[House Hearing, 119 Congress]
[From the U.S. Government Publishing Office]


                 DRIVING ECONOMIC GROWTH: SBA LENDING 
                    PROGRAMS AND THE VITAL ROLE OF 
                            COMMUNITY BANKS

=======================================================================

                                HEARING

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED NINETEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                           FEBRUARY 12, 2025

                               __________

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                               

            Small Business Committee Document Number 119-002
             Available via the GPO Website: www.govinfo.gov
             
             
                                __________

                   U.S. GOVERNMENT PUBLISHING OFFICE                    
58-899                     WASHINGTON : 2025                  
          
-----------------------------------------------------------------------------------     
            
                   HOUSE COMMITTEE ON SMALL BUSINESS

                    ROGER WILLIAMS, Texas, Chairman
                        PETE STAUBER, Minnesota
                        DAN MEUSER, Pennsylvania
                         BETH VAN DUYNE, Texas
                           JAKE ELLZEY, Texas
                         MARK ALFORD, Missouri
                         NICK LALOTA, New York
                        BRAD FINSTAD, Minnesota
                          TONY WIED, Wisconsin
                      ROB BRESNAHAN, Pennsylvania
                          BRIAN JACK, Georgia
                         TROY DOWNING, Montana
             KIMBERLYN KING-HINDS, Northern Marina Islands
                         DEREK SCHMIDT, Kansas
               NYDIA VELAZQUEZ, New York, Ranking Member
                       MORGAN MCGARVEY, Kentucky
                       HILLARY SCHOLTEN, Michigan
                      LAMONICA MCIVER, New Jersey
                        GIL CISNEROS, California
                       KELLY MORRISON, Minnesota
                        GEORGE LATIMER, New York
                         DEREK TRAN, California
                       LATEEFAH SIMON, California
                       JOHNNY OLSZEWSKI, Maryland
                        HERB CONWAY, New Jersey
                    MAGGIE GOODLANDER, New Hampshire

                 Lauren Holmes, Majority Staff Director
                 Melissa Jung, Minority Staff Director
                           
                           
                           C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Roger Williams..............................................     1
Hon. Nydia Velazquez.............................................     2

                               WITNESSES

Mr. Justin B. Hooper, Chief Executive Officer and Chairman, First 
  Financial Bank, Weatherford, TX................................     4
Mr. Michael Sims, Chief Commercial Banking Officer, Georgia's Own 
  Credit Union, Alpharetta, GA...................................     6
Mr. Frank Wetegrove, Owner and Operator, Camp Bow Wow, San 
  Antonio, TX....................................................     7
Ms. Heidi DeArment, President, Montana Community Development Corp 
  dba MoFi, Missoula, MT.........................................     9

                                APPENDIX

Prepared Statements:
    Mr. Justin B. Hooper, Chief Executive Officer and Chairman, 
      First Financial Bank, Weatherford, TX......................    41
    Mr. Michael Sims, Chief Commercial Banking Officer, Georgia's 
      Own Credit Union, Alpharetta, GA...........................    48
    Mr. Frank Wetegrove, Owner and Operator, Camp Bow Wow, San 
      Antonio, TX................................................    59
    Ms. Heidi DeArment, President, Montana Community Development 
      Corp dba MoFi, Missoula, MT................................    66
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    Defense Credit Union Council (DCUC)..........................    74
    National Association of Development Companies (NADCO)........    83
    National Association of Government Guaranteed Lenders (NAGGL)    77
    Small Business Investor Alliance (SBIA)......................    81

 
  DRIVING ECONOMIC GROWTH: SBA LENDING PROGRAMS AND THE VITAL ROLE OF 
                            COMMUNITY BANKS

                              ----------                              


                      WEDNESDAY, FEBRUARY 12, 2025

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:04 a.m., in Room 
2360, Rayburn House Office Building, Hon. Roger Williams 
[chairman of the Committee] presiding.
    Present: Representatives Williams, Stauber, Meuser, Alford, 
LaLota, Finstad, Bresnahan, Jack, Downing, King-Hinds, 
Velazquez, McGarvey, Scholten, McIver, Cisneros, Latimer, Tran, 
Simon, Olszewski, Conaway, and Goodlander.
    Chairman WILLIAMS. Good morning to everybody. And I now 
call the Committee on Small Business to order. Without 
objection the Chair is authorized to declare the recess of the 
committee at any time. I now recognize myself for my opening 
statement.
    Welcome to today's hearing, Driving Economic Growth, SBA 
Lending Programs, and the Vital Role of Community Banks.
    I want to thank our witnesses again for being here today 
and we, our witness is going to be Zoom I believe and so she is 
trying, we are trying to get her on there.
    I want to know that we also know many of you have traveled 
along to, a long way to share your experience and perspectives, 
and we deeply value your time, and we deeply value your voice.
    Now I strongly believe that starting a small business 
captures the true meaning of the American Dream. Part of what 
makes America so great is that anyone from any background can 
go out on a limb with a dream or an idea to provide a new 
service or product to the marketplace.
    Our economy is dependent on small businesses, as they are 
our nation's largest job creators. It is our job here in 
Washington to be main street's biggest advocate and ensure they 
have the tools to succeed. In today's hearing, we will be 
exploring the triumphs and challenges of small businesses and 
the community lenders that provide this support.
    Under the Biden Administration, Main Street America endured 
stifling regulations, record inflation, and high interest rates 
that hindered the ability of small employers to hire workers, 
increase wages, and reinvest back into their businesses to spur 
growth.
    Thanks to the return of President Trump, a wave of pro-
business optimism swept over the small business community. This 
new administration has committed to not only cutting 
regulations across the board for small businesses and community 
banks alike but also reducing taxes and preserving the Tax Cuts 
and Jobs Act.
    Failing to renew the small business provisions of the 2017 
Tax Cuts and Jobs Act would impact all small employers in every 
corner and limit their ability to stay competitive and preserve 
countless community jobs.
    Throughout this Congress and alongside the Trump 
Administration, we will once again prioritize policies that 
support Main Street America by creating an environment where 
small businesses can thrive, and the full potential of 
community banks can be unleashed.
    Finally, due to travel and weather delays the witness that 
we said Democrats have invited to the table is unable to attend 
in person today. We have received permission from Leader 
Scalise to allow her to appear remotely. And I ask unanimous 
consent for the letters between letters, Leader Scalise and I 
noting that this exception be entered into the record. So 
moved. So without objection as so ordered.
    So with that I will yield to my distinguished Ranking 
Member from New York, Ms. Velazquez.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman. I want to thank you 
and your team for working with us on utilizing remote authority 
to enable our witness to testify today due to weather-related 
flight cancellations.
    Small businesses fuel the American economy. They account 
for more than 40 percent of U.S. GDP, create approximately two-
thirds of new jobs, and employ nearly half of all private 
sector workers. Yet, entrepreneurs and small businesses 
consistently tell me that access to capital and investment 
remains a pressing priority.
    The SBA operates multiple capital access and investment 
programs to ensure entrepreneurs and small businesses have 
access to the financing and investment they need to grow and 
scale their operations. These programs are essential to small 
employers and entrepreneurs, especially those in our rural and 
underrepresented communities as they struggle to obtain 
conventional loans and investment from a financial institution 
or private fund.
    The SBA's largest program, the 7(a) program, encourages SBA 
authorized lending partners to provide loans by guaranteeing a 
significant portion of the loan-encouraging lenders to extend 
credit to small businesses that might not typically be able to 
obtain financing. 7(a) loans strengthen local communities, 
create jobs, and move our economy forward. In fiscal year 2024, 
the 7(a) program supported a substantial volume of lending 
nationally with over $31.1 billion across more than 70,000 
loans. A variation of the 7(a) program is the Community 
Advantage Program delivered by mission focused lenders. The 
Community Advantage Program facilitates smaller 7(a) loans to 
small businesses and new businesses located in an underserved 
community. I am particularly excited to hear from one of our 
witnesses this morning about how the Community Advantage 
Program is being utilized in our rural communities. Another 
program, the 504 CDC loan guaranteed program, which is 
administered through nonprofit CDCs, provides long term fixed 
rate financing for major assets such as land, buildings, and 
equipment. Last year the 504-program delivered almost $6,000 
valued at more than $6.6 billion. I look forward to discussing 
how we can better utilize and improve all of these programs. 
The SBA programs are worth protecting, especially lending 
programs which have proven effective and efficient in how they 
operate while building up main street in our communities. I 
will call on the SBA to work with us to strengthen those 
programs. Thank you, I yield back.
    Chairman WILLIAMS. The lady yields back, and I now will 
introduce our witnesses. The first witness here with us today 
is Mr. Justin Hooper. Mr. Hooper is the CEO and Chairman of 
Cross Timbers Region of the First Financial Bank located in 
Weatherford, Texas. Mr. Hooper has more than 30 years of 
banking experience and began his career as a loan officer and a 
review analysis in Abilene, Texas in 1997. Mr. Hooper moved to 
Weatherford as a commercial leader in 2004 and was named 
executive vice president and senior lender for the Weatherford 
region in 2012. He was promoted to president of the region in 
2017. Mr. Hooper serves a Board Member for the Weatherford 
College Foundation and Trinity Christian Academy, and as a 
board president for the court appointed special advocates for 
children in Parker County. Mr. Hooper holds a bachelor of 
business administration and finance from McMurry University and 
attended the graduate school of banking at Louisiana State 
University. I want to thank you, Mr. Hooper for being here with 
us today and look forward to our conversation.
    Our next witness here with us today is Michael Sims. Mr. 
Sims is the chief commercial banking officer of Georgia's Own 
Credit Union located in Atlanta, Georgia. Mr. Sims has well 
over two decades of experience in the banking industry serving 
as an executive vice president for Vinings Bank, and State Bank 
and Trust Company and SunTrust Bank. He is skilled in portfolio 
management, risk management, commercial lending, banking, and 
credit analysis. Mr. Sims serves as a Board Member for the 
Waypoint Ministry, as well as a Committee Member for Promise 
686, an organization that mobilizes church communities to care 
for vulnerable children. Mr. Sims earned a master of business 
administration at the Brock School of Business at Sanford 
University. He also holds a bachelor of science and finance 
from the University of Alabama and a bachelor of science 
account from the University of Alabama at Birmingham. I want to 
thank you for joining us today and I am looking forward to the 
important conversation ahead.
    Our next witness here with us today is Mr. Frank Wetegrove. 
Mr. Wetegrove is an owner and operator of the Premier Dog Care 
Service, Camp Bow Wow. Mr. Wetegrove and his wife, Tamara own 
five Camp Bow Wow franchises from Austin to San Antonio, Texas. 
Mr. Wetegrove is a former senior intelligence officer with over 
30 years of experience for the United States Army. He has 
assisted with numerous programs during his interview, during 
his service including the command critical survivability 
program for the renovation of the Pentagon and the Air Force 
Intelligence, Surveillance, and Reconnaissance agency as an IT 
specialist. Mr. Wetegrove also has worked as a network engineer 
at the San Antonio water system, a client services engineer at 
Lumeta Corporation and an enterprise security engineer for 
information assurance at MacAulay-Brown, Inc. Mr. Wetegrove is 
a graduate of TMI Episcopal, formerly the Texas Military 
Institute in San Antonio, Texas. I want to thank you for your 
years of service and joining us today and I am looking forward 
to the important conversation ahead. And I now recognize the 
Ranking Member from New York, Ms. Velazquez to briefly 
introduce our next witness appearing before us today.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman. I would like to 
recognize Ms. Heidi DeArment who has been with Montana Finance 
for over 17 years. She is an experienced small business lender 
and community development professional. MoFi is committed to 
helping businesses launch and create jobs in rural communities. 
I recognize and respect her for the work with businesses, 
communities and community banks throughout Montana, Idaho, 
Wyoming, and Utah. Thank you, Ms. DeArment. It is a pleasure to 
have you here.
    Chairman WILLIAMS. Okay. Thanks again for all of you being 
here and before recognizing the witnesses I would like to 
remind them that their oral testimony is restricted to 5 
minutes in length. If you see the light turn red in front of 
you it means your 5 minutes is up. You are done and conclude as 
you quickly can and wrap it up. I also want to say that you 
will periodically see Members of this committee leaving, coming 
back, going back and forth. We all have other committees that 
we are involved in so if the Ranking Member gets up and leaves 
or I get up and leave we are not mad at anybody. We will be 
back. Okay? All right. So with that now I would like to 
recognize Mr. Hooper for his 5 minute of opening remarks.

  STATEMENTS OF JUSTIN B. HOOPER, CHIEF EXECUTIVE OFFICER AND 
CHAIRMAN, FIRST FINANCIAL BANK; MICHAEL SIMS, CHIEF COMMERCIAL 
 BANKING OFFICER, GEORGIA'S OWN CREDIT UNION; FRANK WETEGROVE, 
 OWNER AND OPERATOR, CAMP BOW WOW; HEIDI DEARMENT, PRESIDENT, 
          MONTANA COMMUNITY DEVELOPMENT CORP DBA MOFI

STATEMENT OF JUSTIN B. HOOPER, CEO AND CHAIRMAN, CROSS TIMBERS 
                 REGION OF FIRST FINANCIAL BANK

    Mr. HOOPER. Thank you, Mr. Chairman.
    Chairman Williams, Ranking Member Velazquez, and Committee 
Members, my name is Justin Hooper. I currently serve as the CEO 
and Chairman for the Cross Timbers Region of First Financial 
Bank comprised of 14 branches in the Fort Worth area and 
further to the west. In total, First Financial, which was 
founded in 1890 in Abilene, Texas has total assets of just 
under $14 billion. Many of our locations are in rural areas 
just outside, or outside larger metropolitan areas of the 
state. As community bankers, our customers rely on the bank for 
working capital, equipment purchases, or potentially a mortgage 
or construction loan. Before turning to the broader small 
business lending market, I am pleased to say that during the 
COVID pandemic our bank participated in the PPP program in the 
form of almost 10,000 loans with total originations of $1.1 
billion. While difficult to navigate at times the program was 
very successful and allowed us to support the businesses in our 
community at a time in which there was much uncertainty. First 
Financial Bank, like many lenders enjoys a preferred lender 
status with SBA. This is likewise a very positive federal 
program but over the years we have found that due to the 
complexities of navigating all of the standard operating 
procedures with the SBA programs that it was necessary to form 
a specialized department in Abilene to manage our SBA loans. 
Nonetheless in 2024 we originated 4 million of SBA's 7(a) 
general purpose loans and 40 million of 504 SBA loans which 
provide long-term, fixed rate financing for major fixed assets. 
Even though we have preclearance being on the preferred lender 
list, the typical turn around time on SBA loans within our 
department ranges from 45 to 75 days. Of course we make many 
loans to large and small businesses that are not associated 
with any SBA programs. This typically allows for much quicker 
processing and in many case loans that can be closed in days or 
weeks rather than months. It also allows for greater 
flexibility in our product offerings that we can tailor to the 
customer's needs. In 2024, the bank originated $294 million in 
commercial real estate loans, $376 million in loans to schools, 
municipalities, and other taxing entities and just over $825 
million in commercial and agricultural loans.
    The biggest problem for community banks is the increased 
regulatory burdens to keep pace with new and ever-changing 
regulations. Since 2021 our personnel costs in this area have 
doubled and we anticipate that they will continue to rise. That 
number sits at a staggering estimated $7.1 million per year. In 
addition to the personnel to support our audit and compliance 
function we also incur legal, technology and outside audit 
expenses which are estimated to be another $3.8 million. This 
brings our total annual cost to manage an ever-growing 
compliance burden to an estimated $11 million annually, not 
counting the massive amount of time invested by bank personnel 
such as loan officers who are not categorized as compliance 
staff. 2025 will bring additional regulatory burdens. Most 
notably would be those associated with the implementation of 
the CFPB, small business data collection rule, Section 1071 
from personnel cost, training costs and software enhancements 
necessary to achieve compliance we are estimating annual cost 
of $2.1 million for 1071 alone. We appreciate your leadership 
on that issue, Mr. Chairman to see that that regulation going 
back on judicial hold. Additionally with the rise of internet 
reliance and other technology-oriented developments we are 
continuing to see rising fraud losses. In 2024 we incurred 
debit card losses due to fraudulent activity of $1.5 million, 
check fraud losses of $735,000 which were typically forgeries 
and counterfeits. To combat this we incurred personnel cost of 
$2.6 million annually as well as $3.3 million annually in 
software and technology expenses. The personnel and technology 
expenses are necessary and have resulted in the bank stopping 
additional fraud that would be far in excess of the expense we 
actually incurred. Therefore between the actual fraud 
perpetrated and the cost to combat this it comes with a price 
tag of estimated $8.3 million annually. There's not doubt that 
the rapid increase in interest rates in 2023 has resulted in 
much higher borrowing costs for our customers that is lingering 
into 2025 despite a few rate cuts over the last year. This 
strain coupled with inflationary pressure that is driving up 
labor costs and other items for businesses is causing some to 
see cashflow diminish. In conclusion we are fortunate to live 
in a portion of the state that's welcoming new residents every 
day and there is a lot of optimism in the area in which we live 
and many of our customers are contemplating new projects and 
new opportunities. Thank you.
    Chairman WILLIAMS. Thank you. Great timing and now I 
recognize Mr. Sims for his 5 minute opening remarks.

   STATEMENT OF MIKE SIMS, CHIEF COMMERCIAL BANKING OFFICER, 
GEORGIA'S OWN CREDIT UNION ON BEHALF OF AMERICA'S CREDIT UNIONS

    Mr. SIMS. Good morning, Mr. Chairman, and thank you very 
much, Ranking Member Velazquez and Members of the Committee. My 
name is Mike Sims, and I am testifying today on behalf of 
America's Credit Unions. I currently
    serve as the chief commercial banking officer at Georgia's 
Own Credit Union headquartered in Atlanta, Georgia. Georgia's 
Own is a community credit union serving over 240,000 Members 
across Georgia with $4.3 billion in assets. At Georgia's Own we 
pride ourselves on small, being a small business lender. We 
currently have over $571 million outstanding member business 
loans including both SBA 7(a) and SBA 504 program. In 2024, 
Georgia's Own was the number 1 ranked credit union in terms of 
7(a) loan production in the State of Georgia. We currently have 
153 7(a) loans outstanding totally about $153 million. We also 
make SBA 504 loans and currently have 5 loans outstanding 
totally over $17 million. Like many community lenders we saw a 
dip in interest in member business loans and over 2023 and 2024 
as inflationary concerns caused many small businesses to pull 
back on capital access. However we have seen a noticeable 
uptick in interest and applications in the three months since 
the election and expect 2025 to be a stronger year. The MBL and 
SBA loan options at our credit union allow us to work with our 
small businesses, small business members to get them into a 
product that meets their needs. A great example of this is the 
work that we did with Radiant Solar, a woman-owned small 
business specializing in solar powered development and 
construction, also headquartered in Atlanta, Georgia. We were 
able to provide the owners with a $5 million SBA 7(a) cap line 
to fund their working capital needs and have helped them earn 
recognition as one of the nation's top producers in the solar 
industry and we are currently working with them on a potential 
SBA 504 loan to help meet their needs. One of the most pressing 
challenges facing credit unions is the complexity of the SBA 
program requirements. While credit unions are eager to grow 
their SBA loan portfolios, many report the administrative 
burden make it extremely difficult to do so. Lack of internal 
expertise and high cost associated with participation also 
remains a significant barrier. Even our very experienced SBA 
lending staff at Georgia's Own, we see these challenges as 
well. We may hear the right messages from SBA leadership about 
their desire to help community lenders and small businesses but 
many times it does not always translate to the field. Our day-
to-day experience in contacting the SBA with questions about 
loans can often be cumbersome and frustrating. It is common for 
answers to take questions, questions to take days or weeks or 
for us to experience delays while the SBA works to verify 
information about our borrowers. As a preferred lender under 
the SBA's delegated authority we believe we should be given 
greater leeway to operate so we can get capital to our small 
business members. We also believe that the SBA should provide 
more targeted training and technical assistance to community 
lenders and credit unions have expressed a strong interest in 
working with the SBA to enhance their operational capabilities 
in this space. Regular webinars, workshops, and on demand 
training resources could address gaps in expertise and empower 
more credit unions to participate in the SBA's lending 
programs. We also would encourage the SBA to better use 
regional office to engage existing program lenders and 
potential new lenders as well. Having the regional SBA offices 
more fully engaged in the day-to-day operational issues faced 
by lenders will ultimately help streamline inefficiencies and 
enable quicker access to capital for the small business members 
that we serve. Without a full engaged SBA regional offices, 
lenders are left to themselves to navigate a very challenging 
and often complex SBA process. Finally we would encourage 
congress to continue to review recent regulatory efforts that 
hinder small businesses, small business lending from community 
institutions. We are also concerned about the efforts to bring 
more fintech into the SBA lending space which we believe would 
create more risk int eh system. Additionally, the overly broad 
1071 rule from the CFPB stands to greatly increase burden on 
community lenders and we applaud the efforts of Chairman 
Williams to repeal this rulemaking. In conclusion, small 
businesses are the driving force of our economy, and the key to 
its success. It's important that congress and the SBA ensure 
that credit unions have the right regulatory environment to 
meet the needs of their small business members. I thank you for 
your time and the chance to testify before you today and 
welcome any questions.
    Chairman WILLIAMS. Thank you. I now recognize Mr. Wetegrove 
for his 5 minute opening remarks.

STATEMENT OF FRANK WETEGROVE, OWNER AND OPERATOR, CAMP BOW WOW 
        ON BEHALF OF INTERNATIONAL FRANCHISE ASSOCIATION

    Mr. WETEGROVE. Good morning, Chairman Williams, Ranking 
Member Velazquez, and distinguished Members of the Committee. 
My name is Frank Wetegrove, and I am a franchise owner of Camp 
Bow Wow, a dog care services company that my wife and I became 
franchisees of 18 years ago and have since grown our operation 
to include four locations in San Antonio, Texas, and another in 
Austin. At Camp Bow Wow, we offer everything from dog daycare, 
boarding to grooming, and training within the communities that 
we operate. Our team consists of roughly 100 employees. I'm 
also happy to share that we plan on opening of a 6th location 
within our Texas footprint.
    It's an honor to be here today to give my perspective on 
the impact that the U.S. Small Business Administration's loan 
programs have on small businesses especially franchisors, 
franchisees, and their employees. Its impact to me is near as I 
utilized SBA's 7(a) loan program when I decided
    to become a franchise owner in 2007. As a retired colonel 
with 34 years of service in the Army Reserve along with 8 years 
in active duty, I'd like to say my skillset came in handy when 
considering starting a franchise, and SBA's 7(a) loan program 
was the access to capital that gave me the opportunity to put 
it to good use.
    Throughout my military career I held leadership positions 
at every level, including Platoon Leader, Officer in-Charge, 
Commander of Detachments, Companies, a Battalion, and a Group. 
More importantly, I became a husband, a father of five, and now 
a proud grandfather of four. As you can see sitting still is 
not in my nature nor the word, retirement in my vernacular.
    In 2005, about 20 years into my Army mostly Reserve career, 
I was mobilized to work at the Defense Intelligence Agency. 
During my first summer in Washington, my wife and I discussed 
the possibility of our family spending a month there with me. 
However, one major challenge arose, what would we do with our 
dog? He couldn't join us in our temporary living arrangements 
and around that time my wife suggested I log into AOL, and of 
course I'm dating myself, to explore a business opportunity 
she'd come across. That business was Camp Bow Wow, a franchise 
that emphasized in doggy day care, something I'd never heard 
about, but I was immediately intrigued. This opportunity became 
a true family affair. Since I was still advancing in my career 
my wife took on the brunt of running the business. I 
contributed after hours, on weekend, during the holidays and 
this was all while we were raising our toddlers which came to 
Camp Bow Wow every single day. Ultimately I knew this endeavor 
would teach my family the difference between working for 
someone and working for one's self. I believe 100 percent in 
giving back. I have been awarded franchisee of the year several 
times. I speak to many of my peers daily. Every chance I get I 
speak to people in general. I explain to them about my success 
story, the conversation starts with getting to know them, the 
possibility of owning their own business and future and remind 
them of great opportunities that this country provides us 
including the government assistant programs available. None of 
this would have been possible without the support of the 
federal government's SBA program. The SBA's assistance was 
instrumental in getting my business off the ground. I know for 
a fact that many of my fellow franchisees and countless other 
small businesses would not exist without these critical funding 
programs. The SBA and access to capital and its' lending 
programs provided an essential part of the instrument--part of 
the franchise success story. In the fiscal year 2024, the SBA 
guaranteed $31.1 billion dollars in 7(a) loan volume, $6.7 
billion in 504 loan volume. Historically franchises have 
represented about 20 percent of the SBA's loans by dollar 
volume. Finally I'd like to highlight a regulatory issue that 
has the potential to not only strengthen the franchise business 
model but also supplement SBA lending practices to further 
support franchise business performance for the years to come. 
That is to permanently extend the 2020 NLRB's joint employer 
rule, recognizing the harm this would bring, both the House and 
Senate voted to overturn the joint employer rule on a 
bipartisan basis in early 2024 using the Congressional Review 
Act, which I and other Members of the IFA commend. In March of 
2024, a U.S. District judge struck down the 2023 NLRB rule and 
the joint employer standard reverted to 2020 rule. While a 
reprieve from the previous NLRB's joint employer rule has been 
welcome news, I wanted to stress the importance of the current 
common sense standard and federal law, labor law has on 
franchisees like mine and state that any actions toward 
permanently preserving the current NLRB rule would only protect 
both businesses and workers but also create the regulatory 
conditions that allow both franchisors and franchisees to 
thrive, grow, and create jobs and opportunities in the 
community that they serve. Mr. Chairman and distinguished 
Members of the committee, thank you again for the opportunity 
to testify and I'm happy to answer any easy questions you might 
have.
    Chairman WILLIAMS. Dogs or Pentagon, much harder. Thank you 
very much.
    Mr. WETEGROVE. Thank you. Now Ms. DeArment, is she 
available?
    Ms. DEARMENT. Can you hear me? I am here.
    Chairman WILLIAMS. Okay. Great. Well, all right. We will 
now recognize Ms. DeArment for her 5 minute opening remarks? 
There she is.

   STATEMENT OF HEIDI DEARMENT, PRESIDENT, MONTANA COMMUNITY 
                   DEVELOPMENT CORP DBA MOFI

    Ms. DEARMENT. Chairman Williams, Ranking Member Velazquez, 
and Committee Members, thank you for having me here today and 
thank you for accommodating the travel problems. My name is 
Heidi DeArment. I'm the President of MoFi. We're a
    nonprofit, rural, CDFI that provides small business loans 
and free advisory services to people in Montana, Idaho, Utah, 
Wyoming, Oregon, Washington.
    MoFi partners with 126 bank and credit union systems across 
that six-state region that refer thousands of their loan 
denials to us annually. Between all of those denials and our 
Board Members who are commercial lenders we know a lot about 
who banks aren't funding today. And that's where we come in. We 
provide loans to entrepreneurs and businesses that don't 
qualify for financing at a bank or credit union. Last year MoFi 
lent $40 million to successful applicants all of whom had been 
denied. This is a less profitable venture than banking, but it 
works. The businesses we fund build assets, they build track 
record, and they ultimately go back to the bank that referred 
them to us. MoFi has done this successfully for decades and we 
maintain a loss rate of less than, of 1 percent over the last 
ten years. That 1 percent I think tells us that these loans 
aren't risker. They're just simply harder and longer to 
underwrite so they are less desirable for a profit motivated 
back or a credit union. To do this work we rely on two 
essential SBA programs, the microloan program, and the 
Community Advantage Guarantee program. I thought it might be 
easier to explain how we use these programs using one of the 
businesses from my home town, Missoula, Montana. The businesses 
called Betty's Devine and it's a women's clothing store 
downtown. When the owner came to she was working in retail and 
people were coming in, asking for clothing that they didn't 
sell and that you couldn't buy in Missoula, which I think is 
the perfect start to a business, seeing an opportunity and then 
figuring out how to build a business around that. She wrote a 
business plan, she contacted a bunch of vendors, she found a 
lease space, she built great financial projections that made 
sense she took that all into her back and they said, you don't 
have any assets, you don't have any collateral, you don't have 
outside income, you don't have business history. She was 
denied. She did qualify for an SBA microloan through us and 
like most of ours she became successful and then her back 
refinanced her. A few later her banker came back to us and said 
that business is doing really well and now she wants to buy a 
bigger space, her own building but she doesn't have the down 
payment, would you do a partnership loan with us where the bank 
does 70 year or 75 percent, and we will fill in the gap. We do 
about 40 percent of our loans annually as a partnership with 
banks or credit unions. She was able to buy the building and 
today she is still there. That's 20 years later. She's a huge 
success. She's a household name. She's a bit of community force 
where we live and she's just one of many thousands of SBA 
microloans that have been funded across the country over the 
past 20 years that create jobs, revitalize our main streets, 
and fuel our economies. The Community Advantage program is just 
as important to us. MoFi uses the CA guarantee for clients who 
have been denied bank financing, need up to $350,000 and they 
are usually start ups. We like using them on startups because 
the CA program is an amazing onramp to bankability. If you can 
show as a small business owner, a new business owner that 
you've been able to make your payments on a CA loan, your 
banker sees a future 7(a) client. These are also not risky 
loans. Since the start of the program in 2011, our losses have 
been, I think this is right, .065 of a percent. I heard the 
other witnesses talk about the challenges with some of the SBA 
programs and how long they take. That's not the case with CA. 
It's a fast, efficient program that allows us to get capital to 
borrowers very quickly. Today the U.S. financial system 
operates on two tiers, one for those with established wealth 
and one for those still building towards that future success. 
We need these SBA programs for entire generation of low wealth 
entrepreneurs who are going to be successful tomorrow, 
especially in the rural areas we serve. Thank you for your time 
and for supporting the SBA tools.
    Chairman WILLIAMS. Thank you very much. And we will now 
move to the Member questions under the 5 minute rule. I 
recognize myself for 5 minutes.
    Mr. Hooper, community banks are an essential resource for 
small businesses providing a large shares of small business 
capital and offering a more tailored approach to small business 
lending than larger financial institutions. Unfortunately, the 
Biden administration added $1.7 trillion dollars in regulatory 
costs, disproportionally impacting small business and small 
lenders. So my question is, how has the increased regulatory 
burden impacted your ability to lend to small business?
    Mr. HOOPER. Thank you for that question. You know I think 
probably the simplest answer is to say that due to ever 
increasing budgets that we have for audit and compliance, as I 
mentioned that's almost $11 million is what we're estimating 
for this next year, it takes away from our ability to reinvest 
in new loan programs, effectively market those to our customers 
and roll out new programs that would benefit our clients. 
Additionally, other regulatory issues such as like the Durbin 
Amendment that reduced some of our debit card interchange 
income also takes away from our ability to offer low cost or 
free business deposit service to our customers in many cases. 
You know, from a very basic perspective the more time that we 
have to spend on compliance and regulatory oversight just takes 
away from our time that we can spend with our customers and in 
tailoring products to their needs.
    Chairman WILLIAMS. Under the Biden administration the SBA's 
flag ship 7(a) loan program was altered with rule changes that 
stripped away prudent lending standards that had preserved a 
programmatic integrity for decades. While many of these changes 
were said to simplify the 7(a) lending program, they are 
instead confusing the lending community and impacting the 
services that community lenders provide to borrowers. So in 
your testimony you described that credit unions have expressed 
a strong interest in working with the SBA to enhance their 
operational capabilities in the SBA lending space but that 
there is a great deal to be desired in that area. So 
opportunities do you see for the SBA to better work with credit 
unions?
    Mr. HOOPER. Thank you for the question, Mr. Williams, 
Chairman Williams. I think immediate area where we can focus 
our concentration on with the SBA is through their regional 
district offices. If we have them as a resource to help us 
navigate the processes, policies, and procedures that are ever 
changing inside the SOP it will help us to deliver more 
efficiently and more effectively to the small businesses that 
we serve in our communities. The program itself, the loan 
program, the 7(a) and the 504, the structures that those 
programs allow are very good and very flexible. It's the 
process and the procedures and the policies and the regulation 
that has dampened the effectiveness of those really good 
programs in getting into the hands of the business community 
that needs them.
    Chairman WILLIAMS. With portions of the Tax Cuts and Jobs 
Act set to to expire, you are aware, small businesses across 
America are concerned that their taxes will go up. If you were 
able to keep more of your cash on hand and not pay it to the 
government how would you use that money?
    Mr. WETEGROVE. I would definitely use it for improvements 
to my business, I would also like to, you know, pay my 
employees a little bit better. I think that I can only bring 
home so much money these days and I would love to pass that on 
to my employees and provide, you know, enriching lives to dogs 
to be honest.
    Chairman WILLIAMS. In other words the money can be used 
better by you than by the federal government?
    Mr. HOOPER. Yes, sir.
    Chairman WILLIAMS. You can create more taxpayers with it?
    Mr. HOOPER. Yes, sir.
    Chairman WILLIAMS. Okay. I now recognize the Ranking Member 
for 5 minutes of questions.
    Ms. VELAZQUEZ. Good morning, and thank you, Mr. Chairman. I 
have been a member of the small business committee--Ranking 
Member and Chair. I have also been a member of the Financial 
Services Committee and to say that regulations are impacting 
financial services institutions and that the Biden-Harris 
administration hindered small business formation doesn't hold 
water. The Biden-Harris administration oversaw the fastest rate 
of new business applications on record with entrepreneurs 
filing an average of over 440,000 applications every month, a 
rate that was over 90 percent faster than from the pre-pandemic 
averages. Importantly the small business boom of the last four 
years was equitably distributed among multiple segments of the 
population. Business ownership doubled among Black households, 
hit a 30 year high for Hispanic households, new businesses 
created rates hit a 30 year high for Asian Americans, and women 
owned business, a higher share of businesses than before the 
pandemic. I thought that the topic here today was about small 
business lending and the different programs under SBA, not 
making a case about tax cuts. But I know that that is the 
agenda here.
    Ms. DeArment, can you explain how MoFi is utilizing the 
Community Advantage SBLC program to provide capital to small 
businesses in the rural communities you serve?
    Ms. DEARMENT. Yes, absolutely. Thank you. We use the 
Community Advantage program much like banks use 7(a) but we use 
it for a different segment of the market. Borrowers who are 
credit worth but who are denied at banks or credit unions. Our 
clients aren't seeing a CA loan. They're referred to us from a 
bank after the bank says, no. I think it's really challenging 
in the rural areas right now that we serve. Over time banks 
have consolidated and closed some of the branches and even in 
the rural areas that do still have a bank, the commercial 
lending officer usually isn't there. They're in large cities. 
They don't know the area very well and decisions can be made 
elsewhere.
    Ms. VELAZQUEZ. What segment of the market does the 
Community Advantage program reach that a traditional 7(a) loan 
might not?
    Ms. DEARMENT. Yes. It reaches people who don't have wealth, 
assets, prior experience in a bank or high cash flow. I don't 
think you need those things. I think we've proven you don't 
need those things to be successful in business and be 
successful in paying back a loan. But we underwrite for 
repayment the say way a bank does. We just don't use factors 
like wealth, assets, or prior year cash flow. Instead we use 
potential industry viability and sort of hard work and 
determination, and it works.
    Ms. VELAZQUEZ. Thank you. Mr. Sims, as you know I have been 
supportive of raising the member business lending cap in the 
past, but we need to do it in a responsible way. I also just 
want to say for the record that the MBL cap is an issue for the 
financial services committee and in which this committee 
doesn't have jurisdiction. As a member of the financial 
services committee I have made the case in terms of raising the 
cap. Mr. Sims, I understand you participate in both the 7(a) 
loan program as the primary lender and the 504 loan program as 
a partner working in conjunction with certified development 
companies. With a lens on the process of both programs would 
you agree with the following statements, 1, the 504 program has 
a unique economic development mission and, 2, at times the 504 
program can be overly complex? If so, do you have any 
recommendation to streamline the program and more efficiently 
get capital into the hands of small businesses?
    Mr. SIMS. Yes, ma'am. Thank you for the support of the 
member business lending cap very much. Appreciate that. And I 
would agree with your statements. I certainly do agree with 
your statement, 1, the program provides small businesses with a 
very solid financing vehicle for owner occupied commercial real 
estate. As you know the 504 is best used in that environment. 
If you're looking for cash flow--or excuse me, operating 
capital, and other elements of the financing, it's not part of 
that program, but it is a very good program, nonetheless. And 
as you know on the other side we do work local, not-for-profit 
CDCs to provide the debenture on the sell out once the loan has 
met its term.
    Chairman WILLIAMS. Lady's time is up.
    Ms. VELAZQUEZ. Thank you.
    Mr. SIMS. Thank you.
    Chairman WILLIAMS. Next I would now recognize Mr. Alford 
from the great state of Missouri for 5 minutes.
    Mr. ALFORD. Thank you, Mr. Chair and thank you Ranking 
Member Velazquez. Today small business are working to recover 
after four years of inflation, supply chain issues, workforce 
shortages, and burdensome over regulations. But I want to let 
you know, I want to let main street know that help is on the 
way with President Trump in office and Republicans in control 
of both chambers of congress, we will work for you to make sure 
that your business thrive. And we will cut the red tape and for 
you to spend more time actually building your businesses, not 
just filling out paperwork to satisfy some bureaucrat down the 
street. We will codify the Trump tax cuts to protect the 199A 
passthroughs and to keep more of your dollars in your own 
pocket and we will work with the SBA to make sure that existing 
businesses have the access to capital and counseling that they 
need to ensure that Americans can continue to found more small 
businesses in America.
    Mr. Hooper, I have heard some of the same issues from our 
community bank where I bank in Raymore, Missouri from Bill 
McDaniel, the president, that the burdens of these over 
regulations among the most harmful regulations implemented 
during the Biden administration are the 1071 rule implementing 
by the Consumer Financial Protection Bureau. And thank goodness 
that Chairman Williams introduced last February 5th, H.R.976 
which would repeal the CFPB's implementation of the 1071 rules. 
Fin Cen's implementation of the beneficial ownership reporting 
rule has been paused by federal courts though there are 
additional pending actions in court. So my question to you is, 
number 1, do you believe the CFPB is constitutional?
    Mr. HOOPER. I do not.
    Mr. ALFORD. I do not either. Thank you. What happens if the 
1071 rules are put back into place? What effect will that have 
on lending to people who need this money, the capital to start 
and maintain a small business?
    Mr. HOOPER. Sure. Thank you for the question. There's a 
couple of points there with 1081. There's 81 data points that 
have to be collected at the time we would take an application 
and then some of those, some of that data is then published by 
the CFPB annually and so that raises all kinds of privacy 
concerns and things of that nature especially relative to if 
there were denials and things like that included in some of 
those data points. And so, you know, just simply managing it 
and then also on our side the cost to implement it is 
astounding. As I mentioned we're estimate prior to it being 
stayed we were looking at over $2 million in cost potentially 
to do the training and everything necessary. But I will tell 
you most of our customers would find that the questioning very 
troublesome and difficult as well.
    Mr. ALFORD. Mr. Sims, do you believe that the CFPB is 
constitutional?
    Mr. SIMS. I do not, sir.
    Mr. ALFORD. Thank you. I want to continue with you, Mr. 
Sims. You reached, you mentioned about regional offices, they 
needed to be more proactive. I agree with that. Senator Joni 
Ernst introduced a bill to relocated SBA workers in part from 
the office down here in D.C., which we were at a year and a 
half ago and they all scurried to show up when they knew we 
were coming and on any given day even if the building is 
staffed with 100 percent of the employees in the building it is 
only 67 percent full. It is a waste of money basically. We need 
to get these SBA regional offices out into rural America where 
we have business deserts if you will so they can get the 
capital and counseling they need in a lot of these areas where 
we have the rural broadband to operate businesses and the 
people wanting to relocate out into communities of rural 
America. What are your thoughts on that and how would credit 
corporations, or not credit corporations but credit unions play 
a vital role in that?
    Mr. SIMS. Yes, sir. Thank you for the question, Mr. Alford. 
I think simply levering the expertise that you would have 
inside of an SBA district office and from a credit union's 
perspective my focus is on the business member and how do I 
figure out what's the best product set for that business member 
and to have an advocate that has the inner working, the 
knowledge of the SBA process, policies, and procedures to help 
us when we hit a roadblock and we have a question that has 
arisen as a result of a particular request they would be able 
to help us navigate that process.
    Mr. ALFORD. Thank you very much. And again thank you for 
being here on this snowy day coming here on your own time and 
your own dime. I appreciate. And I yield back.
    Chairman WILLIAMS. Gentleman yields back. I recognize Mr. 
McGarvey from the great state of Kentucky for five minutes.
    Mr. MCGARVEY. Thank you, Mr. Chairman. I appreciate that. I 
will start with a question for the panel. Are any of you all 
Supreme Court justices?
    Mr. HOOPER. No, sir.
    Mr. SIMS. No, sir.
    Mr. WETEGROVE. No, sir.
    Mr. MCGARVEY. Fantastic. I just want to point out last year 
in CFPB, Community Financial Services Association of America 
the Supreme Court upheld in a 7-2 decision the CFPB's funding 
as constitutional. If we do get to take back the Supreme Court 
ruling in this committee, I would like to start with a few 
myself, maybe with Dobbs and Citizen's United. But for the 
moment it is constitutional so we will keep it there.
    I want to agree with something that was said earlier, the 
American dream is alive and well and powered through our small 
businesses. So is the American economy powered through our 
small businesses. But let us zoom out and take a macro look at 
what is happening right now because even though Donald Trump 
came into office campaigning on lowering costs and lowering 
inflation what we are seeing right now in the number coming out 
today is an incredible rise in inflation, 3 percent over last 
year. In fact not just take last year, it is the fastest 
growing month for inflation since August 2023. We are seeing 
the cost rise in everything from gasoline to groceries to the 
things that our consumers use, which of course has an impact on 
our small business community. This inflation is driven at least 
in part by the tariff policies of the Trump administration.
    I want to read you something. In Kentucky, local store 
owners are already hearing about their suppliers prices going 
up. One estimate suggests the president's tariffs could cost 
the average Kentuckian up $1,200 each year and it is not just 
about rising prices here at home. During the last Trump 
administration retaliatory tariffs from trade partners set off 
a broader trade war that hit wide swaths of American industry 
from agriculture to manufacturing to aerospace and motor 
vehicles to distilled spirits. I am not quoting from some 
liberal publication here. I am quoting from Senator Mitch 
McConnell's op-ed to the Courier Journal today. On top of the 
rising prices and rising cost to consumers and our small 
businesses are making we are seeing the Fed not cut the 
interest rate, which is going to again have an impact on our 
small businesses and if that is not enough, the Trump 
administration last month froze funding at every single SBA 
capital access program, which we have heard time and again on 
this committee that our small businesses to succeed, to grow, 
to start use that capital access provided by the SBA as such a 
lifeline. So I think we have to zoom out and look at what is 
happening to our small businesses and make sure that we are 
going in the right direction where there costs are indeed 
lowered so the consumers can buy things, our small businesses 
can grow, and our economy can continue to thrive.
    I have a question for Ms. DeArment. Where you conduct 
business in rural Montana, just like in my state, farmers and 
ranchers are going to see their market shrink thanks to Trumps 
tariffs. They will force manufacturers in my district to make 
the hard choice between swallowing increased in put costs and 
cutting jobs or passing them along to their customers. Could 
you briefly explain about why these SBA capital programs are 
important alternatives for small business in this kind of 
restricted lending environment that we find ourselves?
    Ms. DEARMENT. Yes. One of the best things about the SBA 
programs that we use is that they provide capital to CDFIs and 
SBA lenders like us to use in rural areas. That capital is very 
limited, and it is one of the only sources we have to reach 
into some of the most rural or most depressed land values, 
building values, depressed areas. Without them fewer businesses 
would get funded in rural America.
    Mr. MCGARVEY. And we know that community lenders support 
veterans, rural Americans, other traditionally underserved 
groups. Just briefly because we've got a little less than a 
minute left, what would happen if rural communities lost access 
to these SBA resources? What would it mean for farmers and 
ranchers in your state?
    Ms. DEARMENT. I think the biggest thing we would see is 
fewer business starts. Most of the businesses we fund using 
these SBA programs are business starts and banks and credit 
unions are funding these businesses, so these programs are what 
they have.
    Mr. MCGARVEY. Thank you so much. Mr. Chairman, I yield 
back.
    Chairman WILLIAMS. The gentleman yields back. And I now 
recognize Mr. LoLota from the great state of New York for 5 
minutes.
    Mr. LALOTA. Thank you, Mr. Chairman. Thanks for hosting 
this important hearing today for the witnesses for traveling 
here to be with us.
    Ensuring America's small business have access to capital is 
fundamental to America's economic success and that starts by 
empowering community banks and credit unions not just as 
lenders but as trusted partners that fuel local economies, 
create jobs and drive growth. For too long burdensome 
regulations, inflation and misguided policies have restricted 
the flow of capital making it harder for small business's to 
expand. Fortunately, community banks and credit unions remain 
steady fast allies of America's small business offering 
personalized lending solutions and building relationships that 
big banks simply can't. Through vital federal programs like 
7(a) and 504 loan programs, the Small Business Administration 
partners with these lenders to create jobs, drive economic 
grown and strengthen our communities. But for these programs to 
truly help small businesses we must cut red tape, reduce costs, 
and ensure access to affordable capital. With the right 
policies we can unleash the full potential of America's small 
businesses allowing them to thrive, innovate, and power 
America's economy moving forward. This leads me to my first 
question. Mr. Hooper, thank you for being here today, sir. 
You're the CEO and Chairman of a regional bank and in your 
testimony you highlighted how compliance costs at your bank 
have doubled since 2021 with an estimated $10.9 million 
annually spent on regulatory compliance. This committee 
understands, sir, that regulations like the CFPB's 1099 rule 
adds significant reporting burdens making it harder for 
community banks to compete with larger institutions. So my 
question is this, Mr. Hooper, how has the 1099 rule and the 
broader regulatory environment impacted your ability to provide 
capital to small businesses?
    Mr. HOOPER. So I would say generally speaking the 
regulatory environment that we have in general we spend a lot 
of time on that and so a lot time, resources and frankly the 
1099 rule, are you referring to the 1,099 pages of the 
legislation relative to, that came from the Dodd-Frank Act?
    Mr. LALOTA. Yes.
    Mr. HOOPER. Okay. So, you know, we had to form an entirely 
new department after the implementation of that so that we 
could make sure we were compliant and could do it well and so 
it is incredibly burdensome. It's tough on our customers 
especially our small business customers who want to get a 
mortgage. You can just sense when they walk in if they own a 
business that they know, you know, the reporting requirements 
for them is elevated and frankly getting a mortgage is much 
harder for them in many cases than it is, you know, sometimes 
our other, our other types of businesses.
    Mr. LALOTA. And Mr. Hooper, if you didn't have to spend 
those resources doing that burdensome, onerous regulator 
compliance, could you use those resources to increase the wages 
of your employees, decrease the cost for your consumers and 
otherwise invest that money in better areas?
    Mr. HOOPER. Absolutely.
    Mr. LALOTA. Awesome, sir. Mr. Sims, you're the chief of 
commercial banking officer of Georgia's Own Credit Union. You 
have been the leading SBA lender with a strong record in both 
the SBA's 7(a) and 504 loan programs. However, sir, you noted 
in your testimony that administrative complexity and slow 
response times from the SBA often create challenges for credit 
unions trying to efficiently serve small businesses. So my 
question is this, what specific or forms to 7(a) and 504 would 
help credit unions expand access to capital while at the same 
time ensuring these programs remain sustainable and effective, 
sir?
    Mr. SIMS. Thank you, Mr. LaLota for the question. Again go 
back to the programs. The programs themselves are very good. 
The processes are not as good. I can point to specific examples 
within our organization where we've seen a decline in our SBA 
production from 2022 to 2024 to the tune of about 25 percent. 
The vast majority of that has to do with burdensome regulatory 
environments and process and procedures associated with moving 
applications through the SBA process. So it's a time drain. 
Money does not get to your business member as quickly as they 
would like it and quite frankly the, really the first reaction 
that I get when I talk to business members about using SBA 
tools as a vehicle for their financing is I have to sell 
through the reputation that the SBA has for inefficiency and 
the time to take a loan from soup to nuts.
    Mr. LALOTA. Great, sir. And I only have a few moments 
remaining, but Mr. Wetegrove I read in your bio, 34 years in 
the Army, retired as a colonel. Appreciate your service, sir. 
Real quick with about 15 or 20 seconds, how would you reducing 
unnecessary costs and regulatory burdens impact your ability to 
expand, hire more employees, make more loans, sir?
    Mr. WETEGROVE. Yes. Thank you for providing the question. 
It would of course allow me and others to be able to expand 
more aggressively and be able to employ additional people and 
service the community.
    Mr. LALOTA. Thanks for your time, sir. Appreciate it. I 
yield.
    Chairman WILLIAMS. The gentleman yields back. I now 
recognize Ms. Scholten from the great state of Michigan for 5 
minutes.
    Ms. SCHOLTEN. Thank you, Mr. Chairman. I just want to 
clarify that there is no CFPB 1099 rule. You know, I think that 
was testimony that was getting a little muddled and it is 
important to get that into the record. You know, also earlier 
this week we extended Fin Cen's beneficial ownership 
requirements through Mr. Nunn, a bill that passed on suspension 
in this house. I want to turn to some critically important 
things here for West Michigan. Ms. DeArment, I understand that 
your organization is an SBA certified community advantage 
lender. My district in West Michigan is home to many hub zone 
areas which are historically under-utilized business zones. The 
hub zone program establishes a goal of awarding 3 percent of 
federal contracting dollars to hub zone certified businesses 
each year. Ms. DeArment, your testimony points out that the 
community advantage program was designed to enable lenders to 
reach into communities that might otherwise have trouble 
accessing the capital that they need. Can you explain how this 
program can boost HUBZones like the ones that we have in West 
Michigan?
    Ms. DEARMENT. Absolutely, HUBZones like other low-income 
communities don't have the same asset value and they are harder 
to lend in. When you go into look--for us in our experience 
when we go into lend there we often have expenses going into 
buildings or revitalizations that don't then pan out in 
appraisals. The SBA Community Advantage can right that ship 
when you're underwriting a loan and get capital to borrowers 
who don't qualify for a bank loan or a credit union loan that 
are absolutely credit worthy to build the business, be 
successful, get a CA loan and eventually graduate back into 
bankability.
    Ms. SCHOLTEN. Thank you so much. Mr. Wetegrove, first and 
foremost I want to thank you for your service to our nation and 
your accomplished career in the Armed Forces. As a Co-Chair of 
the congression franchise caucus, I also appreciate your story 
of how you came to be and grow Camp Bow Wow. We have a number 
in our district and our beloved family dog, Smokey, has 
utilized those services as well. So, you noticed, you noticed 
the importance of acquiring 7(a) loan to start your business. 
Can you explain how this program was critical to the long-term 
success of your business?
    Mr. WETEGROVE. Yes, absolutely. Thank you for the question. 
I don't think I could have gotten any other type of financing 
at the time. And, you know, even though some of the 
requirements were, they're not as strict as the conventional 
type process so I, you know, greatly appreciated that. There's 
a more flexible structure in the SBA program other than the 
convention process. Even though the underwriting was very 
comprehensive, it was manageable at the time. The partner that 
I was utilizing to give me the loan, you know, provided me 
counseling along the way and was very instrumental in the 
lending process. And I just really appreciated everything that 
kind of came to the table because I just think that there's so 
much more background in the SBA lending program. Thank you.
    Ms. SCHOLTEN. That is true. Yes. Absolutely. Thank you. And 
one more for you, Ms. DeArment. The microloan program provides 
up to $50,000 to help not only small businesses but certain 
nonprofit childcare centers to grow. As a mom of two I know all 
too well how critical childcare services are in bolstering our 
economy especially to those trying to grown their small 
businesses. Can you speak to how the microloan program 
addresses the growing need for childcare services in our 
country?
    Ms. DEARMENT. Yes. One of the great things about the 
microloan program is it provides technical assistance dollars. 
We see a lot of, especially women come in and say I'd like to 
start a childcare business, but they don't know where to start. 
They don't know how to put together a financial projections, 
find a facility or use their home. These TA dollars allow us to 
bring an advisor in to help write a business plan, create 
financial projections, find a lease, get legal services, and 
get them set up for success. Once they're set up for success 
and have a microloan in place those businesses do really well. 
It's a perfect program because it combines those two 
components.
    Ms. SCHOLTEN. Thank you. I yield back.
    Chairman WILLIAMS. The gentlelady yields back. I now 
recognize, Mr. Jack from the great state of Georgia for 5 
minutes.
    Mr. JACK. Well thank you very much, Mr. Chairman, and I'd 
be remiss if I didn't start by acknowledging one of my guests 
in the audience today, the Chairman of Georgia's Small Business 
Development Committee in the House of Representatives, Mr. Mike 
Cheokas. Chairman, thank you for being here today. And likewise 
to our witnesses. Thank you very much for testifying before our 
committee. As we continue to navigate the complex and evolving 
challenges facing small businesses it is crucial that we 
recognize the vital role credit unions and community banks plan 
in providing accessible, affordable financial services to 
entrepreneurs, particularly those in our underserved and 
economically disadvantaged communities. I would like to of 
course because we have a Georgian in the audience today, I 
would like to direct my questions to Mr. Sims who leads 
Georgia's Own Credit Union in my home state. And first and 
foremost I would like to start by asking you, and I think in 
your testimony you note that over 240,000 members are served 
across our state of Georgia. How many employees do you have in 
our state of Georgia?
    Mr. SIMS. Yes, sir. We have currently over 700 employees 
working at Georgia's Own Credit Union.
    Mr. JACK. And with my district if I'm not mistaken I think 
you've got two Branches. You have one in Douglas County and one 
in Fayette County. Is that correct?
    Mr. SIMS. Yes, sir.
    Mr. JACK. So what I find interesting particularly within 
your testimony is just how successful Georgia's Own Credit 
Union has been, recognized throughout the state, and the, you 
know, the impact that you have on our community is evident. I 
mean one of the areas of Georgia that is booming in growth is 
Fayette County, Douglas County, as you get a little further out 
from Atlanta we are seeing enormous economic growth in large 
part fueled by small businesses and those small businesses are 
often dependent on the credit unions much like your own. So I 
would like to ask, I think in your testimony you noted that you 
were recognized as the number 1 credit union in the state of 
Georgia. You know, what are some helpful tips and practices you 
would advise our committee to engage upon to help continue to 
have business thrive especially in my home state and district?
    Mr. SIMS. Yes, thank you, Congressman Jack. Appreciate the 
question very much and recognition of the performance of 
Georgia's Own from an SBA lending perspective inside of the 
state and that is a record that we're very proud of and we've 
been ranked number 1 credit union over the last 5 years, always 
in the top 5 from an in-state production level as well. And 
again I think I would get back to the conversation that we had 
a little bit yesterday and also with Chairman Williams is 
leveraging our local district offices. I think there's a great 
role for them to be able to play in supporting both those of us 
that are in SBA lending, and you heard Mr. Hooper talk about 
having to build the infrastructure to be able to do that 
appropriately and it takes a lot of investment to do that. It 
can be that investment can be mobilized and amplified with help 
from our regional offices.
    Mr. JACK. And for my colleagues across the committee and 
for everybody watching there is a lot of debate right now over 
tax reform and some of the taxes that are coming up, can you 
illustrate to all of us what the consequences would be and for 
not just consumers, people dependent on the credit union but 
the broader economy if the tax exemptions currently afforded to 
credit unions were to be reduced or eliminated this fiscal 
year?
    Mr. SIMS. Yes. Thank you for that question. As you know 
credit unions would turn over $36 billion to the economy 
annually thanks to that tax exemption at a cost of just under 
$3 billion to our taxpayers. And so there's a multiple return 
on that. I think a eliminating or changing the credit union tax 
exemption would change the nature of how we do business and 
what we're trying to accomplish with our business members and 
quite honestly I think you would see a fewer, you would see 
fewer credit unions in specially rural markets which would lead 
to fewer, just to deployment of capital even underneath the 
SBA's program and so I think that would be a detriment quite 
frankly to small business members as well as consumers in the 
market place.
    Mr. JACK. Well I appreciate that. I am not going to take 
much more time but I just want again illustrate as all of us 
are working across this distinguished body to advance agenda 
that we all were elected to advance, I think it is critical 
that we remember the impact of some of the tax provision we are 
considering visa vie reconciliation at the same time, too. I 
think we were all elected to advance pro-growth, economic 
policy, that is one of the reasons why President Trump earned 
the historic victory that he did and why more Americans voted 
for house Republicans this time than ever before. So I am 
grateful for your testimony. I am grateful for all the 
witnesses being here today and Chairman thank you very much for 
letting me bring my own Chairman from Georgia Small Business 
Committee in the House of Representatives of Georgia to our 
hearing today. Thank you.
    Chairman WILLIAMS. Gentleman yields back. I now recognize 
Mrs. McIver from New Jersey for 5 minutes.
    Mrs. MCIVER. Thank you Chairman and Ranking Member for 
having this hearing today and to each of our witnesses, thank 
you so much for joining us on a very snowy day and making your 
way here.
    Accessing capital is a critical early step that our nation 
entrepreneurs must take to turn their business ideas into 
reality and a much-needed push for businesses fighting to 
expand. As our Ranking Member said, we all know the critical 
investments into small businesses made by the Biden-Harris 
administration helped millions of business owners to start 
small businesses and last four years, in the last four years. 
Many of whom come from underserved communities. We saw business 
ownership rates double and reach a 30 year high among 
communities of color. My district alone in the great state of 
New Jersey in the 10th congressional district, home to nearly 
2,000 minority owned business. They definitely benefitted from 
the efforts of the last administration. As we continue through 
this congress we must be mindful to protect the progress made 
by these communities.
    With that I would like to throw my first question to Mr. 
Sims and Mr. Hooper. Each of you represent a different and 
critical part of how the SBA can help small businesses access 
capital. This is especially critical to protecting the gains 
made by underserved communities in recent years. In your view 
what more can congress do assist small businesses in accessing 
capital from institutions like yours?
    Mr. HOOPER. Thank you for that question. I think a couple 
of ways. One is, you know, we can continue to expand the SBA 
resources which can be a benefit for some of our customers and 
I think just make the system less cumbersome. Additionally if 
we reduce the cost due to regulatory changes because it's an 
ever-evolving landscape. That would allow us to then spend some 
of those same dollars on bankers who actually can go and work 
with clients again rather than, rather than us investing large 
sums in oversight of compliance side.
    Mrs. MCIVER. Thank you.
    Mr. SIMS. Thank you, Ms. McIver, Congressman McIver. I 
would suggest that again the programs are really good. They are 
very flexible. You heard Mr. Wetegrove talk about the 
flexibility of the program that allowed him to put his business 
together. So I would encourage congress to encourage the SBA to 
focus on their core competency and that is how can we eliminate 
the burden of excess policies, processes, and procedures in 
order for us as the distributed lending force that's in the 
marketplace that are talking with business members on a day-to-
day basis, and we understand what they're looking for in the 
structure and how do we capital into their hands more quickly 
and more efficiently.
    Mrs. MCIVER. Thank you for that. I would also like to ask 
the panel about their thoughts on the Consumer Financial 
Protection Bureau. The CFPB has recovered over $21 billion for 
consumers who have been victims of abusive and illegal activity 
with a budget of less than $700 million. How do you propose the 
government protect consumers from crooks in the open market if 
it no longer exists? That is to each panelist?
    Mr. HOOPER. I think if the CFPB did not exist there are 
other regulatory agencies that can provide similar services. We 
already have several, you know, that oversee the financial 
industry and so I think you could easily push some of those 
same, some of those same oversight activities to some of those 
other agencies that already exist?
    Mr. SIMS. And I would agree. I would suggest that credit 
unions believe in the importance of consumer protection laws 
and then having an entity to regulate otherwise unregulated 
entities is critically important. Don't have a position on the 
CFP elimination but the industry has long advocated for change 
to make consumer bureau a bipartisan commission. Unfortunately 
under that current structure the Bureau has to become overly, 
or has become overly political, and I think the focus needs to 
be on those unrelated entities that would be regulated.
    Mrs. MCIVER. Okay. Any feedback from you, Mr. Wetegrove?
    Mr. WETEGROVE. I would just agree with them since I don't 
know much about your question. Sorry.
    Mrs. MCIVER. Okay. And I know we have, I am not sure if she 
is still on, Ms. DeArment who is on?
    Ms. DEARMENT. Yes.
    Mrs. MCIVER. Oh okay. Would you like to chime in in the 
couple of seconds that I have left?
    Ms. DEARMENT. The one thing that I would say is that 
working with low wealth borrowers they fall victim to predatory 
online lenders and so we would want to make sure that that 
protection is extended to people regardless of whether or not 
they have resources.
    Mrs. MCIVER. Thank you. I am out of time. Thank you.
    Chairman WILLIAMS. The lady yields back. I now recognize 
Ms. King-Hinds from the Northern Mariana Islands for 5 minutes.
    Ms. KING-HINDS. Thank you Mr. Chair and thank you to all 
the witnesses who braved the storm today. I am from the 
Marianas where it is about 75 degrees right now. So this 
weather it not in the business for me.
    It is very encouraging to hear about the optimism and 
resilience among small business across the United States. But 
as we have heard optimism--as we have heard optimism alone is 
not enough. It must be backed by a financial system that 
empowers small businesses with the capital that they need to 
thrive. We have seen how entrepreneur respond to the economic 
optimism, taking risks and investing in growth. But that 
optimism along does not drive lending decisions. It is the 
outlook of financial institutions that determines whether 
capital flows into communities and businesses. When banks see 
potential for secure returns they invest. When uncertainty 
looms a vicious cycle takes hold. Businesses struggle, lending 
slows and economic recovery stalls. Right now my district is 
caught in that very same exact cycle. In an economy where banks 
see no path to recovery, even the brightest most promising 
entrepreneurs find their potential stifled. Lenders hesitate, 
investments dry up, and businesses are left to fend for 
themselves. Small businesses in my district aren't giving up. 
They are fighting for recovery. But in speaking with business 
owners more and more they are being forced to rely on high 
interest credit cards and personal loans just to say afloat. 
Unlike the rest of the U.S. where consumer debit is 69 percent 
of the size of commercial and industrial loans, in the Northern 
Mariana Islands consumer debt is 180 percent of commercial 
lending. That is just unstainable. Small businesses should not 
have to shoulder the burden of economic recovery alone and so, 
you know, I wish we had a credit union back home from where I'm 
at. We only have, we have, we are down to two banks right now, 
three banks and so this is more of a broad question for Mr. 
Hooper. How can the federal government help small businesses in 
communities where industries have collapsed or remain in 
decline? So basically in these economic conditions where we are 
caught in this vicious cycle, how can the federal government 
assist to be able to allow for access to capital?
    Mr. HOOPER. You know, I think as Mr. Sims noted the SBA 
programs that exist are good programs. And so I think 
continuing to make those more manageable for the consumer as 
well as the banks that are putting those programs into place 
with the customer I think is one way, just to make it less 
burdensome. You know that I would say that's probably one of 
the primary ways. Additionally if interest rates come down a 
little more I know many of our customers would appreciate lower 
borrowing rates, which also make it more manageable from a 
small business perspective as far as them managing their 
budgets with other inflationary pressures they already have.
    Ms. KING-HINDS. All right. Just a quick follow up question. 
In your written testimony you spoke about the fact that it is 
just not just the beginning of the application process but the 
bank's ability to go and recover those SBA guarantees. Can you 
speak us to the challenges with regards to that particular 
issue?
    Mr. HOOPER. Sure. I'm actually in the middle of one right 
now. We're in our second year of trying to do the recovery. 
Part of the dilemma is once you go down that road and you start 
through liquidation you have to liquidate everything that you 
had as collateral as well as pursue all other opportunities for 
recovery and it could be a variety of different things. You 
have to do all of that before you can go back to the SBA to get 
the SBA to honor the guarantee that they gave at the inception 
of the loan. So the other difficulty that exists within that is 
like others had mentioned getting communication from SBA can 
prove difficult and some of the answers we get at times are 
vague and so which also puts us in a precarious position 
because if we don't make the right choices as we go through 
that liquidation process and that recovery process it has the 
potential for the SBA to claw back potentially some of that 
guarantee when we get to that stage of the process.
    Ms. KING-HINDS. Which would I presume discourages lending?
    Mr. HOOPER. It certainly makes it harder if we don't have 
clear, you know, expectations and understanding of how the SBA 
is going to respond.
    Ms. KING-HINDS. All right. Thank you. I yield the rest of 
my time, Mr. Chairman. Thank you.
    Chairman WILLIAMS. Gentlelady yields back. I now recognize 
Mr. Cisneros from the great state of California for 5 minutes.
    Mr. CISNEROS. Thank you, Mr. Chairman. Mr. Sims, you noted 
in your testimony the legislative purpose of Section 1071 is to 
facilitate enforcement of fair lending laws and to enable 
communities, governmental entities, and creditors to identify 
businesses and community develop needs and opportunities of 
women-owned, minority-owned, and small business. We all seem to 
want loans that are more transparent and more equitable and 
more responsive to the needs of all borrowers. You know, in my 
community a lot of our community banks have kind of been eaten 
up by the bigger banks. There really aren't too many here in 
California. Credit unions have kind of helped to kind of fill 
that void. But I feel there is a need to kind of protect those 
banks. How do we protect those? Beside a regulatory questions 
what are other steps that we on the committee can take to 
ensure that community lenders are strong and competitive to 
support small businesses, and I will open that up to the panel 
to see whoever wants to answer?
    Mr. SIMS. Thank you Congressman Cisneros. Again I get back 
to the similar comments that you've gotten from Mr. Hooper 
here. Products are good and SBA in particular products are very 
good. Process is not good and the 1071 rule adds to the burden 
associated with that and in many cases it's going to be an 
increased cost for us to comply, also increased cost for the 
business member to comply. And I truly believe that you will 
see many business members, business owners not seek capital to 
inject into their business because of the reporting 
requirements that we're asking for them as they come into to 
try and access capita.
    Mr. CISNEROS. Anyone else care to respond? You want 
nothing? Oh.
    Mr. HOOPER. No. I was going to say I think Mr. Sims had a 
great answer, so.
    Mr. CISNEROS. Okay. Sounds good. But what other steps, I 
will say in order to protect these community banks who are the 
lenders to our small businesses, big banks don't like to do 
small loans. What steps can we take to make sure that we 
protect your interest to ensure their survival, and they don't 
get gobbled up by bigger institutions?
    Mr. HOOPER. Well I can tell you I've been a community 
banker my entire career and I love it. It's something that I 
hope never changes and something I can do for the remainder of 
my career. You know, being a community banker means that it's 
the business owners and the customers we work with are the same 
people I see at church, the same people I see in the grocery 
store, the same people I see at a restaurant on Friday night. 
It's the people we live with and are part of the fabric of the 
same community in which we live and so their success means 
success for the community and, you know, we are part of that 
community and success for the bank. And so I think, you know, 
community banking is a necessary tool because it starts with at 
the very personal relationship level. And we walk hand and hand 
with our customers and are a proven financial partner over the 
years for them.
    Mr. CISNEROS. All right. Thank you. Ms. DeArment out there 
on the Zoom. Thank you for supporting women-owned small 
businesses across the Northern Rockies and according to the SBA 
summary report last report last year, 73.8 percent of total 
dollar amount for 7(a) loan approvals went to male owned 
businesses as did 71.2 percent of total dollar amounts for the 
504 program. The Montana Community Development Corporation had 
23 approved microloans in fiscal year 2024 in Montana alone. 
SBA microloans offer funding to traditionally underserved 
businesses such as women-owned business, SBAs also fund 
business development centers, loan programs, federal contract 
opportunities among others to focus on women and minority owned 
businesses. Last month the SBA awarded $26.5 million to create 
13 new women business centers and support 17 existing centers 
across the country. If President Trump isn't stopped and 
doubles down these programs funded by the SBA are at risk to be 
effected by a freeze in federal funds. What would the impact 
for access to capital for the women-owned businesses have for 
you?
    Ms. DEARMENT. Well I think what we've seen is that women 
have some special challenges. Their credit scores often go down 
when they have kids and leave the workforce. Their assets go 
down when they leave the workforce. And so just like everybody 
else who's low wealth or low income they have a very hard time 
getting a bank loan especially when they're starting out. The 
SBA programs allow us to wrap services around these people to 
help them create business plans and financial projects and get 
legal help and start their business and then within a couple of 
years become bankable. Without those programs the on-ramp into 
bankability will not exist.
    Mr. CISNEROS. All right. Thank you for the answer. I yield 
back.
    Ms. KING-HINDS. I now recognize Mr. Downing from Montana 
for his 5 minutes.
    Mr. DOWNING. Thank you, Madam Chairwoman. Community banks 
are the economic life blood in rural communities across the 
nation providing tailored relationship-based banking services 
for small businesses. In Montana's 2nd District, which I am 
proud to represent, community banks help businesses like small 
farms and local stores access the capital that they need to 
thrive. Regulatory red tape and inflationary policies 
particularly under the Biden administration have crippled 
community banks. In my home district we have seen the number of 
community banks drastically decrease hurting the ability of 
local employers to hire workers and reinvest in their 
businesses. The Trump administration is how championing bold 
reforms to how the government functions promising to cut 
unnecessary regulations that have hindered entrepreneurship, 
and I am incredibly optimistic about our economic future under 
President Trump's leadership. And I look forward to seeing what 
incoming Small Business Administrator Kelly Loeffler will do to 
reinvigorate support for our communities banks. So to start off 
I am going to start with Mr. Hooper.
    Through your operations in Texas to what extent do you 
provide services to rural businesses such as small farms?
    Mr. HOOPER. Thank you for that question. That's one of the 
unique things about the company I work for. First Financial is 
spread all across the state. We have 79 locations. Many of 
those locations are in Far West Text and up in the panhandle 
and those are predominantly agricultural, you know, 
communities. And so last year alone we originated $54 million 
in agricultural loans, many of those are going to be probably 
in the South Texas and then up in the panhandle in West Texas. 
So and a lot of those are smaller communities that we're able 
to partner with those businesses owners for those Ag loans.
    Mr. DOWNING. What do you see are the biggest challenges in, 
you know, small farms, accessing capital?
    Mr. HOOPER. Well I live in Texas. The weather is always the 
biggest challenge but we can't fix that one and so but I would 
say just again if we are more accessible through the reduction 
of some of the burdens we have on a regulatory side I think 
that it allows us to be better bankers.
    Mr. DOWNING. And how do you see your business and, you 
know, how your rural business and your partners or your small 
farms, et cetera, compared to, you know, larger national banks? 
What do, how do you compare those?
    Mr. HOOPER. Again I think back to my comments earlier those 
are the same people we live with in the community. Those are, 
and that's why we're hand and hand with them because their 
success is our success.
    Mr. DOWNING. Right.
    Mr. HOOPER. And so, but I think that's something you only 
get when you're part of the same fabric of the community that 
they are.
    Mr. DOWNING. Yes, I agree. What in your experience are the 
most effective SBA programs in promoting access to capital in 
rural communities, especially local farms?
    Mr. HOOPER. The 7(a) program is very good. It provides 
longer terms than we might normally have on conventional 
financing and the 504 program we've used extensively is great 
as well.
    Mr. DOWNING. Great. Since the 2008 recession, the federal 
government has implemented numerous regulatory reforms that 
have disproportionately burdened community based financial 
institutions. So to Mr. Sims, how have these regulatory burdens 
hurt your institutions?
    Mr. SIMS. Thank you Mr. Downing for the question. I think 
it principally manifest itself in additional staff and 
resources and infrastructure that we have to put in place in 
order to comply and appropriately comply with that regulation. 
And honestly it takes us away from what we do best, which is to 
be out in the marketplace and trying to serve our business 
members in finding the right capital vehicle for them as 
they're seeking to either grow, expand, buy new businesses.
    Mr. DOWNING. All right. Thank you. Mr. Hooper, anything to 
add to that?
    Mr. HOOPER. No, sir.
    Mr. DOWNING. So to actually either one of you, how can 
congress and the Trump administration, you know, fix this?
    Mr. HOOPER. Again I think reducing the regulatory burden. 
It's just such a huge piece of what we deal with on a daily 
basis and so I think that's first and foremost one of the 
things that needs to be tackled to allow us to be bankers 
again.
    Mr. DOWNING. Appreciate that. And thank you for you 
answers. I think your responses have demonstrated how important 
community banks are in thriving rural economies. And I look 
forward to the Trump administration eliminating unnecessary 
regulatory burdens and empowering local banks, credit unions 
and other financial institutions. And on that I yield back. 
Thank you, Madam Chairwoman.
    Ms. KING-HINDS. Thank you. I now recognize Mr. Tran from 
California for 5 minutes?
    Mr. TRAN. Thank you, Madam Chair. I want to welcome and 
thank the witnesses for being here. Ms. Dearment, I probably 
represent the largest and oldest Vietnamese community in the 
United States known as Little Saigon. This community is a 
symbol of resilience and entrepreneurial spirit and serves as a 
thriving center for Vietnamese Americans and small business and 
a key part of our Orange County's economy. Little Saigon is a 
successful because Vietnamese people are tenacious and 
resourceful. However this can only get you so far and time and 
time again I hear from the Vietnamese community that because of 
limited language capacity and lack of understanding of the 
financial system they are unable to access capital and make 
that leap of faith to start a small business. In fact we know 
that minority-owned businesses are less likely to be able to 
obtain a bank loan and often start out with just half as much 
capital as their White owned businesses. My question to you is 
how does your loan underwriting process differ to accommodate 
applicants with limited credit history or limited English 
proficiency and what impact has that flexibility had had on 
increasing loan access in underserved communities?
    Ms. DEARMENT. Thank you for the question. We rely on the 
microloan program to reach communities that often don't start 
at banks or banks aren't the first place they go. They might go 
to friends and family limiting their capital. The microloan 
program comes with technical assistance dollars so we can get 
out in the field, meet with business owners, meet with 
community leaders, pastors, find folks that are in the exact 
situation that you talk about. We also bring in outside folks 
to help them through the loan application process in whatever 
language they need. And with the flexible underwriting 
standards that a CDFI has we don't rely on wealth or assets or 
prior business experience. So we're able to provide these wrap 
around services long proceeds as well as any type of process 
they need to enter the financial mainstream. And once they're 
in one of the nice things about those microloan TA funds is 
that once they're in we are instantly trying to find a banker 
or a commercial lender at a credit union that can pair with 
that small business owner and overtime build a relationship to 
onboard them back into the financial system. When we do that 
then we see their friends and family start going to that bank 
and it creates a system where we become less needed overall in 
that community.
    Mr. TRAN. Thank you for that answer. Mr. Wetegrove, Orange 
County's economy thrives thanks to the hard work of committed, 
dedicated and resourceful small business owners. As a small 
business owner myself before coming to congress I can say that 
it is not easy owning and running a small business and we face 
issues that are uniquely different from large corporations. And 
issue that I have faced and have commonly head about from small 
business owners from Orange County is limited access to 
capital. My question to you is on this side of the aisle we are 
always looking for ways to improve awareness of SBA's capital 
access programs and the benefits they provide. As a small 
business owner now did you become aware of SBA's capital access 
program and how do you think we can help improve awareness of 
these programs for borrowers.
    Mr. WETEGROVE. Thank you for the question. So when I first 
started with Camp Bow Wow I was introduced to certain parties 
that made me more aware of, you know, these opportunities for 
seeking financial assistance. My father was an onion farmer in 
South Texas, and he was always borrowing money, and I always 
remember him, you know, contemplating on the terms and stuff 
like that. So but to answer your question specifically I know 
that there's small business development center. It's at the 
University of Texas in San Antonio. And I think that's critical 
because I meet a lot of people that are, that want to start 
their own business because they want the entrepreneurial story. 
Right? And so I was pushing them to that entity in particular 
because I know that they're there for, you know, the assistance 
and the SBA help. But anything that would advertise in a 
entrepreneurial magazine or something like that would be 
extremely beneficial.
    Mr. TRAN. Thank you for your answer. Mr. Sims, credit union 
member business lending cap is limited by statute. The statue 
limits both the aggregate amount of lending and lines of credit 
for a commercial purpose. A credit union can make up to a 
specific borrower as well as the aggregate amount of commercial 
lending a credit union can make. Can you briefly explain the 
member business lending cap and how does this affect veterans 
who are looking to start and grow a small business?
    Mr. SIMS. I'm sorry. Thank you, Congressman Tran. The MBL 
cap has really two limitations on my business lending activity. 
One, it is set at 12.25 percent of assets of my organization. 
So as I approach that number I have to modify my business 
activities in the marketplace, which might mean for example for 
a veteran-owned business I may be unable to make that loan 
because I have approached that cap. I think there's a couple of 
things that also go into that. The number of loans, the amount 
of loan that counts underneath that cap is $50,000. It was 
established in 1998. I see your face reacting to that. It 
hasn't adjusted since that time. An example or recommendation 
that I might have would be to put that at the SBA, small 
business level which would be 350, so how you would have two 
loans that are out there that mirror up with each other?
    Chairman WILLIAMS. Gentleman's time is up.
    Mr. TRAN. Thank you, Mr. Sims. I yield back, Mr. Chairman.
    Chairman WILLIAMS. Now I would like to recognize Mr. 
Finstad from the great state of Minnesota for 5 minutes.
    Mr. FINSTAD. Thank you Chairman Williams for holding this 
important hearing today and thank you to our witnesses for 
braving this weather although I find it laughable being from 
Minnesota that this is a weather event. This is dusting back 
home. So as a small business owner myself I understand the 
important role our rural lenders play in allowing individual to 
pursue the American dream. We have great opportunity in the 
119th Congress to make meaningful changes that revitalize main 
street businesses, ensure new business owners have access to 
capital. I look forward to working with the Trump 
administration and the Members of this committee and our local 
financial institutions to reform the small business 
administration into a transparent and accountable entity that 
strengthens rural communities and drives economic growth across 
our nation. With that being said I year quite often from small 
business across my district and across rural America that 
sometimes feel like the SBA treats them like flyover land and 
really a lot of times where small businesses have interfaced 
with the SBA is through our lenders. You are the face of the 
programs to our small businesses and so you know the programs 
well. So my question is for Mr. Sims. As you know small 
business across rural American rely heavily on the 7(a) and the 
504 lending programs. Over the past four years what changes 
have you seen to the 7(a) and the 504 program and what impacts 
have your customers felt on these changes.
    Mr. SIMS. Thank you for the question Congressman. The vase 
majority of the changes that we have seen over the past four 
years have to do with the standard operating procedures of the 
SBA lending program so the SOP. The programs themselves, the 
loans themselves, the structure and the terms are very good. 
The process associated with engaging with the SBA and helping 
our business members navigate that, those processes is the most 
cumbersome piece of the equation.
    Mr. FINSTAD. Would you say those changes have made it more 
usual for our small businesses to access those programs or 
really burdensome and created another roadblock?
    Mr. SIMS. Much more burdensome and it comes in two 
fashions. One is from an SBA lender, if you recall it from 
Georgia's Own specifically, we're the number one credit union 
producers in the state of Georgia so we have a really 
experienced staff. And as the SOP changes on an annual basis we 
have constantly got to go back in and figure out what those 
changes look like and in many cases they don't make a lot of 
sense. And what that does is slow down the process. And hen we 
have to translate those changes to our business members as we 
engage them in capital access.
    Mr. FINSTAD. Do the small business that you work with have 
a stable full of lawyers, compliance officers and regulation 
folks that can navigate this?
    Mr. SIMS. That's probably a better question for Mr. 
Wetegrove over there when he was----
    Mr. FINSTAD. Do you got a stable full of lawyers and 
regulators and compliance officers?
    Mr. WETEGROVE. You're looking at him I'm sure.
    Mr. FINSTAD. So there poses an opportunity and a challenge 
for I think this committee and this congress is to, you know, 
clean up some of the stuff that just doesn't make some sense 
and make these programs again good, solid, historical programs 
that we know have worked.
    Mr. SIMS. Very good.
    Mr. FINSTAD. but if they are sitting on a shelf because we 
can't get out of the way of ourselves then it is just a good 
program sitting on a shelf. So I will turn this a little bit 
here to Mr. Hooper. I have heard from several organizations 
across Southern Minnesota regarding the confusion around the 
beneficial ownership rule. And what impact has this rule had on 
your bank and what have you heard from your customers on the, 
on the ground regarding the limitation of this rule?
    Mr. HOOPER. So I would say many of our customers just find 
it intrusive because we're digging into work through all of the 
different business owner, or the different owners of that 
business. I know our new account staff spends a tremendous 
amount of time making sure that they complete all the 
beneficial ownership forms as well as our lending staff and so 
it's just a, it's cumbersome process and customers are not 
always appreciative of the process either.
    Mr. FINSTAD. So Mr. Hooper, I would assume that your 
designating staff to that all pro-bono, it is all free, you 
don't have any, I mean you're just going to eat all that, 
right?
    Mr. HOOPER. Absolutely.
    Mr. FINSTAD. Yes. So the, you know, the cynical, I guess 
point is that there is time, money and effort that is put into 
this and again we have to ask ourselves in this congress, you 
know, who are we afraid of in this scenario? What problem are 
we trying to fix? And at the end of the day it is access to 
capital that's the most important thing for rural America to 
thrive right now and if we continue to put roadblocks in 
between a good, intended government program and the customer at 
the end day we will see less jobs created, not more. I 
appreciate your time and Mr. Chair, I yield back.
    Chairman WILLIAMS. Gentleman yields back. I know recognize 
Dr. Conaway from the great state of New Jersey for five 
minutes.
    Mr. CONAWAY. Thank you, Mr. Chairman. And thank you to the 
witnesses who have presented themselves here today to offer 
information on the SBA program. I want to start my time here 
with some remarks. I have to say I'm most distressed to hear 
America talk down and we have heard about how terrible things 
are in the economy and yet some of our Ranking Members here 
have quite rightly noted that we have had during the Biden-
Harris administration over the past four years entrepreneur 
filed more than 20 million new business applications and saw 
the fast rate of new business applications on record with 
entrepreneurs filing an average of 440 applications every 
month, a rate that is over 90 percent faster than the pre-
pandemic averages. And as we've head we have seen the number of 
Black households and Hispanic households, and Asian households 
hit new highs in terms of their business ownership. Again all 
greater than pre-pandemic. In New Jersey, we are very pleased, 
and I have some experience with the SBA process. We have seen 
an average of, we have 28,771 approved 7(a) loans with an 
average loan size of 700--I'm sorry, 430,422. And as you know, 
these are essential for small business to grow and to thrive, 
to advance the economic vitality of their communities. We have 
heard today and in our previous hearing a lot of concern about 
the 1071 program. And I have to say when I particularly as you 
just heard me talk about these important improvements that we 
have seen and the business ownership by a person of color and 
minorities, other minorities, which I take as a sign of a vital 
and America, America that includes everybody in our economic 
growth and yet we hear that this program which is designed to 
actually find out what is going on lending activities in the 
banking sector is being, we're being asked not to collect data. 
Now I am a physician. I thrive on data and taking data and 
producing that data and understanding that, and using that data 
to make, to made help patients make decisions. This is across 
all businesses whether you're sending somebody to the moon or 
building a bridge, data analyzing it and using it to make good 
decisions, which is important that society has decided that it 
is important that fair lending take place and that all people 
in our country irrespective of their color or where they're 
from have access to capital. So explain to me without giving 
the data to understand whether or fair lending rules are being, 
and laws are actually working and that there is compliance with 
those laws that recognizes that we're all part of a great 
country. If we take away the data collecting process to find 
out how the laws are working and how you in the lending 
community are actually, whether you're actually in compliance 
with the law or not. How do we ensure that everybody has a 
stake in our economy and has a chance to start their own small 
business? And that's for Mr. Hooper and Mr. Sims.
    Mr. HOOPER. Thank you for that question. You know, I would 
say, you know, in my opinion it's our responsibility as good 
bankers to make loans everyone we can in our community and 
support the community at large. You know, not specifically 
talking about 1071 but speaking about from a fair lending 
perspective, you know, I'm very proud of the products that we 
offer now only to, you know, specifically we have better 
products for those customers that live in majority, minority 
Census tracks. We also have programs that are, you know, I live 
in Texas and so we have people who are there on work visas and 
they have an I-10 and so we're able to provide different home 
ownership options for them with lower amounts down and 
additionally we try to have bilingual personnel in just about 
every office that we can.
    Mr. CONAWAY. I need to reclaim my time because I see the 
clock is ticking. I don't think we can make good decisions 
without getting data. Data should drive our policy decisions 
and if we pass a law we're going to find out whether or not it 
is working. I'll just leave with the time I have remaining to 
talk about the Serve Act that I'm a lead on with Ms. Davis and 
Mr. Alford. I am a veteran myself and serve a lot of veterans 
in my community. I live near a base and served on that base. 
But in the time remaining and I'll leave it for a later answer 
off line but tell me how the SBA is working to ensure that 
veterans are getting a fair shake and accessing the lending 
process. Thank you, Mr. Chairman for your forbearance.
    Chairman WILLIAMS. Gentleman yields back and now I 
recognize Mr. Stauber from the great state of Minnesota for 
five minutes.
    Mr. STAUBER. Thank you very much, Mr. Chair, for holding 
this meeting. And thank you to our witnesses for taking time 
out of your busy schedules to provide insight into the 
challenges and opportunities in small business lending. Access 
to capital is critical for the success of small business and in 
rural America. small businesses depend on relationship banking, 
a personalized approach to lending where community banks and 
credit unions excel. These institutions and the SBA backed 
loans programs they provide must remain a reliable source of 
funding for entrepreneur. However concerns have been raised 
about recent changes to SBA-backed programs including weakened 
guardrails in the 7(a) program which could increase lending 
risk and lead to higher cost for taxpayers. Mr. Sims, you have 
seen first hand the impact of SBA lending policies on small 
business borrowers. How have the SBA policy changes affected 
small business loan default rates and what reforms are needed 
to prevent taxpayers from being left on the hook?
    Mr. SIMS. Thank you for the question, Congressman Stauber. 
first and foremost in support of the SBA platform with every 
SBA loan that is originated the borrower is charged an 
origination fee for their guarantee, for the SBA's guarantee of 
that loan. So that guarantee then goes into the coffers of the 
SBA. Those funds are then used for any defaults that occur 
underneath that program, so from a taxpayer perspective it's 
actually not a taxpayer funded organization. It's self-
sufficient with regard to the premiums that are collected 
associated with new origination loans.
    Mr. STAUBER. The origination fees are adequate in your 
mind?
    Mr. SIMS. Yes, sir, they have been since the inception of 
the program.
    Mr. STAUBER. Mr. Wetegrove, your story is exactly what the 
7(a) program is meant to do, help aspiring entrepreneurs 
across--access rather the capital they need to make their dream 
of owning a business a reality. Had you explored non-SBA loan 
options before turning to the 7(a) program?
    Mr. WETEGROVE. Yes, sir, I did.
    Mr. STAUBER. And can you share a little about the process 
you went through?
    Mr. WETEGROVE. You know in one particular process it was a 
little annoying. I asked for the SBA, I mean, sorry, the 
lending and the loan and I did all my homework, I did the 
procedure to get my business plan done and then all of a sudden 
they came back to me and said, I'm sorry, you don't have seven 
years in business. So I spent like a month doing all this extra 
work and it was extremely unfulfilling and so that is when I 
basically went with the SBA program.
    Mr. STAUBER. And the 7(a), briefly tell us about that, how 
it went?
    Mr. WETEGROVE. You know, it went very well. I mean the 
lender, the lender itself just had so much information for me 
and, you know, I talked to other Camp Bow Wow owners in my 
organization, and this is what they had done as well. So again 
just having that expertise in the lending institution was 
phenomenal. And a guy like me who didn't have all that business 
acumen just, you know, devoured it.
    Mr. STAUBER. Your Honor, hose entrepreneur's out there that 
are across this great nation that want to take that risk 
sometimes they don't know where to go on the 7(a) with the, 
your local community banks or credit unions are given them that 
opportunity and their the ones that change the world, 
literately.
    Mr. WETEGROVE. Yes, sir.
    Mr. STAUBER. Literally. You know, improving government 
efficiency is a big topic around here these days. And there's 
changes the SBA could make to improve entrepreneur access to 
this loans. I want to just thank you all for being here. I will 
tell you that the last administration, I have been on small 
business since I have been a Member of, privileged to serve as 
a Member of Congress. And I tell you what, the last 
administration was devastating to small business owners. I mean 
we're looking at over 11,000 rules and regulations and the 
money's that small business had to put forward just to get 
started or rather 11,000 regulations, rather. Not 11,00 
regulations that are spread out, $20 here, $40 here. that's 
real money to real Americans that are trying to make it, and we 
need to make sure that these loans are giving out with as you 
said, Mr. Wetegrove, with the information and how to do, not 
spend a whole month and then they tell you you haven't been in 
business seven years. You know, your life experience matters 
too, right? What you did in your life matters and it should be 
considered in allowing these loans to go forward. But I can 
tell you that under President Trump's leadership the optimism 
amongst small business owners is growing. He is prioritizing 
tax relief, regulatory reform, and access to capital. Small 
businesses are the backbone of our country, and they will 
continue to be the engine of our economy. Mr. Chair, I yield 
back.
    Chairman WILLIAMS. The gentleman yields back. I now 
recognize Mr. Olszewski from the great state of Maryland for 5 
minutes.
    Mr. OLSZEWSKI. Thank you all for being here today. I will 
just open with an invitation. I joined many of my colleagues on 
this side. We want to be in conversation about regulations that 
might be burdensome. I certainly don't have the time here but 
if you want to provide for the record for the committee's 
benefit, specific regulations, instead of wholesale changes. 
Maybe with specific example so how that could be helpful. I 
would very much welcome the opportunity to have that 
information given to us. So I guess my question would be it 
wouldn't be something that would be viewed favorably by 
customers or your clients if I were to day I want to bring 20 
people and look at some of your most sensitive systems. Like I 
want to have access to your systems tomorrow. I'm going--I mean 
that's not something that is good business practice or 
something that your customers would take kindly to, is that a 
fair assessment? Yes, okay. And if you wanted to be processing 
loans fast or opening a new franchise, if you wanted to provide 
more training you wouldn't tell your employees to stop working? 
You wouldn't stop processing loans, is that also a fair 
assessments? Yes. So I actually again agree. I think we want to 
find ways to help SBA do more training, help work through some 
of the regulations that might slow down these processes. But I 
just want to point out that that is in fact what is happening 
with the SBA. We have someone who without vetting our 
transparency is in there, has access to some of the most 
sensitive data that your partners in this work share and, you 
know, just concerned about instead of finding ways to work 
through these regulations we re instead telling people across 
this government to stop working, to not come to work and I 
think that is at odds with some of the testimony we heard 
today. So but very much look forward to those specific examples 
and hopefully allowing our professionals at SBA to work through 
those to partner with you and again really appreciate you 
making the time to be here today. And with that I will do a 
rare thing, Mr. Chairman and actually yield back some time.
    Chairman WILLIAMS. The gentleman yields back. I now 
recognize Mr. Meuser from the great state of Pennsylvania for 5 
minutes.
    Mr. MEUSER. Well thank you very much Mr. Chairman. Thank 
you all for being here and as mentioned before braving the 
weather and providing some important testimony. It makes a 
difference so thank you. You know, Mr. Hooper, you had stated 
in your opening testimony since 2021 personnel costs related to 
compliance and risk have doubled and we anticipate that they 
will continue to rise, the number sits at a staggering $7.1 
million. You went on to say 2025 will bring on additional 
regulatory burdens. That is nice to look forward to most 
notably those associated with implementation of 1071 directly 
obviously from the SBA, personnel costs, training costs, and 
software enhancements necessary to achieve compliance. We're 
estimating now it will cost over $2 million. So we had a 
financial service committee hearing a few days last week and it 
was about making community banks great again and without a 
doubt the biggest take away was the regulatory burdens, the 
compliance burdens, the problems. I mean just basically the 
weights being put on your backs to allow small business to have 
access to capital. And it just, you know, thank goodness we've 
got an administration in here and a new SBA administrator and 
the majority that understand small business, is going to work 
on doing things that are positive for you and not negative and 
not deny it. It is incredible in light of the evidence and 
everything else that those who sit here and want to say how, 
actually how wonderful things should be for you as opposed to 
what your evidentiary testimony, not just implies but clearly 
states. So, you know, this, the 1071 rule, you know, we've 
talked about it so many times with the 81 separate data fields, 
has that helped anyone in any way, shape, or form? I'll ask 
you, Mr. Hooper?
    Mr. HOOPER. No.
    Mr. MEUSER. Mr. Sims?
    Mr. SIMS. No, sir.
    Mr. MEUSER. No. No consumers helped. No businesses helped. 
Mr. Wetegrove, I'm sorry, I forgot how to pronounce your name, 
Wetegrove, any positives coming out of that extensive amount of 
data?
    Mr. WETEGROVE. No, sir.
    Mr. MEUSER. Yes, private data? Yes. Well we didn't think 
so. That's why we want to eliminate it. Can you, the privacy 
concerns that come with it, do your small business's have grave 
concerns surrounding the privacy as well as the costs and the 
uncertainty and everything else that comes with it?
    Mr. WETEGROVE. Absolutely.
    Mr. MEUSER. Okay. Well that's as well. Okay. So Mr. Sims, 
the 7(a) program, the Biden-Harris change the existing credit 
elsewhere test the self-certification exercises. We know what 
happened there. What degree of concern that you have that this 
is affected, which it clearly has the integrity of the program?
    Mr. SIMS. Yes, sir. A great example of that is the credit 
elsewhere test. As an example of a borrower, a business member 
wanted to come to me and move their SBA loan from one 
institution to another, let's say they got tired of Mr. 
Hooper's friendly fast over here and they wanted to come to me, 
for me to refinance that existing 7(a) loan. Underneath the SBA 
policy I actually have to go to Mr. Hooper and seek is his okay 
in order to refinance that and ask him to provide for me a 
letter that says that I cannot provide the financing that the 
borrower has requested. So from a competition perspective it 
doesn't seem like a really good thing plus the borrower has 
indicated that as nice as Mr. Hooper is, they want to find a 
different relationship and they can't do that without his 
approval.
    Mr. MEUSER. Thanks. And Mr. Wetegrove, and I am pronouncing 
it right, I hope? My apologies. I did come in late, and I hate 
doing that. We did have Chairman Powell in our other, my other 
committee so I had to pay some attention over there. But the 
small business provisions the tax cut and job act, 199A, the 
bonus appreciation, the R&D tax credits, how significant is 
that to your clients, your customers, the small businesses that 
you serve?
    Mr. WETEGROVE. I could not elaborate on that. I don't know 
the answer.
    Mr. MEUSER. Okay. Mr. Sims or Mr. Hooper?
    Mr. SIMS. Would you repeat the question? I'm sorry.
    Mr. MEUSER. The tax cut and jobs act provisions, bonus 
depreciation, R&D tax credit, 199A, and the carried interest 
and such, how significant a blow will it be if we don't 
complete that and continue those tax relief?
    Mr. SIMS. Yes.
    Mr. MEUSER. The business tax incentive, sur.
    Mr. SIMS. I think it changes the platform and the go 
forward marketplace for those small businesses and they will 
react accordingly which would be, I'm going to stop investment. 
I'm not going to seek additional capital for me to go advanced 
my business opportunities.
    Mr. MEUSER. Thanks, well the calvary is here and we are 
going to be on the side of small business. I yield back, Mr. 
Chairman.
    Chairman WILLIAMS. The gentleman yields back. I now 
recognize Ms. Simon from the great state of California for 5 
minutes.
    Ms. SIMON. It is a great state. I'm sorry.
    Chairman WILLIAMS. That's what I said.
    Ms. SIMON. Thank you. You sure did. I appreciate it. Thank 
you, Mr. Chairman. Thank you Ranking Member. I am actually 
super excited to speak with you all today and to our witness on 
Zoom. I have learned so much and there is so much more to 
learn, and I love that I have background music. Listen I am in 
agreement with so much of what has been said today and in fact 
I'm here to actually speak on behalf of the community banks and 
the beautiful 12th District of California. We have over 19 
community banks and, you know, I've worked with these banks and 
the job training programs that I have developed over the past 
30 years for young people coming out of the foster care system 
seeking to shift their generational poverty. I have worked with 
folks coming out of incarceration. The community banks and our 
district from Beneficial Bank, you know, to Summit Bank, they 
have done such incredible work. So one I want to acknowledge 
them. You know, Mr. Wetegrove, I don't have a question for you, 
but I just want to thank you so much because I actually went 
down a rabbit hold last night learning about Bow Wow, and I 
have got to tell you as someone with a disability who has been 
very linked to guide dogs from the blind I saw the work that 
you have been doing with disabled folks and their pets. Folks 
don't realize when someone is going in for long hospital stays 
or for surgeries they need somewhere to keep their animal that 
actually keeps them alive when they are well. I want to thank 
you for that. I also want to acknowledge that as a vet, we are 
talking about SBA. As a veteran and again I come from a family 
of veterans on my maternal side, SBA should be doing everything 
in its power to streamline resources, folks, who are leaving 
and retiring from the service many in my district are left in 
poverty. They don't deserve the bureaucracy. I 100 percent 
agree. If we want to do right by our veterans SBA needs to 
expand its services, making sure that you don't have to spend 
six months, not even two days getting to a representative. Just 
last week I was in my district, visiting our SBA lead and they 
are so wonderful. Wonderful folks who are working in community. 
There are, I mean I have got the stats here. Over 26,000 small 
businesses in California's 12th District. Less than two hours 
after I left the meeting with the SBA lead these staff members 
who are working with low-income business owners, business 
owners from technology, again to your dry cleaners, your auto 
repair shops, two of these members got lay-off notices in this 
time where we are talking about building up the nations 
economy, particularly the backbones of our community. I agree, 
Mr. Wetegrove, we need a robust system with regulations that 
keep us from waste, fraud, and abuse but frankly as we cut the 
federal workforce we will find less opportunities for our 
business owners to get the resources that they need to thrive. 
I want a bustling downtown. I want a transportation system that 
brings folks from the suburbs to the city. We can get there. 
But SBA, my God, we need to expand it. I want to say one more 
thing, our small business pay local taxes. We know and those 
taxes support our police, our fire, in fact our school systems, 
while some of that comes from the state and the feds. Our small 
business, when we say life blood they keep our cities alive. So 
as we cut, which is on the table, our SBA staff, we cut public 
safety, we damage public schools, we prevent our vendors from 
accessing the resources that they need to escape poverty once 
for all. We take from single mothers trying to create a beauty 
shop, or a local consulting opportunity. We take time and 
resource for them, and we leave them at the whims of the public 
dole. So in terms of community banks they do what I know a lot 
of the big banks can't do they support folks, right, front, and 
center. They are at the desk every single day. So I just have a 
quick question for, DeArment. People mispronounce my name all 
the time. That's why I ask. I have a brief question, you know, 
for you. You know, your organization works on the ground to 
finance small businesses, local small businesses that are often 
underserved. And it sounds like community banks and non-profit 
lenders, we only have a couple of seconds are filling in the 
gaps. Name three gaps that they are filling in?
    Ms. DEARMENT. Low wealth, low income, no business 
experience.
    Ms. SIMON. Say that again, we have a couple of seconds.
    Ms. DEARMENT. Low wealth, low income, no business 
experience.
    Ms. SIMON. Low wealth, low income, no business experience, 
the foundation of this country is built on those three 
demographics being able to lift themselves up. Let's fund, fund 
an SBA and community banks. Give them all the resources that 
they need to lift up populations from urban to rural. I yield 
back.
    Chairman WILLIAMS. The gentlelady yields back. I now 
recognize Mr. Bresnahan from the great state of Pennsylvania 
for 5 minutes.
    Mr. BRESNAHAN. Thank you, Mr. Chairman. I appreciate the 
opportunity here and to the witnesses for braving the inclement 
weather and making it out to glorious Washington D.C. Before 
this in my prior life something that brought me a lot of 
pleasure was working with entrepreneurs. I was a real estate 
developer, and nothing would bring me more joy than someone 
taking the leap, trying to make it out on their own. And 
something that was unanimous with every conversation was how do 
we have accessibility of capital and what do I need to do? Is 
it work with a community bank? But there was always a barrier 
to try to get off the ground. Either there wasn't prior 
experience, they didn't have the collateral to secure a certain 
loan. And people would always suggest, well what about the SBA? 
And what they found was it was absolutely impossible to try to 
navigate. And there were some earlier questions relevant to the 
team of lawyers and accountants. I mean at my company even, you 
know, we grew to 175 people and would struggle to meet the 
SBA's requirements sometimes to procure the capital necessary. 
I couldn't imagine a young entrepreneur trying to hurdle these 
boundaries to really make a difference. What could we do to 
lesson the bureaucratic red tape to really get dollars into the 
hands of these entrepreneurs and young businesses that 
ultimately will make a difference. And I guess my first 
question would be for Mr. Sims.
    Mr. SIMS. Thank you congressman. I honestly think the place 
to start is with the SOP, the standard operating procedures of 
the SBA. Again I go back to the products are good. The 
structure of the products are good. The terms are very flexible 
and in particular as you compare them to a traditional 
commercial type product set. And so I think going through the 
thousands of pages of the SOP and streamlining how a small 
business is able to engage with the SBA through their local 
banker whether it be a community bank or a credit union, there 
is where your expertise lies. We are going to ask them 
questions to understand what it's going to take for them to be 
able to qualify underneath the SBA requirements. So even Ms. 
DeArment said a few minutes ago, let's go to low wealth, low 
income, low business experience. The SBA has requirements for 
that. So you must meet minimum debt service coverage 
requirements. You must meet minimum business experience 
requirements. And you must meet minimum collateral 
requirements. So even if the, you wanted to use the SBA vehicle 
as an opportunity for the type businesses that she's providing 
services too, you could not because they would not qualify. All 
right. So when she talks about turning, the banks turning those 
down, the credit unions turning those down, we're following the 
SBA procedures. So the place to start is to create opportunity 
for the type of businesses that she's serving where there might 
be a special program. For example, we talked about an area 
where there may be disadvantages or issues that are going on in 
that particular community, you could create a program where 
those requirements were lessened, still safe, still prudent but 
they're not set at the levels that they are today.
    Mr. BRESNAHAN. So whose responsibility would that fall 
under? Would that be more in the lane of the community bank 
itself?
    Mr. SIMS. It would not. It would be the lane of the 
administrator of the SBA and the SOP.
    Mr. BRESNAHAN. And sometimes what I have noticed is we were 
super involved with the community bank. It was our primary 
lender for many years. And sometimes the community banks though 
have availability of resource concerns and, you know, trying to 
get staff analysts or being able to keep up with the demand to 
supplement the applications with the actual raw material is a 
challenge and it becomes a pitch point and then our young 
business or our entrepreneur need to find a way to get around 
the blockage there in the artery and try to make a difference 
and ultimately it stops them from opening their doors. May last 
question would just be by a quick show of hands. Have any of 
you individually had to fill out any of the beneficial 
ownership forms for any of your own entities? You did? I had to 
fill out a 11 of them and it took me from Harrisburg to 
Washington D.C. for about two and a half hours and I did it on 
the online portal after it would crash more times than I care 
to admit it was frustrating. And, you know, I felt that I 
wanted to go through the process knowing that I was going to be 
serving on this small business committee, and I thought the 87 
data fields that Mr. Meuser had referenced earlier were 
incredibly redundant. If you have a single member LLC you're 
asked to provide the same information on three separate pages, 
and I think it will again be one of those barriers for that 
small business to get up and running and off of the ground. So 
with that I yield back. Thank you.
    Chairman WILLIAMS. The gentleman yields back. Okay. We have 
one more, here she comes. Now recognize Ms. Goodlander who made 
a grand entrance here so from the great state of New Hampshire 
for five minutes.
    Ms. GOODLANDER. Thank you, Mr. Chairman and my apologies. 
This is my first day with two hearings at the exact same time. 
So I have gotten my steps into today. But I want to thank you, 
Mr. Chairman, for bringing this hearing together and to our 
witnesses for coming from all across the country to talk about 
this really important set of issues. I am so excited to be 
serving on this committee. New Hampshire is a great state and 
the overwhelming majority, more than 99 percent of our 
businesses are small businesses. We are also the home of the 
birth of the credit union, which is very exciting. So Mr. Sims, 
I wanted to ask you from your perspective how, what priorities 
you would really point this committee towards in the days 
ahead? You had mentioned the importance of regional SBA staff. 
We are getting a lot of really unsettling reports about SBA 
staff who have received termination notices and who aren't sure 
about their fate within that important government agency. And I 
just want to ask you about if you could say a bit more about 
your partnerships with SBA staff and the role that the SBA has 
played?
    Mr. SIMS. Yes, thank you for the question and I'm said to 
hear that as well. Those folks in our Georgia region district 
office play a vital role in my opinion can play even a greater 
role, play even a greater role in helping community banks and 
credit unions navigate the SBA process. Again you have heard me 
say this a number of time. The products are very good. They are 
very good. The process leaves a great deal to be desired and 
often we are faced with elongated time frames in which we would 
pose a question to 7(a) questions and waiting for that question 
for come back. Well there is a business member that is impacted 
by that time frame as well that's on the other end of that 
answer and it would really be nice if we had a regional 
district office members that we could go to and say, hey, can 
you help us navigate this? Here's what we've done. Here's the 
questions we asked and we sure could use some assistance with 
this. Is there someone that you could pick up inside the phone 
that calls up the chain to be able to help us with that?
    Ms. GOODLANDER. Well thank you for that. You know, some of 
the most exciting stories that I have heard from small business 
owners across New Hampshire have been the stories of microloans 
that have really made all the difference across my state. You 
know, one in particular, and SBA supported program that we have 
been following is the Grafton Regional Development Corporation. 
They have a microloan program that has really helped to bring 
about what we all want on this committee which is the 
realization of the American dream for hard working people. This 
program it has been amazing to read the stories from hair 
stylists to plumbers. This program has supported business 
owners all across my state. I wanted to ask and open it up to 
our witnesses if you could share a bit more about your 
experiences with SBA microloan programs and what you have seen 
work well and any reforms that you would point us to here in 
congress.
    Mr. SIMS. I'll jump in if it is okay. I'm in embarrassed to 
say that I'm not familiar with many of the microloan programs 
and then I would also go back to what a great conversation that 
that could be with our district offices who probably are very 
familiar with that. Most of my organization's focus is on the 
7(a) product and the 504 product and as I have learned today 
quite frankly through the conversation there are a lot of other 
different products that I'm not currently utilizing to day so a 
little education for me. And again I think we could lean on 
those district offices in order for us to get more involved in 
those type of lending programs.
    Ms. DEARMENT. I would like to jump in on
    Mr. HOOPER. I would say am not----
    Ms. DEARMENT.--on the microloan? Is that all right? May I 
jump in on the microloan program
    Ms. GOODLANDER. Please.
    Mr. HOOPER. I was just going to note that I'm not familiar 
with the microloan programs as well. Our primary focus has been 
on the 7(a) and the 504 programs.
    Ms. DEARMENT. I would be happy to jump in on the microloan 
program.
    Ms. GOODLANDER. Thank you. That'd be great.
    Ms. DEARMENT. Yes, we do a ton of microloan programs, a ton 
of microloans. One of the really interesting things about 
lending is if you think about someone who is getting a business 
loan, an small business loan, when we look at them I think from 
bank or credit union perspective you think if that business 
fails what are we going to do to get repaid? We're going to 
have some outside income, some outside wealth, some collateral. 
Micro loaners often don't have that when they look at the 
clients that we serve and we think about that as a safety net, 
those family resources, assets, the microloan program provides 
technical assistance and that allows us to go in and make sure 
that they have good business planning, an asset plan, a credit 
building plan, and an onramp to bankability. It replaces that 
safety net by providing a loan that is wrapped in technical 
assistance services, so you don't need wealth as your answer.
    Chairman WILLIAMS. The gentlewoman's time is up.
    Ms. GOODLANDER. Thank you. Thank you, Mr. Chair. I yield 
back.
    Chairman WILLIAMS. Okay. The lady yields back. I would like 
to now thank our witnesses for your testimony today and for 
your appearing before us. Without objection Members have 5 
legislative days to submit additional materials and written 
questions for the witnesses to the Chair which will be 
forwarded to the witnesses. So I ask the witnesses to please 
respond promptly. If there is no further business without 
objection the committee is adjourned and thank you again for 
being here.
    [Whereupon, at 12:17 p.m., the committee was adjourned.]
                           
                           
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