that was given to the Chinese mutual Aid Association. How does this happen? And, sir, what are you doing to ensure that this doesn't happen in the future?

Uh, Congressman, thank you for the the question, and the these are the ki- when we have massive programs, uh, these are the kinds of things that can happen. Um, and we're we're trying to root it out. And what that is, that was a actually a f- uh, four million dollars going to the Illinois SPDC. And and Illinois, like Minnesota, is one of the state hosted. uh, SBDCs. And as we were evaluating Illinois, which had, we had concerns about the state, obviously we had found the Binational Institute of Human Development, we, we came across this Chinese mutual aid association, which is clearly violating the terms. Uh, I, I don't have with me the exact amount that they were getting of the four million, uh, but for example, they were saying they could serve anybody in all fifty states. That's a violation of their agreement. They were saying that they were the only Asian-led SBDC. That's a violation, that's violation of the the executive orders. Um, and so, this is a part of the challenge with these programs. Um, we do have a lead center service center model within the SBDC program. And so, w- we do approve the overall budget that the service cent, excuse me, that the host the puts in, the lead center, um, and we see the budgets. Uh, but frankly, some of them, like Illinois, we're trying to hide in the service centers, um, really DEI programs, and so we're having to go, our team is going through all their websites, all their documents, and so it, it's very complicated, but we're doing it, we're on it.

Well, thank you for that great work. It's obviously easier to prevent these types of issues than it is to go in and, and try to fix, uh, the bad policies of the Biden administration, and so thank you again for your efforts. Uh, um, why was it determined, and, and maybe this is part of, of what you're doing to correct all of these, uh, problems from the Biden administration, um, that grant managers should move from the OED to the office of chief financial chair. Is that, is that gonna be helpful?

Uh, yes, Congressman, thank you for the question. Yes. Um, the, the grants managers are the people with the warrants. They actually, they, they sign on the line for how much money that, that is approved. Um, it's clearly a financial function. Uh, and my understanding is many years ago there was, there, and there still is an office of grants management. They all used to be off, uh, housed in the CFO's office. But because that was not efficiently run, individual program offices were allowed to hire their own grant managers. So really all we're doing is bringing it back to where it was, but that is an inherently financial function, and you want them sitting under the uh our the leadership of Nathan Davis, our CFO who is a three decade executive. Um, uh but they work very very closely with our program managers. Uh the other thing is is we actually drive efficiency, as opposed to having a p- a grant manager that's assigned to only one program. they can, they can serve multiple programs. So again, they're cross-trained so we can surge staff to where the need is.

Unlike the Biden administration, we are focused now on being good stewards of the taxpayer dollar. Uh, sir, what can we do as a committee to, um, to maximize the impact of every taxpayer dollar given to the OED?

Congressman, thank you. Um, when it comes to, we're, we're happy to provide, uh, technical assistance. Um, I think what we don't want is, is lots of new ideas that Congress and Congress thinks up to meet uh, to serve a very small population, um, and I think we need to keep it broad, and serve all Americans equally. But our team, again, like I said, we're happy to develop and work with you on legislation you're developing, and our Office of Legislative Affairs will be happy to work with you.

All right, thank you. Keep up the good work. With that, I yield back.

Gentlemen, he yields back. And I recognize Mister Jack. from the great state of Georgia for five minutes.

Thank you, Mister Chairman, and uh Mister Fitzpatrick, thank you for testifying. As you may know, I represent Georgia's third congressional district and was very proud to bring Administrator Loeffler to my district twice uh within the last year and looking forward for her uh potentially coming to visit again in twenty twenty six. Um a question I have with respect to OED and the oversight therein. What changes have you made to strengthen internal oversight within OED?

Congressman, thank you for the question. Um We have actually made major system upgrades and built a whole, really an integrated system for our grant solution system. We've connected it, now it's connected to our financial system. We have simplified the documents, we have common labels and our teams using similar processes, so that we have greater transparency and greater integration between the grants and the, our financial system. So that now we have oversight, we have proper controls, Um, and we can see when problems happen sooner. We don't, we're not gonna wait years before finding it out and having to rectify the problem.

One of the priorities our chairman laid before us, um, last year is let's do our best to cut regulations and reduce dupli- uh duplicative behavior within government to make it easier for small businesses to thrive so I'm curious um could you share with this committee what you have done to eliminate duplicative programs and what steps have are you continuing to take to identify those that could be eliminated?

Congressman, thank you. Um What we've been doing at at the on the the excuse me regulatory and oversight level, for example, is simplifying the burdens on our resource partners so so more dollars can actually go to counseling and training. For example, we inherited a system where our field team, again, uh the Office of Entrepreneurial Development, we don't have staff in the field. SBA has staff in the field. The field team does uh does what we call field reviews annually. Um, and when we got here, we found that the field team was asking the resource partners to produce documents to them, that the resource partners had already produced and supplied to our program managers. So those are the kinds of things. Is that gonna make or break the organization? No. But we're making small decisions, process decisions like that to free up funds. Um, we're also, what we're doing is we've created a new, um, a power to grow Manufacturing in America, um, workforce development program. And that's probably the most significant new program we've rolled out, under Administrator Loeffler, supporting the President's priorities in re-industrializing America. So that's where we're taking funds and reprogramming funds that were going to inefficient programs to put it into something that's actually gonna make a difference, for small businesses.

One of our proudest accomplishments is Congress was passing and enacting the, uh, Working Families Tax Credit, H.R. one, Could you share with us, I mean you're the closest to this and ov- obviously your administration's working with small businesses every day, just how impactful the Working Families Tax Cut has been for small businesses and the, the benefits it's given to American citizens across the country.

Y- yes Congressman, thank you. We, we have been, as, as you know, uh, Administrator Leffler from Georgia. Um, she's traveling tirelessly and meeting with small businesses. And she went around the country finding out what were their needs, what were their problems. It, it's capital, it's skilled labor. Um, and they were so excited to see what was, what was going on, what we could do. And, and they are diving in, they're making a difference, and what they said is, leave more money in our pockets. And so she's now hearing, after the working family tax cuts, I, I built this building. She actually was in uh, a, a plant where they, they, they put sticker, big posters on the CNC machine saying this machine was paid for by the working family tax cuts. Um, and they have buildings named after it. And, and so she's seeing tangible results of making the, uh, of it immediate expensing and the twenty percent per, uh, for small businesses permanent. And so we're seeing that every day when, when we're traveling the country.

And with the remainder of this Congress, are there any other priorities you have for us to, uh, to do what we can to best help small businesses? Or anything else coming up that you think would be helpful for us to do?

Um, w- w- we again support the President's policies. We, we want safe communities, we want lower taxes, lower regulations, we want fair trade, and we want healthy capital markets. So anything that Congress can do to support that, we would support.

Well, I appreciate your testimony, and as you noted, um, one of the things we're gonna be talking about a lot this J- uh, late July, August, and September as we, uh, we soon leave to go back to our districts is just how impactful these tax cuts have been. I worked in President Trump's first administration and helped pass the Tax Cuts and Jobs Act of twenty seventeen as a staffer. And I saw the resultant impact just a year later. Uh, the economy was absolutely roaring as it is, uh, continuing to do today. So I'm excited to do what we can to, um, accentuate exactly what we've done and accomplished. And I appreciate and applaud your work, uh, to serve the Small Business Administration. And I appreciate the Chairman's efforts to convene, um, this hearing. So with that, I yield back.

Gentleman yields back. I'd like to thank uh, Associate Administrator Fitzpatrick for his testimony, for appearing before us today. Uh, with that objection, members have five legislative days to submit additional materials and written questions for the witnesses to the chair, which will be forwarded to the witnesses, and I ask the witness to please respond promptly. Uh, if there's no further business to that objection, the committee is now adjourned.

Okay, good to see you.

Thanks so much, Jen. Thank you so much, by the way. Of course, no problem. So It's on the front desk.

thank you thank you hopefully it didn't like you're the best now i can the sound yeah

thank you