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93–464 2015

THE SBA BUDGET FOR FY 2016: DOES IT MEET 

THE NEEDS OF AMERICA’S SMALL BUSINESSES? 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

FEBRUARY 25, 2015 

Small Business Committee Document Number 114–003 

Available via the GPO Website: www.fdsys.gov 

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Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

STEVE CHABOT, Ohio, Chairman 

STEVE KING, Iowa 

BLAINE LUETKEMEYER, Missouri 

RICHARD HANNA, New York 

TIM HUELSKAMP, Kansas 

TOM RICE, South Carolina 

CHRIS GIBSON, New York 

DAVE BRAT, Virginia 

AUMUA AMATA COLEMAN RADEWAGEN, American Samoa 

STEVE KNIGHT, California 

CARLOS CURBELO, Florida 

MIKE BOST, Illinois 

CRESENT HARDY, Nevada 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

YVETTE CLARKE, New York 

JUDY CHU, California 

JANICE HAHN, California 

DONALD PAYNE, JR., New Jersey 

GRACE MENG, New York 

BRENDA LAWRENCE, Michigan 

ALMA ADAMS, North Carolina 

SETH MOULTON, Massachusetts 

KEVIN FITZPATRICK, Staff Director 

STEPHEN DENNIS, Deputy Staff Director for Policy 

JAN OLIVER, Deputy Staff Director for Operation 

BARRY PINELES, Chief Counsel 

MICHAEL DAY, Minority Staff Director 

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(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. Steve Chabot ................................................................................................... 1 

Hon. Nydia Vela ́zquez ............................................................................................. 2 

WITNESS 

Hon. Maria Contreras-Sweet, Administrator, United States Small Business 

Administration, Washington, DC ........................................................................ 4 

APPENDIX 

Prepared Statements: 

Hon. Maria Contreras-Sweet, Administrator, United States Small Business Administration, Washington, DC ........................................................ 20 

Questions for the Record: 

None. 

Answers for the Record: 

None. 

Additional Material for the Record: 

National Association of Federal Credit Unions (NAFCU) ............................ 23 

U.S. Women’s Chamber of Commerce (USWC) .............................................. 24 

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(1) 

THE SBA BUDGET FOR FY 2016: DOES IT 

MEET THE NEEDS OF AMERICA’S SMALL 

BUSINESSES? 

WEDNESDAY, FEBRUARY 25, 2015 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Committee met, pursuant to call, at 2:00 p.m., in Room 

2360, Rayburn House Office Building. Hon. Steve Chabot [chairman of the Committee] presiding. 

Present: Representatives Chabot, Luetkemeyer, Hanna, Rice, 

Gibson, Brat, Hardy, Radewagen, Vela ́zquez, Chu, Hahn, Clarke, 

Meng, Payne and Lawrence. 

Chairman CHABOT. The Committee will come to order. 

Good afternoon, everyone. We want to thank the Administrator 

of the SBA, Maria Contreras-Sweet for joining us here this afternoon. I believe this is her first appearance this Congress—the 

114th Congress. She is always a welcome visitor to us. And I want 

to particularly acknowledge and thank her for coming to my district a couple of weeks ago, to Cincinnati, and we, together, had a 

number of events—in an area called Over-the-Rhine, a number of 

small businesses, as well as credit union, and met with the Chamber and did a town meeting and a whole range of things. And she 

was obviously extremely knowledgeable and I think made a wonderful impression on the people of Cincinnati, and we thank you for 

coming. I really do. 

Today, the Committee will hear from the Administrator about 

the President’s Fiscal Year 2016 budget request. Two questions 

arise. First, are the resources sufficient to help small business grow 

the middle class jobs that America needs? And second, are the resources allocated in an open and transparent manner? 

It is important to note that there are numerous other policies 

that are as critical for small businesses as those that will be raised 

today. Among those are the following: small businesses deserve tax 

reform because the current code is so complex, it makes their lives 

miserable. They need a regulatory regime that protects health and 

the environment without imposing outrageous costs. They need financial markets that are not so burdened by government oversight 

that access to capital to small businesses oftentimes is all but impossible. They need a simple system for exports and imports, one 

that does not require navigation of a maze-like bureaucracy. 

Now, turning to the SBA budget request, I believe that it is more 

than sufficient to meet the needs of America’s entrepreneurs. 

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2 

Where I disagree with that request is in the priorities revealed in 

the request. 

For example, the SBA budget makes no mention of hiring additional key personnel who will help small businesses enter the federal contracting marketplace, a key pillar of the Small Business 

Act. The budget fails to allocate additional funds or explain how 

the Agency will update its Loan Management Accounting System 

that still utilizes 1960s computer technology. The budget request 

disturbingly fails to mention the absence of a chief information officer to oversee implementation of computer technology. The budget 

request makes no mention of resources needed to implement 

changes made to SBA’s government contracting programs that 

have yet to be implemented. 

Instead, the SBA budget request is replete with its own initiatives and priorities. These include more funds for, among other 

things: entrepreneurial outreach programs that duplicate services 

in many instances provided by existing partners; a new computer 

system not requested by Congress, the Loan Information Network 

for Access to Credit that is intended to help small businesses find 

SBA lending partners; and Executive Direction. This request for more than $5 million in Executive Direction is 

particularly troubling. After more than 60 years of existence, Executive Direction from the SBA suddenly determines that a more 

than century-old statute, the Anti-Deficiency Act, applies to the 

closing of loans without any explanation. Executive Direction from 

the Agency entails waiting 30 years to update the application process for small business investment companies and then failing to 

publish that update in the Federal Register. Executive Direction 

forces changes in cost accounting procedures for Small Business 

Development Center grantees but provides no mechanism for challenging that action. If these are the types of decisions that will result from increased Executive Direction, it represents very questionable use of resources in my opinion. 

The SBA must reconsider its priorities to minimize risk to taxpayers from a $100 billion loan portfolio while maximizing opportunities that ensure small businesses will prosper and create needed 

middle-class jobs. That should include a top-down reexamination of 

the Agency’s procedures for creating policy. 

Ultimately, budgeting is about the bottom line for small businesses. For the SBA, the budget is about accountability. The budget request is the Agency’s defense of its priorities to taxpayers, current small business owners, entrepreneurs, and Congress. If this is 

the Agency’s defense, than it has not gotten that accountability 

right. 

And I would now yield to the ranking member, Ms. Vela ́zquez, 

for her opening statement. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. 

Our economy continues exhibiting signs of strength, and small 

businesses are vital to this resurgency. Last year, companies with 

fewer than 500 workers expanded their payrolls by more than two 

million positions. That is roughly two-thirds of the three million 

total new hires. Clearly, as with previous economic recoveries, our 

nation’s small business sector will be instrumental to our overall 

progress. Given the central role small firms and entrepreneurs play 

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3 

in creating new jobs and furthering growth, it is critical we work 

to ensure small businesses have the tools they need to succeed. The 

Small Business Administration plays a vital role in this regard. 

Access to capital is the perennial challenge for all small businesses. When private capital markets are insufficient for small 

companies seeking affordable loans, the SBAs initiatives help fill in 

the gaps. Last fiscal year, the agency supported nearly $19 billion 

in lending through its 7A program alone. Another $4 billion in 

lending was made available for capital-intensive projects through 

the agency’s 504 initiative. In many instances, these were businesses that might struggle to secure financing elsewhere. It is vital 

that the SBA’s capital programs function smoothly and continue 

serving as a backstop to private capital markets. 

For small firms to succeed, they need more than capital. Technical know-how and guidance on everything from how to develop 

a business plan to export products to new markets can make a difference between whether a business thrives or goes under. To help 

meet those needs, the SBA has a range of entrepreneurial development initiatives. The agency’s network of Small Business Development Centers and Women’s Business Development Centers are 

spread throughout the country, providing valuable counseling services to startups and growing companies in every region. 

Beyond capital and technical assistance, the SBA also plays a 

vital role in helping small businesses and disadvantaged firms secure their fair share of federal contracts. Federal procurement efforts are responsible for $500 billion in economic activity. When 

small firms are awarded these type of projects, the benefits are 

twofold. Taxpayers receive quality goods and services at fair prices, 

while small companies are able to grow, and in many cases add 

employees to their payroll. In that sense, the SBA’s contracting 

programs are another element critical to our overall economic 

health. Given the myriad of ways the small business administration can be critical to the health of the small business sector, it is 

paramount that the agency’s scarce resources be invested wisely. 

I look forward to hearing the administrator’s views regarding the 

agency’s priorities moving forward. 

With that, I thank the chairman again for holding this important 

hearing, and I want to thank the administrator for being here 

today. I yield the balance of my time. 

Chairman CHABOT. Thank you very much. 

We will now introduce our sole witness here this afternoon, the 

administrator, who took her position in April 2014 becoming the 

24th administrator of the U.S. Small Business Administration, and 

a member of President Obama’s cabinet on April 7, 2014. Prior to 

her arrival in Washington, Contreras-Sweet founded the first 

Latino-formed commercial bank in California in more than 35 

years that focused on serving small- and medium-sized businesses. 

We welcome you here again this afternoon, Madam Administrator, and we generally have a five-minute rule but we open it up 

to you to take such time as you might consume within reason since 

there is just one witness. Thank you very much for being here. 

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4 

STATEMENT OF MARIA CONTRERAS-SWEET, ADMINISTRATOR, 

UNITED STATES SMALL BUSINESS ADMINISTRATION 

Ms. CONTRERAS-SWEET. Thank you. Thank you again for that 

generous introduction, Chairman Chabot. And, of course, to Ranking Member Vela ́zquez and the distinguished members of the Committee. Thank you for this opportunity to testify about SBA’s FY 

2016 budget. 

Chairman, congratulations. It is nice to see you come back to 

your Committee. Your leadership and your record on bipartisanship and your commitment to the small businesses is a great tribute to our country. Thank you for that. 

I know there are many new faces on the committee, and I have 

already had some productive conversations with some of you, and 

I look forward to visiting with all of you and your districts in the 

months ahead. 

Entrepreneurs, I agree, Ms. Vela ́zquez, are the backbone of our 

economy. They exude confidence. They exude courage and character. The programs in this budget have one thing in common: they 

seek to maximize opportunities for small business owners to create 

jobs and contribute their talents to our economy. 

That is the Agency’s mission, and that is why I am here. To accomplish this goal, we must continue our work to modernize the 

SBA, so that we are accessible and relevant to the business community in the 21st century. 

To that end, I want to share with you an important achievement 

in this document before you. Our Fiscal Year 2016 budget proposal 

contains a zero subsidy request for our core capital programs. 

Those would be the 7(a), the 504 and the Small Business Investment Company (SBIC) programs. We are proud of this achievement 

and the fiscal responsibility that it represents. 

I am an entrepreneur and a former community banker. I take my 

fiduciary responsibility seriously, and this budget represents my 

commitment to be a good steward of taxpayer dollars. For Fiscal 

Year 2016, the SBA requests $860 million. In time of tight budgets, 

the SBA is doing more with less. SBA’s zero subsidy achievement 

means that this proposed budget comes in three percent below our 

current budget. 

The SBA is making good loans, and we project we will cover any 

loan losses through fees in Fiscal Year 2016. We have achieved this 

despite waving fees on small-dollar loans. This fee relief helped us 

increase lending to minority-owned businesses by 23 percent last 

year, so we propose continuing it in Fiscal Year 2016. 

I have completed 10 months on the job now. And thanks to the 

bipartisan support we have enjoyed from this Committee, we have 

made some important progress together. Together, we met our 23 

percent small business goal contracting goal for the first time in 

eight years. We supported nearly $29 billion in lending last year, 

which created or sustained nearly 600,000 jobs. In the same period, 

our resource partners counseled 1.2 million entrepreneurs. Our 

SBIC funds increased their investments by 60 percent and provided 

$5.5 billion in patient capital to promising small firms. We expanded our Boots to Business program to train more than 15,000 

service members at 165 military installations worldwide. 

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In his State of the Union address, the President spoke about our 

economic recovery and job growth. I will tell you something you already know: It is our small businesses that are leading this economic comeback. 

This budget requests an increase in our 7(a) lending authorization to meet the growing demand for SBA capital. Last year, Congress raised our 7(a) authorization level as we approached our 

lending cap, resulting in an all-time lending record of $19.2 billion 

in approvals. This year, we are asking for our highest authorization 

level yet of $21 billion. 

This budget also seeks full funding for our resource partners. 

The loan counseling provided by our Small Business Development 

Centers, our SCORE partners, the Women’s Business Centers and 

the Veterans Business Outreach Centers helps entrepreneurs 

across America start, grow, or reinvigorate their businesses. 

Partnering with them is one of the smartest investments we can 

make. 

This budget seeks a modest $950,000 increase for veterans outreach programs. We propose to offer SBA’s Boots to Business entrepreneurial training program to the National Guard, the Reserve 

component members, and additional military installations. We are 

asking to offer our Boots to Business Reboot program to veterans 

who have already transitioned out. 

And we are proposing to continue the fee reductions on loans to 

veterans, so we can serve these heroes as well as they have served 

us. 

We are also asking to expand SBA’s microloan program level by 

40 percent to increase the ability of microlenders to capitalize 

startups and provide technical assistance. We are 

Convinced this expansion would fill a real need for more smalldollar loans in the current commercial market. It will help underserved and rural businesses turn a profit and create more jobs. 

This budget also seeks to improve our customer service. As a 

former community banker, I understand that the best way to make 

SBA more effective is to make our products and processes easier, 

quicker, and more cost-effective. This budget structure accomplishes this critical goal by migrating more of our services online, 

where more and more banking is taking place today. 

This April, we will roll out our highly anticipated SBA One system. This is the automation of the entire 7(a) loan application. It 

is going to significantly cut the cost and time of our application 

process. We recently demonstrated this new service to our bankers, 

and the feedback has been overwhelmingly positive. 

Last year, I rolled out my modernization plan to fashion a 21st 

century SBA that stands for smart, bold and accessible. Smart 

means implementing systems that harness technology to deliver 

capital more effectively. Bold means opening new markets for small 

business owners both at home and abroad. And accessible means 

making our services available to all, including women, veterans, 

rural entrepreneurs, seniors, and the disadvantaged. 

As the ranking member indicated, more than two million of the 

three million jobs generated last year were created by small businesses. This budget would help us build on this momentum. It 

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would give us the resources we need to perform our core mission 

and help more small businesses innovate, launch, hire, and grow. 

Again, many thanks to the members of this Committee and to 

our very committed staff at the SBA across the country. 

Thank you, Mr. Chairman. 

Chairman CHABOT. Thank you very much for your testimony, 

Madam Administrator, and I will recognize myself for five minutes. 

My first question, as you know, I had introduced legislation last 

Congress to help small businesses, the investment companies, 

SBICs. What is the SBA doing to make that application process 

more open, transparent, and less complex? 

Ms. CONTRERAS-SWEET. First of all, let me compliment you 

on sponsoring, or I should say sort of being the patron of the Family of Funds program. We are really looking forward to having that 

tool, so I want to thank you right at the front end for that leadership. We think it is an important tool for job creation. The fact that 

we have a cap. I know if you have success fund or another it prohibits you from going on to the next, so I just wanted to thank you 

for that foremost. 

But, you know, on the SBICs, we have been at zero subsidy now 

for about 11 years, and I have to tell you that that program has 

seasoned executives that really vet these applications, and as a result, I think we are having that kind of success. If you are hearing 

that the process is arduous, I would be more interested in learning 

more about that because it is, you know, the government obviously 

guaranteeing investments that are higher risk, and so we just 

wanted to make sure that we are doing our complete due diligence 

and maintaining the kind of confidence that you have in us. 

Chairman CHABOT. Thank you. 

I will have my staff follow up with your staff on the particulars 

because I only have five minutes. So I do not want to take up all 

the time on that. 

Ms. CONTRERAS-SWEET. Sure. Thank you. 

Chairman CHABOT. The SBA uses private sector partners to 

provide capital, as you know, to small businesses. These programs 

have specific missions. What procedures does the SBA have to ensure that small business investment companies, 7(a) lenders, certified development companies, and microloan intermediaries are 

complying with their statutory mission? 

Ms. CONTRERAS-SWEET. We do a couple of things. Well, several things, but one of the things that I am installing recently that 

I think you will be pleased to know is in banking, as you generously mentioned, when I was back in Los Angeles, I founded a community business bank. And one of the things that we always enjoyed was having a sense of predictability. No one wants too much 

government regulation, but at least when you know what it is and 

you understand why it exists in terms of banking, for example, it 

is really important to be able to anticipate what is going to happen. 

So I felt that in terms of our regulation, for example, as you mentioned, in CDCs, our regulation, or rather our oversight I should 

say was not as clear to people when we went in to examine it. 

There was a standard process through which we regulated or examined these partners. And so we are installing a new program 

that we call PARRiS. And it will do just that, sir. It will make sure 

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that we have a standard, anticipated, confident program that people can plan to, manage to, so that when we get there, we all talk 

in the same language. 

Chairman CHABOT. Thank you. 

I had a meeting, along with a couple other members of this Committee with—and one who is on Ways and Means and was not a 

member of this Committee, but with a number of small businesses 

from around the country. There were eight, exactly, and some 

groups, and we discussed a number of issues. We met for about an 

hour. And one of the issues, not surprisingly, these were small 

businesses that are actually engaged in trade, international trade 

for the most part. I think seven of the eight were. And as you 

know, trade is critical to our economy. Ninety-six percent of the 

consumers around this globe are located outside the boundaries of 

the United States, and unfortunately, one to two percent of small 

businesses are engaged in international trade, and that is despite 

the Internet and access that was unheard of years ago. 

But one of the principal topics that they wanted to talk about— 

there were a number. They talked about Ex-Im Bank and other 

things, but we talked about the importance of, first of all, TPA 

(Trade Promotion Authority), which used to be called Fast Track 

years ago which no president has had in a while. But we have got 

to do that first. And then TPP is hopefully something that would 

not be too far down the road from there, the Trans-Pacific Partnership. And then T-TIP with Europe. 

So my question for you, Madam Administrator, would be I know 

and understand from others that the President has really stepped 

up his game in working on both sides of the aisle. He really only 

needs to work one side of the aisle; we are working the other side 

of the aisle. But it is going to take—this will truly have to be bipartisan to get this done. So could you comment on what the Administration is thinking relative to moving TPA, TPP, T-TIP? 

Ms. CONTRERAS-SWEET. I admire your interest, and I am 

grateful for your interest in the globalized economy because I think 

whether we want to be a part of it or not, it is upon us. When you 

light up your website, you are already there. 

And so first, if I may go to the specific and then go to the general, let me just say that specifically at the SBA, when I mentioned 

in my opening address about the smart, bold, and the accessible, 

the bold really meant about—was speaking to the market making. 

I do think that we have to help small businesses engage and protect them. Not protectionist but rather guide them through the 

international marketplace. And so to that extent, you know that we 

have USIACs that we deploy. We have products that help. We have 

really strong products that have a 90 percent guarantee. Lamentably, it is just not a well-known product and so that is one place 

where we can work together. 

But then to your general point about the administration, clearly, 

the president has made this a top priority of his. He understands 

that if we do not set some rules of engagement, China will set them 

for us. And so in that regard, I know the president has asked all 

of us at Cabinet to make this a top priority. And so I have been 

traveling across the country to try to engage the conversation, have 

people give us feedback about what that could look like. I have 

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been meeting directly with Mike Froman, my cabinet colleague 

about an SME chapter and what that should include. We are taking valid input across the country from people, and it is informing 

our process. But to the extent that we get TPA and TPP, we think 

that that will set a great foundational framework for T-TIP. 

Chairman CHABOT. Thank you very much. My time has expired. But to the extent that I can, please let me urge you to do 

everything within your power to emphasize to the Administration 

the importance of passing these trade pieces of legislation are to 

small businesses across the country, and you and I in our different 

capacities I think should do everything we can to do that. So thank 

you very much. I appreciate it. 

And I now recognize the gentlelady from New York, the ranking 

member of the Committee, Ms. Vela ́zquez. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. And welcome, Administrator Contreras-Sweet. 

You know, one of the biggest challenges that we face in our country is the income inequality, the widening gap. For few, the economy is doing extremely well, but for a big majority they are not. 

And so one of the programs that we have within the Small Business Administration is the PRIME program that serves to help 

very low income entrepreneurs. However, the program is slated for 

termination by your agency. And instead, the SBA chooses to target the most wealthy business owners through programs like 

Emerging Leaders, which require almost half a million dollars in 

annual revenues to gain entry. So I would like to ask you, of the 

new pilot programs, the new initiatives that you are proposing this 

year, which one of them is designed specifically for very low income 

entrepreneurs, like PRIME? 

Ms. CONTRERAS-SWEET. Yes. Let me just say that, first of all, 

you know how simpatico I am to your disposition about the underserved. It is something that I feel that I have been trying at least 

to emulate your work and to do it in my own little way in Los Angeles in my bank that was stood up just to serve the underserved. 

So you know that that is where I come from. When you are an immigrant, as I am, and you navigate, you know, any assistance 

along the way is something that is very well received. 

Ms. VELA ́ ZQUEZ. But it is not only immigrants. 

Ms. CONTRERAS-SWEET. No, I know. 

Ms. VELA ́ ZQUEZ. Very low income could be rural America. 

Ms. CONTRERAS-SWEET. Yes. So I just wanted to say I hope 

that you noticed that we did amp up the technical assistance component under the microloan assistance program to accommodate 

that. It is why in large measure we zeroed out fees on the loans 

under $150,000. 

Ms. VELA ́ ZQUEZ. I understand. My question to you is on the 

new programs and initiatives, if there are any being designed, tailored, to help very low income entrepreneurs. You have Emerging 

Leaders and other programs, and you are going to tell me that 

maybe, you know, the Microloan program could fill that gap, but 

I can tell you that the SBDCs offer training as well as Emerging 

Leaders does. So if we are going to say that it is duplicative, well, 

the Emerging Leaders Program might not require the type of technical assistance that low income entrepreneurs need. 

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Ms. CONTRERAS-SWEET. Right. The way I—and again, only 

from my experience as a banker and then as a business person trying to start two businesses, I felt that there were three things that 

we needed to do to help this target community that you are identifying. And one is to provide them counseling. We launched a program also—and you know, again, I am reluctant to call it a program because I think it is a segmentation, but it is called My 

Brother’s Keeper, and it speaks to focus on clearly the underserved. 

And so we are working with community colleges. We are working 

with churches. And we are going across the country. In fact, it is 

a program that we are launching very imminently. And again, I am 

reluctant to use the word ‘‘program,’’ but this initiative, this effort 

very soon to target that very population. 

And then the second thing is that I have just been working with 

the credit unions of late to make sure that they make those 

$50,000 loans and under more available, and so we have entered 

into a partnership with them. 

And then third, the technology to make the system more efficient. 

Ms. VELA ́ ZQUEZ. So we have two new programs, Emerging 

Leaders and ScaleUp America. Both of them provide training for 

very successful businesses. I have a concern, I have a problem with 

that picture because here we are creating new pilot programs to assist businesses that really do not need it. If you are a small business that has revenue of $500,000 and have been in existence for 

three years, you are already up and running. How can we fill the 

gap of those small businesses that are struggling? It goes to the 

core mission of what the Small Business Administration should be 

doing. 

I just want to share with you that I will be fighting to make sure 

that the PRIME program gets funded. 

Ms. CONTRERAS-SWEET. Just, if this is any consolation, I hope 

that you also noticed that we amped up by a million dollars for the 

Women Business Centers, which are wholly dedicated to underserved communities as well in addition to My Brother’s Keeper. 

Ms. VELA ́ ZQUEZ. I would like to talk to you about the SBICs. 

Chairman CHABOT. The gentlelady’s time has expired. Would 

you like an additional minute or so? 

Ms. VELA ́ ZQUEZ. Yes, please. 

Chairman CHABOT. Okay. The gentlelady is recognized for an 

additional minute. 

Ms. VELA ́ ZQUEZ. Let me call your attention to the fact that the 

agency is claiming you achieved the 23 percent contracting goal, 

and I am very happy about that. But then I cannot reconcile that 

with the inspector general report that says that one billion dollars 

of small business contracting actions were awarded to big firms, ineligible firms. How do you reconcile that? My point is, you must 

have better mechanisms and oversight to make sure that those contracting actions go to those who thy were intended for in the first 

place, small businesses. And one billion dollars going to big firms 

and then being counted as small firms is just not right. 

Chairman CHABOT. The ranking member’s time is expired but 

you can answer the question. 

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Ms. CONTRERAS-SWEET. Well, just let me say, I could not 

agree with her more than when we have a program that is focused 

on small business, that is what we want to do, and so just to say 

that the SBA has committed several programs put in place to make 

sure that this is not taking place. We have disbarred more people, 

three times more at the rate since we took office than in the prior 

10 years. So I want you to know we are on it. We are adding more 

personnel. We are conducting more anomaly reports, and just every 

tool available to us is being deployed. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. 

Chairman CHABOT. The gentlelady’s time is expired. 

The gentleman from Nevada, Mr. Hardy, who is the chairman of 

the Subcommittee on Investigations, Oversight, and Regulations is 

recognized for five minutes. 

Mr. HARDY. Thank you, Mr. Chairman. 

You know, I am a small business owner myself, or was, and I 

was out in the district this last week, and my district is District 

4, which hosts Nellis Air Force Base. We probably have the largest 

veteran population in my district of any place in Nevada. With that 

being said, the SBA claims that the Veterans Business Opportunity 

Centers are underfunded; however, SBA makes no requests for increase of funding for that program, but instead requests an increase of around $5 million for Executive Direction. If these centers 

are underfunded, then why not request Executive Direction allocation for those funds to the Veterans Business Opportunity? 

Ms. CONTRERAS-SWEET. Sir, I have to go back and check on 

the number, because we are asking full funding for all of our partners to continue the programs that we are doing, and we are asking for an amplification, an expansion on the reboot program. And 

so we are asking for more funding for the veterans’ programs, so 

I have to review what number you are referring to because we 

want to relaunch the Reboot program which is for those who already transitioned out. So my understanding is that our request is 

an increase. So I will have to look to see. 

Mr. HARDY. According to the report, I looked at it, there were 

some questions about whether that was what was actually happening. So we can get with each other after. 

Ms. CONTRERAS-SWEET. I would be delighted, sir. Thank you. 

Of course. 

Mr. HARDY. The other thing is the inspector general question. 

Why does the SBA require the Office of Inspector General to clear 

all the proposed final rules, and can you speak of how the role of 

the inspector general works with SBA? 

Ms. CONTRERAS-SWEET. We have, you know, I try to visit 

with the inspector general on a monthly basis and to have a 

proactive—I always think it is better to prevent than to detect. It 

is sort of my Japanese training. When I was in corporate, you 

know, the private sector, it is not about detection, it is about prevention. So to the extent that I can meet with the inspector general 

in advance of promulgating something to get the feedback, then I 

think it helps us to be more efficient to not have to get caught up 

in messy quagmires at the end of the process. 

Mr. HARDY. Okay. If you could, could you explain to me how the 

SBA works with veterans on getting access and moving forward to 

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access those funds? And the question I also have is it expresses 

that the program is at about $350,000. Is that sufficient for small 

businesses? Because it seemed like a pretty low number to me. 

Ms. CONTRERAS-SWEET. Thank you for allowing me the opportunity to clarify that point. What we are saying is that up to 

$350,000, we have zeroed out fees, but they can take loans up to 

$5 million. It is just the fee structure. So we are waiving fees for 

veterans on loans up to $350,000. That is the point on that; not 

that we are limiting to that size of loan. So that is the clarification 

on that SCORE. 

I am sorry, and your other question was? 

Mr. HARDY. It was about the process about how a veteran actually utilizes their benefit to be able to get part of the SBA. 

Ms. CONTRERAS-SWEET. So the program is really quite dynamic and interesting. It is part of the federal TAP program, the 

Transitioning Assistance Program. So we go into the installations 

globally around the world and we introduce them first to a couple 

hour video. And if they are interested in entrepreneurship, then we 

put them into an eight-hour—excuse me, into a two-day program 

where we actually have in-person training about entrepreneurship. 

And then if they are interested in that, then they go into the complete program that is a very extensive program where they actually 

develop a business plan so that when they come out they are ready 

to start their business. So there is no languishing when they are 

out in the community and trying to navigate through a labyrinth 

of what are they going to do with their lives after they have served 

us. So that is the counseling portion. And then they can go to a 

Veterans Business Outreach Center where they can get counseling 

for contracting opportunities where we have set-asides for veterans. 

And then as I said, our fee structure for veterans is very favorable. 

So the entire longitudinal track for veterans I think is a strong one, 

and we are seeing enormous success from that. And the success 

rate of veterans who are starting businesses is outstanding. It is 

their discipline, their rigor, and so we are experiencing strong success there. 

Mr. HARDY. One last question. Through this process, is there 

specific things that the SBA looks at and how somebody is qualified 

for a certain business or get involved in it? Do they have to have 

any real world experience in that industry that they are trying to 

get into, a small business? How do you qualify individuals? Is there 

an education factor or criteria that you have to meet? 

Ms. CONTRERAS-SWEET. You know, we do not think it is our 

place to say to somebody that they are qualified for a business or 

not. And I will give you an example. 

Since you have been asking me about veterans, I was in Denver, 

and I met Sheilagh. And Sheilagh was a Fine Arts major as a captain—I believe she was a captain—lieutenant, excuse me. And anyway, the point, she was a Fine Arts major, but she was in this intelligence unit where they trained our Blackhawk helicopter pilots. 

And she always wanted to fix the training, but yet her family 

brought her home, her daughter needed her at home. Long story 

short, she ended up hiring some engineers and came to the SBA, 

and so we provided her counseling to build her plan out and then 

we guided her so that she could get certified and actually apply for 

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an SBIR grant that she was able to take to commercialization. And 

now she has a multi-million dollar business, and she is creating 

jobs and building a very important supply chain. So it is not to us 

to decide what they want to do or that their major matches. If we 

feel that they have the passion and the wherewithal, they build a 

business plan and we help them navigate through it. And if they 

are successful, more power to them. 

Chairman CHABOT. The gentleman’s time is expired. 

There are votes on the floor. We will go through one more fiveminute round of questions here; then we will go over and vote. 

Now, there are three votes and there is a motion to recommit, so 

it probably pushes us up to around 4:00, I think, before we are able 

to come back for votes. 

Ms. CONTRERAS-SWEET. Okay. 

Chairman CHABOT. So I think we do have other members on 

both sides that want to ask questions. So if you are able to come 

back, I know that you had a 4 o’clock time, but if you are able to 

modify that, and just let our staff know what the status is, I would 

appreciate it. 

Ms. CONTRERAS-SWEET. All right. Thank you. 

Chairman CHABOT. The gentlelady from California, Ms. Chu, is 

recognized for five minutes. 

Ms. CHU. Okay. Administrator Contreras-Sweet, I am struck by 

how much initiative the SBA has taken to address the critical problems that small businesses are facing in this nation, and I would 

like you to tell us about how three of these initiatives work. I know 

these are pilot programs that have been approved by Congress via 

the Appropriations bill. 

The first one I would like you tell us more about is the Boots to 

Business program, and I know that veterans returning home after 

serving our country face so many struggles of just finding employment and have unavoidable difficulties of resuming life as a civilian. I once had a veteran working in my office who told me that 

when he deactivated from the military, all he received was a list 

of benefits that were recited to him, and yet he really needed employment alternatives. And yet, the Boots to Business program is 

designed to help veterans before they get deactivated so they will 

not feel so lost. 

And then there is a whole other area, and that is the young entrepreneurs and the high-tech innovators who are not the typical 

types to join the Chamber of Commerce, and oftentimes the last 

place they would look for assistance is the federal government. 

How has the SBA worked to change that mindset and tap into the 

young, entrepreneurial energy we see exuding from places like the 

Silicon Valley through the Growth Accelerator Fund? 

And finally, I know that there are places around this country 

with high unemployment and economic stagnation that could become the next Silicon Valley if here were the right partnerships 

that took place between universities, government, and business. 

How does the Clusters initiative address this kind of issue? 

Ms. CONTRERAS-SWEET. Thank you, Congresswoman. 

Let me just say that the Boots to Business program is, as I was 

outlining to Mr. Hardy, is a program that has been exceedingly 

well received. In fact, recently, I was at a cabinet meeting with sevSBREP-219 with DISTILLER

13 

eral of my counterparts who were so interested. They wanted to 

know how to get this program. But essentially, the Defense Department came to us and said that while they are preparing—the men 

and women in uniform are preparing to transition out into civilian 

life, that many of them wonder about what their future is going to 

be and do not have a sense of direction. And so one of those options 

can be entrepreneurship. As I was outlining, we introduced them, 

a very cursory, quick introduction, and then if it peaks their interest, then we take them through a series of other processes to eventually help them complete a business plan that we think is viable, 

realistic, that we can help guide them through. And then when 

they get out into civilian life working through the VBOCs or 

SBDCs or the other programs, they can get the counseling that 

they need to continue to start and grow their business, access capital, and then eventually contracts. 

With respect to the young entrepreneurs, there are so many ways 

in which we think that we need to engage the young entrepreneurs, so we have a millennials program. And again, these are 

segmentations. I call them just different channels; they are not programs but merely segmentation in our strategy. It is still counseling, and it is still the same kind of effort, just different lines of 

effort in a new target, but those programs have been well received 

by our millennials and we are directing them now to these growth 

accelerators. 

We thought that we would try to understand what was taking 

place in this new phenomenon. Some people call them incubators, 

and we put out an invitation to compete for prizes of $50,000, and 

we had $2.5 million that you awarded to us for that purpose that 

was appropriated. And essentially, we had 823 applications. And so 

it was really nice to have several positive outcomes as a result of 

this competition. First, we were able to introduce the growth accelerators to each other so that they could meet and learn best practices. Second, we brought them in so they could learn more about 

federal resources available to them. And then number three, we 

now have an ongoing communication, another outreach where we 

can continue to promote the SBA services in their communities. 

And last, to your last question, the Cluster. You and I are both 

from California, and we know and we appreciate and respect the 

Silicon Valley model and what it has done for the world in many 

ways. Not just the job creation, but the innovation and the many 

full contributions to health, to sciences, to so much of society. And 

so we see that there are some underserved communities that can 

use a little oomph, if you will. That is a technical term. And essentially, what we try to do is pilot a program that would test how 

these work. And I have to tell you that it is always nice when you 

see that P3s can happen, I believe in public-private partnerships. 

And so when a large financial institution came forward, seeing the 

results of these programs and is now duplicating our efforts, it 

holds promise, and eventually it could be that we either sunset this 

program and allow the marketplace to take hold, but we are really 

heartened by its success to date. 

Chairman CHABOT. Thank you very much. The gentlelady’s 

time is expired. 

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14 

The Committee is going to head over to vote now. Mr. Rice, you 

will be next if you should choose to come back. 

Mr. RICE. I will. 

Chairman CHABOT. Excellent. So we will be back hopefully in 

a half hour approximately, or perhaps shorter than that. But if 

there is no further business, we are in recess for as long as it takes 

to get done with the votes. 

Ms. CONTRERAS-SWEET. Thank you. 

[Recess] 

Chairman CHABOT. The Committee will come back to order. 

And we will now yield to the gentlelady from New York, Ms. 

Clarke, for five minutes. And we want to once again thank the Administrator for being so understanding and so gracious and not just 

running out. So we appreciate very much you sticking around. 

Thank you. 

Ms. CLARKE. And thank you, Mr. Chairman, and thank our 

ranking member, and echo our Chairman’s sentiments to our administrator. Thank you for indulging us today and for sharing your 

testimony with us today. 

Advances in technology continue to impact the needs of small 

businesses and entrepreneurs. Small businesses face the need to 

adapt to new technological environments quicker than ever before. 

I am pleased to hear that one of your focal points is the modernization of the SBA, and I support your efforts to implement your new 

online programs. 

My question, Madam Administrator, is would you discuss in 

more detail the new technological tools that the SBA plans to implement, particularly how these tools may reach out to economically and socially disadvantaged citizens that may benefit from the 

many opportunities afforded by the SBA? 

Ms. CONTRERAS-SWEET. Thank you again for that question. 

Let me just say that technology allows us to do quite a bit, and one 

of those is the goal that you just framed. When we think about access, just my experience bank-wise, if I said to a relationship manager, ‘‘You have a goal of $10 million,’’ they would try to go out and 

get two $5 million loans to make their bogey. And so when you 

have—and so the challenge is about finding—you know, I would 

say, ‘‘No, I want you to put out, you know, 10 $500,000 loans or 

even smaller.’’ And so then it was about how much foot traffic could 

we get into the bank? How do we identify them? It is just as much 

work to underwrite a small loan as it is to do a larger loan. So 

what technology allows us to do is, number one, through LINC, it 

allows us to create that kind of foot traffic. 

Just during our break today, we just met with the Women’s Business Center who outlined to us that in just one week she was able 

to get incredible foot traffic through the LINC program that is a 

dating match program where people who are looking for loans get 

real-time responses from banks, and they are allowed to make a 

match. And then they get a date, if you will, and so it allows you 

to connect with the banker much more quickly. So it is foot traffic, 

if you will, in very real time. So that allows more people to get in 

and to be heard by banks. 

SBREP-219 with DISTILLER

15 

Number two, it allows then the relationship manager to get a 

whole bunch of more people; that he does not have to go out and 

scout. So it is more efficient for community banks. 

The next level is this what we call a liquid FICO score, and that 

is a second initiative that we put in place. And that allows us to 

expedite the way in which we underwrite and the global cash flows 

and the debt service coverage considerations that we do in our underwriting systems. This allows us to do that for the community 

bank that heretofore did not want to do SBA loans because they 

were so cumbersome. So thank you for asking the question because 

we think that this is going to be an important advancement to 

allow banks to do more of our SBA loans. And clearly, there is 

strong evidence that when we compare our SBA loans to the general market conventional loans, there are so many more minorities 

that benefit from SBA loans. 

And the third, and the one that we think is going to be the most 

transformative, is SBA One. And that is going to come online in a 

couple of months, and that is going to completely transform the 

way we interact with our lending partners. And so, again, we think 

that our loans will become more attractive to banks and make 

them more available to our targeted disadvantaged communities, 

particularly our small business communities, and therefore, we 

think positive outcomes will ensue. Thank you. 

Ms. CLARKE. That sounds like a real game changer, Madam Administrator. I am looking forward to seeing the results of the online 

rollout, and just how people really adhere to the usage of it because, you know, you were probably dealing with some areas that 

are more fluent in the use of online services versus others that are 

sort of getting up to speed on it. So I am looking forward to that. 

Just sort of very quickly, the SCORE association has been a 

great resource for small businesses, particularly in my district in 

Brooklyn. Can you express to us what plans, if any, you have to 

expand and grow the collaboration between SBA and SCORE chapters? How would you sort of rate the relationship as it stands 

today? 

Ms. CONTRERAS-SWEET. SCORE is one of the most impressive 

organizations in America. When you think that these are seasoned 

executives who have already had success and they come back and 

volunteer their services to help replicate their stories, I think that 

is an admirable story. 

I was recently visiting with them at their 50th anniversary, and 

it was really quite impressive to see the generosity of these men 

and women who come before. To your earlier question, I know that 

they are also working to address more diversity in their outreach, 

and that is something that we are working to support. And so that 

is another important thing. But just generally speaking, we are 

asking for full funding for SCORE because we think they are important partners, and to the extent that they can continue to recruit volunteers, I think their programs will clearly grow and the 

counseling will grow and we will be able to create more jobs. So 

we are very heartened by the work of SCORE, and we consider 

them top partners, if you will. They are priority partners with us, 

and I have enjoyed visiting with them. And many of them are colocated in the SBA offices. So we have a very intimate relationship. 

SBREP-219 with DISTILLER

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Ms. CLARKE. Thank you, Mr. Chairman, for your indulgence. I 

yield back. Thank you, Madam Administrator. 

Chairman CHABOT. The gentlelady’s time is expired. 

If the administrator can stay a few more minutes, I have got a 

few more questions, and Nydia has a couple questions. 

Ms. VELA ́ ZQUEZ. I do not have any more questions. 

Chairman CHABOT. Oh, you do not? Okay. 

Well, I will ask just a couple quick ones. 

Ms. CONTRERAS-SWEET. Sure, sir. 

Chairman CHABOT. You have been at the SBA for not quite a 

year, I guess April of last year. What is the most significant challenge in managing the agency that you have found since you have 

been there? 

Ms. CONTRERAS-SWEET. You and I sort of discussed this briefly, and that is that unfortunately, our products are seen as cumbersome. And so I think that people see the SBA as their grandfather’s SBA, and that is what we are really working hard. The arc 

of our work, sir, is to make certain that we are responding to the 

technological advances and the way people take in information. 

And so I think that overall that will be the arc of our work, is the 

way we take the SBA and bring it into the 21st century. 

When you think about the technology that we need to use and 

need to become familiar with to make sure that we are helping 

small businesses navigate through the technology that they can deploy and will be encountering in their work. So that is one part of 

the modernization effort. 

The other is that our population used to compete. Our target 

market—one florist competed against another florist across the 

street, and now they find themselves as you identified, in a global 

marketplace. So the marketplace is different. We need to make 

sure that we are modernizing the way we think about market making. And I heard you address markets, and I think that is a salient 

point that we need to address as well and I think are doing nicely 

with those initiatives that I discussed that we are putting in place. 

And the third is that the population is dramatically changing, so 

we need to address whether we have cultural competency as the 

ranking member mentioned. We need to make sure that we are responding to how many—I was going to use the word ‘‘seniors,’’ but 

let us just call them ‘‘encore entrepreneurs.’’ I tell my husband that 

the 60-year-olds are now the new 40s. Our population is changing, 

and so we need to make sure that we have products that respond 

to the dynamic changing demographics for our seniors, for our vets 

as we mentioned, the millennials who now want to start more businesses than ever. And so all in all, I would say the arc of the work 

is the modernization agenda. 

Chairman CHABOT. Thank you. You mentioned kind of the perception among folks of the challenge that it is to go through and 

get loans, for example, through the SBA. We had eight, those businesses I mentioned this morning, that were principally in international trade. That is why we met. And I asked them how many 

of you have ever gotten loans through the SBA or attempted to, 

and three of the eight had attempted, but ultimately, either did not 

go through with the process or were rejected. I think the limits 

were not conducive to what they were trying to do and they just 

SBREP-219 with DISTILLER

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thought the paperwork was kind of daunting and they just sort of 

dropped out. So those were folks that we had not prompted. I was 

not sure what they would say, but just so you know, you do not 

necessarily have to respond, but that is what they told me. 

One other, my final thing that I would want you to respond to 

if you could, the Judiciary Committee passed the Regulatory Flexibility Act that we have passed in previous congresses a couple of 

weeks ago, and it is a small business bill to some degree, so I was 

the principal sponsor, but it did not actually go through this Committee because we wanted to go ahead and get it to the floor. We 

had already been through this Committee in past congresses. Anyway, in general, the Regulatory Flexibility Improvements Act—because it was improvements. But the Improvements Act does a couple of things. But the principal thing that it does is require that 

when federal agencies are considering new rules or regulations, 

they have to get input from small businesses and determine what 

the impact will be, both direct and indirect. That is one of the differences between the existing and the old bill, or the old legislation, 

is that it would include indirect impacts on small businesses. And 

so it passed, passed the House. It was bipartisan. I forget exactly 

how many democratic votes we got on the floor. It was, I think, 29 

or 30 or something like that, virtually all the republicans. And the 

President shortly after that—it has not gone through the Senate 

yet—but issued, and we have seen a fair number of these coming 

out recently, a veto threat which I was—I cannot say surprised, but 

did not particularly—was not happy about it. Do you have anything 

about that at this point that you might want to shed any light, or 

if you would like to come back at a later—get back to me in the 

future after you have had more of an opportunity to find out the 

Administration’s position, I would be happy to wait till then, but 

I will leave it open to you at this point. 

Ms. CONTRERAS-SWEET. Thank you. But if I may just go back 

a step to your earlier comment. I wanted to assure you, I wanted 

to leave you with this assurance because I noted that you referenced in your opening comments about the LMAS system, our 

Loan Management Accounting System. And I just wanted to give 

you the wonderful news. I stated it in September when I was here, 

but maybe I just need to punctuate it or state it with the fine out, 

our LMAS system project, the mainframe, we have migrated off the 

mainframe. We are on longer working—we have done that work 

and it is a completed project. And it is the basis for which we were 

able to launch the LINC and the SBA One. So I wanted to give you 

that assurance that that project is now behind us and we are moving forward in a system that is now compatible with other systems. 

And so we are no longer in a proprietary system that was asked 

about in September and to which you eluded in your opening remarks. 

But as it relates to regulatory, I have not read the specifics of 

the legislation, and so I am happy to go back and review the specifics. But generally speaking, I believe in smart regulation. I do 

not believe in overregulation. I believe in smart regulation. As a 

banker, I did not appreciate the regulation that I had to navigate 

through to start my bank and certainly to operate the bank. But 

I understood that some were appropriate for consumer protection. 

SBREP-219 with DISTILLER

18 

And so it is trying to find that right balance. I have not heard that 

the president indicated that he would veto. I have heard that some 

of his staff said that they might advise him to veto it, but I have 

not heard that he has actually made a final decision on that. So 

I would be delighted to get back to you once I learn more about 

what the administration’s position is. 

Chairman CHABOT. I appreciate that very much. 

And I will now yield to the gentleman from New Jersey, Mr. 

Payne, for five minutes. 

Mr. PAYNE. Thank you, Mr. Chair. I am looking forward to serving with you on this Committee and us working together to improve the circumstances for our constituents as it relates to small 

business. And to the ranking member, who has been a consummate 

proponent for small businesses across the country. 

And Ms. Contreras-Sweet, welcome. 

Ms. CONTRERAS-SWEET. Thank you. 

Mr. PAYNE. First, let me say that I have been very impressed 

with the work that you have done in the short time that you were 

here under the circumstances you found yourself and have been 

able to move SBA in the right direction. We know there is definitely a lot more work to do, but your hands-on leadership bodes 

well for small businesses and entrepreneurs across this country. 

And I was delighted to have you in my district for an SBA small 

business seminar along with Senator Booker, I believe had it, and 

I was able to join. And also, the attention that your office has 

shown to me and my constituents, and I appreciate that. 

Let me say that, you know, as you know, Hurricane Sandy heavily impacted New Jersey, and the Government Accountability Office found that the SBA took well above the goal of 21 days to process disaster relief applications. I see in the budget there is a request for another $159 million for major disasters and $28 million 

for other disasters. Can you tell the Committee what additional improvements SBA intends to make to ensure better response in the 

future? And we know that was not under your initial purview, but 

moving forward, how do you see that? 

Ms. CONTRERAS-SWEET. I have to share with you that since 

I am from Los Angeles, I experienced the Northridge earthquake 

and was on the Rebuild Los Angeles Board after we had the South 

Central Los Angeles riots. And so I have been through situations 

where we really needed SBA and FEMA and others to come in to 

give us support, so this was something that was very important to 

me. And as soon as I took office, this was the first office that I sat 

down to review. So we started just from my experiences things that 

I felt needed to be done and the initiative of the good men and 

women who are trying to evolve at the department, we have done 

several things. 

First, what we found in the response rates and the timeframe 

that it took to respond to the requests, the loan requests, it was 

because there was one queue. So what we did is we have now double-tracked the queue to have one for businesses and one for mortgage recovery. So we now have experts in each queue and they are 

able to process them a little faster. 

Another was that we took them manually. We went in and we 

gave them the paperwork and they completed it manually. We have 

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now gone from 36 percent that came online to now 82 percent that 

are coming online, so that is allowing us to be more efficient. 

Our third initiative is that when people needed help, the limit, the cap limit of the unsecured limit was set at $14,000, and we 

have now raised it to $25,000. And another one is that when we 

see that there is some strong credit and so we really do not have 

to take a lot of time underwriting and understanding what their 

financials are, we put them now in an even more rapid line. So 

these are the kinds of initiatives that we have put in place very 

recently. I know we can do more. 

I recently met with FEMA to understand what their role is and 

how we can complement each other a little more effectively, and so 

just know that the work is ongoing. 

Mr. PAYNE. Okay. We appreciate that. 

One of the SBA’s objectives is to provide timely and instructive 

and useful information through digital and in-person outreach efforts. With the rollout of the SBA One and LINC programs, how 

do you plan to handle the pushback from our constituents who 

have more trust in in-person lending, and how will you gauge the 

success of this program? 

I can tell you that this is not obviate or supplant the process and 

that there should still be some engagement in the process. For example, the date with the lender, you can come in and visit with the 

lender, and in most cases you still have to go in and interact with 

the lender. But this is not a mandatory program. This is an optin. You choose to be on this program. So, you know, for example, 

my mother is never going to go online. She still wants to gauge and 

be personally addressed. And so this does not affect that system 

whatsoever. It is just an added program. It is another layer of programming. So I do not see that that would—I do not think that 

would supplant the personal engagement that needs to take place. 

At the end of the day, particularly community banks, what we do, 

at least I did in my bank is I would always consider character as 

well. And so it is important to get to know the person and to develop the relationship and have a sense of their trustworthiness, 

credit worthiness. 

Mr. PAYNE. Thank you. 

Chairman CHABOT. The gentleman’s time is expired. 

Madam Administrator, we want to thank you very much for your 

testimony here this afternoon. We are sorry that because of votes 

you ended up having to stay beyond the time that you had originally allotted, and we appreciate you doing that. 

And I would ask unanimous consent that members have five legislative days to submit statements and supporting materials for the 

record. And if there is no further business to come before the Committee, we are adjourned. Thank you. 

Ms. CONTRERAS-SWEET. Thank you very much. Thank you. 

[Whereupon, at 4:25 p.m., the Committee was adjourned.] 

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A P P E N D I X 

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Insert offset folio 20 here 93464.001
21 

Chairman Chabot, Ranking Member Velazquez, and distinguished members of the Committee, thank you for this opportunity 

to testify about SBA’s FY 2016 budget. Chairman Chabot, welcome 

back to the leadership of this committee. Your track record and bipartisan commitment is an asset to this country’s small businesses. 

I see a number of new faces on the committee. I’ve already had 

productive conversations with many of you. I look forward to working with all of you and visiting your districts in the months ahead. 

Entrepreneurs are the backbone of our economy. They exude 

courage and character. The programs in this budget request have 

one thing in common: They seek to maximize opportunities for 

small business owners to create jobs and contribute their talents to 

our economy. 

That’s the agency’s mission, and that’s why I’m here. To accomplish this goal, we must continue our work to modernize the SBA, 

so we’re accessible and relevant to the business community in the 

21st century. 

To that end, I want to share an important achievement in this 

document. Our FY16 budget proposal contains a zero subsidy request for our core capital programs—7(a), 504 and the Small Business Investment Company (SBIC) program. We are proud of this 

achievement and the fiscal responsibility it represents. 

I’m an entrepreneur and a former community banker. I take my 

fiduciary responsibility very seriously, and this budget represents 

my commitment to be a good steward of taxpayer dollars. For 

FY16, the SBA requests $860 million. In this time of tight budgets, 

the SBA is doing more with less. SBA’s zero subsidy achievement 

means this proposed budget comes in three percent below our current budget. 

The SBA is making good loans, and we project we will cover any 

loan losses through fees in FY16. We’ve achieved this despite waving fees on small-dollar loans. This fee relief helped us increase 

lending to minority-owned businesses by 23 percent last year, so 

we propose continuing it in FY16. 

I’ve been on the job now for nearly a year. Thanks to the bipartisan support we’ve enjoyed from this committee, we’ve made some 

important progress together. 

Together, we met our 23 percent small business goal contracting 

goal for the first time in eight years. We supported nearly $29 billion in lending last year, which created or sustained nearly 600,000 

jobs. In the same period, our resource partners counseled 1.2 million entrepreneurs. Our SBIC funds increased their investments by 

60 percent and provided $5.5 billion in patient capital to promising 

small firms. And we expanded our Boots to Business program to 

train more than 15,000 service members at 165 military installations worldwide. 

In his State of the Union address, the President spoke about our 

economic recovery and job growth. I’ll tell you something you already know: It’s our small businesses that are leading this economy 

back. 

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This budget requests an increase in our 7(a) lending authorization to meet the growing demand for SBA capital. Last year, Congress raised our 7(a) authorization level as we approached our 

lending cap, resulting in an all-time record of $19.2 billion in approvals. This year, we’re asking for our highest authorization level 

yet of $21 billion. 

This budget also seeks full funding for our resource partners. 

The loan counseling provided by our Small Business Development 

Centers, SCORE partners, Women’s Business Centers and Veterans Business Outreach Centers helps entrepreneurs across 

America start, grow or reinvigorate their businesses. Partnering 

with them is one of the smartest investments we can make. 

This budget seeks a modest $950,000 increase for veterans outreach programs. We propose expanding SBA’s Boots to Business 

entrepreneurial training program to the National Guard, Reserve 

component members, and additional military installations. We’re 

asking to broaden our Boots to Business Reboot program that 

serves veterans who’ve already transitioned out. And we’re proposing to continue the fee reductions on loans to veterans, so we 

can serve these heroes as well as they’ve served us. 

We’re also asking to expand SBA’s microloan program level by 40 

percent to increase the ability of microlenders to capitalize startups 

and provide technical assistance. We are convinced this expansion 

would fill a real need for more small-dollar loans in the current 

commercial market. It will help underserved and rural businesses 

turn a profit and create more jobs. 

This budget also seeks to improve our customer service. As a 

former community banker, I understand that the best way to make 

SBA more effective is to make our products and processes easier, 

quicker, and more cost-effective. This budget seeks funding to accomplish this critical goal by migrating more of our services online, 

where most banking takes place today. 

This April, we’ll roll out our highly anticipated SBA One system. 

This is the automation of the entire 7a loan application. It’s going 

to significantly cut the time and cost of our application process. We 

recently demonstrated this new service to bankers, and the feedback has been overwhelmingly positive. 

Last year, I laid out my modernization plan to fashion a 21st 

century SBA that stands for Smart, Bold and Accessible. Smart 

means implementing systems that harness technology to deliver 

capital more effectively. Bold means opening new markets for small 

business owners both at home and abroad. Accessible means making our services available to all, including women, veterans, rural 

entrepreneurs, seniors and the disadvantaged. 

I’d like to close by expressing my thanks members of this committee and to our committed SBA staff across this country. More 

than 2 million of the 3 million jobs generated last year, we’re created by small businesses. This budget would help us build on this 

momentum. It would give us the resources we need to perform our 

core mission and help more small businesses across the country innovate, launch, hire, and grow. 

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