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24–809 2017

TAKING CARE OF SMALL BUSINESS: WORKING 

TOGETHER FOR A BETTER SBA 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

APRIL 5, 2017 

Small Business Committee Document Number 115–014 

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 

DAVE BRAT, Virginia 

AUMUA AMATA COLEMAN RADEWAGEN, American Samoa 

STEVE KNIGHT, California 

TRENT KELLY, Mississippi 

ROD BLUM, Iowa 

JAMES COMER, Kentucky 

JENNIFFER GONZA ́ LEZ-COLO ́ N, Puerto Rico 

DON BACON, Nebraska 

BRIAN FITZPATRICK, Pennsylvania 

ROGER MARSHALL, Kansas 

VACANT 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

DWIGHT EVANS, Pennsylvania 

STEPHANIE MURPHY, Florida 

AL LAWSON, JR., Florida 

YVETTE CLARK, New York 

JUDY CHU, California 

ALMA ADAMS, North Carolina 

ADRIANO ESPAILLAT, New York 

BRAD SCHNEIDER, Illinois 

VACANT 

KEVIN FITZPATRICK, Majority Staff Director 

JAN OLIVER, Majority Deputy Staff Director and Chief Counsel 

ADAM MINEHARDT, 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. Linda McMahon, Administrator, United States Small Business Administration, Washington, DC ...................................................................................... 4 

APPENDIX 

Prepared Statement: 

Hon. Linda McMahon, Administrator, United States Small Business Administration, Washington, DC ..................................................................... 31 

Questions for the Record: 

From Hon. Chabot, Hon. Marshall, and Hon. Bacon .................................... 34 

Answers for the Record: 

From Hon. Linda McMahon ............................................................................ 36 

Additional Material for the Record: 

Talking Points/Remarks from Congresswoman Yvette D. Clarke ................ 39 

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(1) 

TAKING CARE OF SMALL BUSINESS: 

WORKING TOGETHER FOR A BETTER SBA 

WEDNESDAY, APRIL 5, 2017 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Committee met, pursuant to call, at 11:00 a.m., in Room 

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

Present: Representatives Chabot, Radewagen, Kelly, Blum, 

Comer, Gonza ́lez-Colo ́n, Bacon, Marshall, Vela ́zquez, Evans, Murphy, Lawson, Clarke, Chu, Adams, Espaillat, and Schneider. 

Chairman CHABOT. Good morning. The Committee will come to 

order. 

Here at the Small Business Committee, we have members from 

all walks of life, all parts of the country, and certainly, all political 

views. That is why we take every opportunity to remind ourselves 

why we are here serving on this particular Committee together. We 

know that every small business started with an idea. 

In the 21st century, there are more ways than ever for the federal government to either help those ideas become reality and create jobs, or squash them before they ever get off the ground. I believe we have a new partner at the Small Business Administration 

who understands this as well as anyone. Linda McMahon is a living example of what can happen when risks are weighted, chances 

are taken, and creativity is unleashed. When that happens the 

world is your arena, and I do not use that word loosely. 

My long-time friend, our Ranking Member, often says that there 

is no such thing as a Republican small business or a Democrat 

small business; they are just small businesses trying to succeed. I 

agree. And I believe the resounding support Administrator 

McMahon received through her Senate confirmation process is a 

sign that she shares our approach. Not to belabor the point, but the 

Senate really seemed to like her, and they do not like anybody. 

This Committee has long believed that the SBA is an agency in 

need of attention. The loan programs that provide crucial access to 

capital need vigilant oversight. The training and technical assistance programs that reach people through local SBDCs need to keep 

up with rapidly changing times. Our job is to ensure that SBA’s 

programs are effectively and efficiently serving the millions of 

Americans who work at, own, or want to start a small business. We 

ended the last Congress with a lot of unanswered questions from 

the SBA about how the agency will address longstanding defiSBREP-219A with DISTILLER

2 

ciencies in management, information technology, and program 

oversight. 

It is our intention that today will mark the official start of a collaborative relationship that will address these issues and any more 

that arise in the future. Administrator McMahon has a record of 

spotting opportunity where few others could. I think it is also safe 

to say that she does not put up with much nonsense, not that this 

Committee would ever give her any but we are looking forward to 

hearing directly from her today about her plans for making the 

SBA a better agency. 

Madam Administrator, welcome to the first of what I am sure 

will be many productive conversations with this Committee. And I 

would now yield to our ranking member, Ms. Vela ́zquez, for her 

opening statement. 

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

Madam Administrator. And thank you for being here today. 

While there are many political and ideological differences represented on this committee, one thing we all agree on is the centrality of small businesses to our nation’s economy. America’s small 

employers merit our attention because in a time of partisanship 

they remain our common ground. They are the voices this committee strives to make heard. Small businesses need the focus of 

both the federal government and the private sector. Today we will 

center our discussion on government efforts to assist small business owners, principally those of the Small Business Administration. 

The SBA plays a vital role because it is the only agency in the 

federal government tasked specifically with helping small businesses grow and succeed. For small businesses to fully reap the 

benefit from SBA’s programs, it is important that the agency operates efficiently and effectively, utilizing taxpayers’ dollars wisely. 

As such, one role of this committee is conducting vigorous oversight 

so we know the agency is serving small businesses well. In that regard, it is the duty of our committee to raise our concerns with any 

proposal eliminating or consolidating valuable SBA programs. 

While cutting redundant programs is a worthwhile goal, SBA 

programs serve an important purpose in reaching business owners 

who often cannot access assistance elsewhere. In many cases, businesses struggle to secure financing, and SBA initiatives help fill 

these gaps. Last fiscal year, the agency supported over $24 billion 

in lending through its 7(a) program alone. Another $4 billion in 

lending was made available for capital-intensive projects through 

the agency’s 504 initiative. 

The SBA also plays a vital role in helping small businesses and 

disadvantaged firms secure their fair share of federal contracts. 

When small firms win government contracts, our entire nation benefits. Taxpayers receive quality goods and services at fair prices. 

At the same time, unlike their larger competitors, when small 

businesses secure federal work, they often must scale up quickly 

and that creates jobs. 

We have seen some progress in federal agencies meeting their 

small business contracting goals, but more work remains. I will be 

interested to hear the administrator’s view on how to help more 

small firms break into the federal marketplace. Beyond lending 

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3 

and contracting, entrepreneurs need the technical know-how and 

guidance to help them with everything from writing a business 

plan to learning to export. 

The agency’s Small Business Development Centers, Women’s 

Business Centers, and Veterans Business Outreach Centers are 

spread throughout the country and help meet those needs, but improvements can always be made. SBA must do more to support 

minority- and women-owned businesses as they account for much 

of the nation’s small business growth. Women and minority business owners face high interest rates, a lack of capital, unmet contract goaling, and a lack of mentorship. These business owners are 

invaluable to our economy and continued disparities need to be addressed. 

Nevertheless, the SBA remains an important institution for 

America’s small businesses. It is paramount that the agency’s 

scarce resources be invested wisely and that the agency has the 

funds and people in it to carry out its mission. In that regard, I 

found disconcerting this administration’s proposal to reduce SBA’s 

budget by 5 percent. Likewise, I have concerns about how the current hiring freeze and plans to reduce SBA’s workforce might restrict agency functions. 

All of us in Congress and the administration agree that small 

businesses are a cornerstone of our economy and deserve our support. However, that requires more than lip service. It involves a 

real commitment to invest in programs that work. 

On that note, I look forward to hearing the administrator’s view 

regarding the agency’s priorities for the long term. With that, I 

thank the chairman for holding this hearing and, again, I welcome 

the administrator. I yield back. 

Chairman CHABOT. Thank you. The gentlelady yields back. 

If Committee members have an opening statement prepared we 

would ask that they submit them for the record. 

And I would like to take just a moment to go over the time restraints and the lighting system which we have already discussed, 

but we basically operate under the 5-minute rule. And you get 5 

minutes and we do, too. And there is a lighting system to assist 

you in that. The green light will be on for 4 minutes and the yellow 

light will come on and it gives you a minute to wrap up, and then 

the red light will come on. If you need a little more time since we 

just have one witness, we usually have four, you do not get four 

times 5 minutes, 20, but a little bit over would be fine. 

So, and I would now like to officially introduce our distinguished 

witness here this morning. It is my pleasure to introduce The Honorable Linda McMahon, the 25th administrator of the Small Business Administration. She is one of the Nation’s top female executives, has run for public office, and has been recognized for her 

many philanthropic activities. Administrator McMahon is the cofounder and former chief executive officer of WWE, which grew 

from a small, regional operation, to a publicly-traded global company with 800 employees worldwide; many of those employees, 

very big employees. 

Most recently, she served as the cofounder and former chief executive officer of Women’s Leadership LIVE, LLC, a company that 

helps women to launch and expand their own businesses, advance 

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4 

their careers towards executive roles, and pursue opportunities for 

leadership in public service. Before assuming the top post at SBA 

6 weeks ago, she served on the boards of Sacred Heart University 

in Fairfield, Connecticut; the Close Up Foundation in Washington, 

D.C., which educates young people to participate in our democracy; 

and American Corporate Partners in New York City, which pairs 

returning veterans with mentors in the workforce. 

Administrator McMahon has received numerous honors, including, among other things, the Humanitarian Award from Catholic 

Big Sisters and Big Brothers in New York City and the Spirit of 

Hope Award from Liberation programs in Norwalk, Connecticut. 

She is a graduate of East Carolina University. 

Administrator McMahon, we want to thank you again for appearing this morning, and you are recognized for 5 minutes. 

STATEMENT OF THE HONORABLE LINDA MCMAHON, ADMINISTRATOR, UNITED STATES SMALL BUSINESS ADMINISTRATION 

Ms. MCMAHON. Thank you very much, Chairman Chabot, 

Ranking Member Vela ́zquez, and members of the Committee, for 

inviting me to speak with you today. I am so honored to be serving 

as administrator of the U.S. Small Business Administration. I 

would also like to express my gratitude to President Trump for the 

opportunity to join his administration and for his support of small 

businesses. 

I want to right off the bat address recent reports that came out 

last Friday relative to an article in a magazine that indicated that 

SBA’s flagship program, the 7(a) Business Loan Guaranty program, 

may be at risk of exceeding its program authority this year. I am 

here today to assure you that while the agency is seeing increased 

demand by the small business community, we are not currently in 

jeopardy of exceeding our capacity to meet such needs. We have 

contacted and continue to work with the SBA lending community 

to inform them that the agency is in good financial position with 

sufficient resources through the end of this fiscal year. 

To ensure that America’s small businesses can fully benefit from 

the tools and resources provided by SBA and that this support continues through the year uninterrupted, I do support legislative 

changes that provide the administrator circumstantial flexibility to 

increase its program authority level. Such flexibility, such as 

through prior proposals to increase the program authority by 15 

percent following proper congressional notification, could better 

equip SBA to meet peaks in demand while continuing to operate 

at zero subsidy. 

Today marks 50 days since I was sworn in as administrator of 

SBA, and I have been drinking from a firehose a little bit. I am 

continually impressed by the tremendous work being done by 

SBA’s team in support of our Nation’s 28 million small businesses. 

My goal as administrator is to revitalize the agency and raise its 

profile and, in turn, revitalize the spirit of entrepreneurship in 

America. 

My hope is as more people learn about the services SBA provides, they will have the confidence, skills, and resources they need 

to start or grow their own businesses, to invest in their commuSBREP-219A with DISTILLER

5 

nities, to create jobs, and to grow our economy. I feel a tremendous 

commitment to each of SBA’s stakeholders: our small business 

owners; our team at SBA; President Trump, who entrusted me 

with this position; and the taxpayers who expect us to use their 

dollars effectively and efficiently. 

When I first met with President-elect Trump back in November 

about taking the top job at SBA, he communicated one clear, specific request to me. As I was leaving his office, he looked at me and 

he said, ‘‘I have one request, and that is that you do a good job.’’ 

He said it with such sincerity, I knew he meant it and was expecting me to deliver. I responded that I would, adding that, ‘‘If at any 

time my job is not good enough, I trust you will tell me and I will 

step aside for someone who would do it better.’’ And his response 

to me was, ‘‘Well, I could not ask for more than that.’’ 

And during my first town hall meeting with SBA’s employees 

last month, I asked every one of them to join me in that commitment: do a good job and expect to be held accountable. I have spent 

a lot of time getting to know our team and letting our team get to 

know me. I want them to feel engaged and empowered and know 

their expertise is valued. Since our town hall meeting, the conversation has continued, whether in formal settings or chats on the 

elevator or on social media. In fact, our social media team tells me 

the agency’s official Twitter feed has added more than 100,000 followers since I came onboard. Last week’s Twitter chat called ‘‘Business Success Her Way,’’ promoting women entrepreneurship, was a 

trending topic nationwide. I am thrilled there is a buzz around 

SBA as it draws attention to the services the agency offers, services 

that will ultimately help people start, scale, and succeed in business. 

Our small businesses are our Nation’s innovators and job creators, and I am committed to serving as their advocate. Last week, 

I had the privilege of joining Vice President Pence visiting small 

business owners in West Virginia. Our host, Ron Foster, grew his 

construction supply company with the help of a 504 loan from SBA. 

I relate to entrepreneurs like Ron because I am an entrepreneur 

myself. I have shared the experiences of our country’s small business owners. My husband and I built our business from scratch. 

We started out sharing a desk. Over decades of hard work and 

strategic growth, we built it into a publicly-traded, global enterprise with more than 800 employees. This past weekend, the business we created had a global audience of millions as it broadcast 

the 33rd edition of WrestleMania. 

I am proud of our success. I know every bit of hard work and 

sweat equity it took to create that success. I remember the early 

days when every month I had to decide whether I should continue 

to lease a typewriter or whether I could finally afford to buy it. 

Yes, and believe it or not, that $12 a month made a difference in 

the budget. 

Like all small business owners, I know what it is like to take a 

risk on an idea, manage cash flow, navigate regulations and tax 

laws, and create jobs. Since stepping down as CEO of WWE in 

2009, I have worked to help more people have the opportunity to 

pursue those goals. As a candidate for the U.S. Senate in 2010 and 

2012, I met with more than 500 small business owners, touring 

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their shops, restaurants, offices and factories, and sharing ideas 

during roundtable discussions. Job growth was a pillar of my campaign, and because small businesses are responsible for half of all 

private sector jobs and the majority of new jobs, they were my 

focus. 

And for the past 2 years, I promoted women and entrepreneurship as cofounder and CEO of a startup called Women’s Leadership 

LIVE. I wanted to share my vast experience with others who are 

launching startups or looking to scale their businesses. Through 

live events and webinars, we educated entrepreneurs about things 

like applying for a loan and developing a business plan. We also 

worked to build their confidence. I always say that even entrepreneurs with the best ideas just sometimes need a little wind beneath their wings. We shared our stories of successes and failures, 

our networks of contacts and resources, and our strategies for addressing challenges. And now through SBA, I am committed to offering small business owners the capital, the counseling, and the 

confidence that will help propel them forward. 

Small businesses have taken some tough blows in the past. I 

know what it is like to take a hit, and I have learned it is not how 

you fall, but how you get up that truly matters. Early in my career 

when we were very young, my husband and I declared bankruptcy. 

We invested in a company we did not understand and trusted people we should not have. When that company went under, we were 

left holding the bag. We worked really hard to pay off those debts 

until we realized we just could not do it. Bankruptcy was a really 

hard decision and a very tough time in our lives. We lost our home. 

My car was repossessed in the driveway. At that time we had a 

young son and a baby on the way. We had no choice but to work 

hard and start building again so we could support our family. 

When our daughter Stephanie was born, a perfect little baby so full 

of promise and potential, I took it as an omen that things were 

going to be okay. We owed it to her and to our son that we would 

make it okay. And fortunately, we were able to and we did. 

As I visited small businesses all over the country, I have seen 

that same resiliency over and over again. Entrepreneurs are fighters. They work hard. When they get knocked down by recession or 

a natural disaster, or simply a change in consumer demand, they 

turn to their creativity to make it better. But sometimes they need 

a helping hand. Now that I am the SBA administrator, I am committed to ensuring that our agency is as strong as it can be to lift 

up as many entrepreneurs as it can. My commitment extends to 

making sure that all services we offer to our customers are delivered effectively and efficiently and, most importantly, that SBA 

and our partners are offering what small businesses actually need 

to grow to innovate and to create jobs. With small businesses as 

the driver of our economy, I believe our country will remain strong, 

too. 

Thank you so much for the opportunity to speak with you today, 

and I look forward to answering your questions. 

Chairman CHABOT. Thank you very much. And I will recognize 

myself for 5 minutes to begin the questioning. 

I was struck by your comment about not knowing whether you 

should lease or buy the typewriter because I had a similar experiSBREP-219A with DISTILLER

7 

ence when I, out of law school, opened up my law office and I was 

a sole practitioner. And I used to go a mile down the street to make 

copies at the end of every day at the Quick Print because it was 

too expensive to lease or buy a copy machine myself. And I did not 

buy one until 3 or 4 years after having that. So it saved a lot of 

time not having to drive down there, but I certainly can identify 

with that story. 

And I also want to thank you for addressing the 7(a) loan program issue at the beginning of your testimony because I had also 

seen that same article and was concerned about that as well because we had an experience here a couple years ago and so we need 

to, in advance, plan for this. And I am very glad to hear—was that 

just last year then? Yeah, recently. As recently as last year. And 

so please, if you would not mind closely monitoring that. We are 

glad you are, and if you could keep in touch with our staff and will 

let both sides of the aisle know how that is progressing down the 

road. 

The Government Accountability Office reports, the GAO, they 

found many longstanding SBA management challenges, all of 

which, of course, were prior to your time at the administration 

since you have only been there 6 weeks now. What sort of plans 

do you have for completing the implementation of the GAO’s recommendations on the Small Business Administration, your agency’s management? 

Ms. MCMAHON. Thank you very much for that question. You 

know, coming on as the administrator of SBA is a lot like assuming 

the position of CEO of a company. In fact, that is clearly what it 

is. So when you first come on board you are trying to evaluate employees, practices, what is good business, what is not good business. And in this instance, you had a little help in identifying some 

of those issues by the GAO. So I can tell you that we have been 

incredibly responsive, it is my understanding, to a lot of those 

issues and have already closed some of those issues. 

When I came, my first address in our town hall meeting was to 

let our folks know that, look, I want this to be the best SBA that 

has ever been, and I think it is a little stodgy. I want us to update 

it. I want us to look at every instance we can and make it better. 

So I appreciate the GAO and the Oversight Committee’s recommendations, and we will continue to make sure that we are 

making those kinds of improvements. 

Chairman CHABOT. Excellent. Thank you very much. 

My next question, the SBA has been plagued with IT issues, and, 

in fact, the GAO and the SBA’s Office of Inspector General have 

both reported that IT is a top management challenge for the SBA. 

The GAO has even gone so far as to find that the SBA is at serious 

risk of a cybersecurity attack, putting small businesses and their 

personal data in jeopardy. What steps are you planning to take to 

address the SBA’s IT challenges, and will these steps help the SBA 

to prevent cybersecurity attacks? 

Ms. MCMAHON. It is certainly my goal to take the steps that 

would help prevent those attacks. Just before I arrived in October, 

the acting administrator hired a new CIO. And Marie Roat’s background is very thorough. She comes from the public and the private 

sector. In fact, she has actually, just this past Friday, received an 

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award for her government service and expertise. She kind of inherited a mess, and I think what she has done so far is to put in policies and procedures that are absolutely making things better. 

We have a long ways to go. In fact, last Thursday evening we 

had what was called a spoof email come through. It did not affect 

our network. Our network was not hacked, but these are attempts 

to get inside. What we found was a configuration error in transferring from one email management system over to Microsoft, so that 

was fixed immediately. But you do not know that those things exist 

until it is tested. So what I asked Maria and our deputy last week 

were what kind of beta tests are we doing to make sure that we 

can identify in advance any of these weaknesses? So they are in 

the process of doing that. 

We are also in the process of upgrading our equipment because 

what we found was we had a lot of equipment that no longer had 

support, for instance, of Microsoft. So identification of equipment 

throughout the enterprise, policies and procedures, they are working very hard to get those in place and I think we have some good 

people. The deputy came on in January, so you know, the proof is 

in the pudding, but I have seen positive results so far. 

Chairman CHABOT. Thank you very much. My time is expired. 

The Ranking Member is recognized for 5 minutes. 

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

Administrator, you mentioned in your opening statement the 7(a) 

cap issue and how you have moved to alleviate fears of a shutdown. 

What exactly do you mean by it? 

Ms. MCMAHON. Well, first of all, we contacted our lenders to 

make sure that they understood that this article was not totally 

correct. One of the things the article stated was it talked about the 

increase on a percentage basis of where we were for loans this year 

relative to last year, and we had run out of funds and had to come 

back and ask for more funds. That is not the case. What the writer 

of the article did not look at the program in totality. 

So another thing that we did, I had our communications department call the writer of the article and say we want to work with 

you. If you have issues, please at least call us so you can get the 

full information so that your story is correct for both you and for 

us because you could create a panic in the lending environment 

that would send people, you know, it could be a run on the banks 

to get things done. So it was very inappropriate, and I thought not 

as professional as it might have been, so we offered to work with 

them. In addition, we notified all of our employees that this was 

not an issue. 

Ms. VELA ́ ZQUEZ. Okay. But the risk is real and we have dealt 

with this issue before. So my question to you is to what extent 

should SBA be given flexibility to increase 7(a) lending authority 

beyond the congressional authorized cap? 

Ms. MCMAHON. Well, thank you. And one of the things that I 

have asked for is an ability to increase the cap by 15 percent 

should we have surges that would be unanticipated and not 

through anything that we have done. However, we do have, I think, 

a really good lender oversight program now and are really managing that risk. We watch it on a daily basis, so we are totally on 

top of it. 

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Ms. VELA ́ ZQUEZ. Are you telling me that you are open to be 

supportive of flexibility in increasing the 7(a) program subsidy? 

Ms. MCMAHON. Absolutely. 

Ms. VELA ́ ZQUEZ. Okay, thank you. 

Last week, I hosted a women’s roundtable exploring women’s 

small business issues, and a common concern among participants 

was the access women have to capital in order to start and grow 

their businesses. The SBIC program that we have with SBA is a 

stable and successful program, but it needs more women investors. 

I think there is a real opportunity for Congress, the Small Business 

Administration, and the industry to work together to support getting more women into investing and for more women-run businesses to receive investment. Will you work with this committee 

and the industry to get more women licensed as SBIC fund managers? 

Ms. MCMAHON. I certainly will because I think it is just that 

important as well. 

Ms. VELA ́ ZQUEZ. Thank you. 

In 2014, the GAO reported that many ineligible firms were allowed to enter into the Women’s Procurement program because of 

their ability to self-certify. In order to prevent fraud in the program, the 2015 National Defense Authorization Act required SBA 

to implement its own certification program. I would like to know, 

when SBA expects to have its certification process up and running? 

Ms. MCMAHON. Very soon. As a matter of fact, it is a focus 

right now that is going on in SBA. I do not have an exact timeframe for you, but we are looking at having that program up and 

running very soon. 

Ms. VELA ́ ZQUEZ. And at that time, when can we expect the repository currently used by self-certifying businesses to be eliminated? 

Ms. MCMAHON. Let me take a look at that and get back to you. 

Ms. VELA ́ ZQUEZ. Okay. In the 114th Congress, bipartisan legislation was introduced that included redefining credit elsewhere to 

focus on the borrower’s ability to obtain credit instead of a lender’s 

ability to provide it. We continue to hear concerns over how the 

credit elsewhere test is applied. To what extent do you believe Congress should enact legislation that provides clarity to the definition 

of credit elsewhere? 

Ms. MCMAHON. I think that it is incumbent upon the agency. 

Maybe not necessarily government. 

Ms. VELA ́ ZQUEZ. Okay. 

Ms. MCMAHON. To continue to look at making sure that our 

lenders are the ones that we need for our programs when our borrowers cannot get money elsewhere. 

Chairman CHABOT. The gentlelady’s time is expired. Does the 

gentlelady need additional time? 

Ms. VELA ́ ZQUEZ. No. I will go in the second round. Thank you. 

Chairman CHABOT. Okay. Okay. Okay. Thank you. 

Ms. VELA ́ ZQUEZ. I yield back. 

Chairman CHABOT. The gentlelady yields back. 

The gentlelady from American Samoa, Mrs. Radewagen, who is 

the chairman of the Subcommittee on Health and Technology, is 

recognized for 5 minutes. 

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Mrs. RADEWAGEN. Thank you, Mr. Chairman and Ranking 

Member. Talofa. I want to welcome you, Administrator McMahon, 

for testifying today. 

Just a few weeks ago, my colleagues in this Committee were all 

joking about March Madness and their districts’ various college 

basketball teams. Unfortunately, American Samoa does not have a 

college basketball team, but I can boast about something the other 

members of this Committee cannot, and that is professional wrestling. American Samoa has given the wrestling world Pita Maivia, 

Roman Reigns, the Usos, Samoa Joe, and of course, my friend and 

cousin, The Rock. The WWE has done a great job of raising awareness of American Samoa. 

Administrator McMahon, during the last administration, the CIO 

post remained vacant for long periods of time, which likely contributed to many IT challenges, and I am glad to learn that you now 

have one. I also represent American Samoa, and one of the main 

issues that our small businesses face is a lack of capital. Under 

your direction, how will SBA address access to capital? 

Ms. MCMAHON. In general terms you mean? 

Mrs. RADEWAGEN. Yes. 

Ms. MCMAHON. We are already addressing that access to capital. I think we are looking always for more qualified lenders, but 

we want to make sure that they are the right lenders. We have 

lender training programs. Our field offices are constantly in touch 

with our lending partners. And as we can see, there is more demand for capital. So I think we have a good program in place but 

it is one that we will continue to monitor to make sure that we are 

making as much capital available, you know, to our women programs. 

Mrs. RADEWAGEN. And thirdly, my last major concern is the 

Disaster Loan program. American Samoa has suffered from hurricanes and tsunamis and cyclones which have nearly destroyed our 

economy. Will SBA be ready to help assist small businesses and 

homeowners when the next disaster strikes? 

Ms. MCMAHON. I think we learned a lot from Katrina and 

Sandy, and it is my understanding that we were not prepared to 

handle the magnitude of those storms. In fact, when I first learned 

that disaster relief came under SBA, I was actually quite surprised. 

And in my Senate hearing I testified that it would be one of the 

areas that I would take the first look at because you never know 

when that next disaster or catastrophe is going to strike. And we 

have to be ready because when our businesses, when our entrepreneurs or operators have lost their businesses, that not only impacts them, it impacts the local economy, it impacts our national 

economy. So we want to make sure that we can get them back on 

their feet, not only from their business perspective but also from 

their home perspective. 

So the leader of our Disaster Relief program, James Rivera, I 

think has done an excellent job in responding to the magnitude 

now of Disaster Relief. In fact, let us see, in May, I will tour our 

facility in Dallas-Fort Worth, from which everything fans out from 

when we get a disaster program. It is sort of the headquarters of 

Disaster Relief, so I am looking forward to that. But I feel confident that James—in fact, I believe he is testifying before this 

SBREP-219A with DISTILLER

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Committee later this month. I think he has put in really good, solid 

programs to make sure that we do not get caught like we did with 

Katrina and Sandy. 

Mrs. RADEWAGEN. Thank you, Mr. Chairman. I yield back. 

Chairman CHABOT. Thank you. The gentlelady yields back. 

The chair would note that the administrator mentioned Hurricane Sandy, and the Ranking Member was instrumental in proposing bipartisan legislation to improve the response to tragedies 

like Sandy, and that is something in a bipartisan manner that 

made it into law in the last Congress. So I would like to commend 

the Ranking Member for that. Absolutely. 

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

Chairman CHABOT. Absolutely. Well, it is well deserved. 

So I would now like to recognize the gentlelady from Florida, Ms. 

Murphy, who is a ranking member of the Subcommittee on Contracting and Workforce, for 5 minutes. 

Ms. MURPHY. Administrator McMahon, thank you for being 

here today, and we look forward to working with you. 

As you mentioned in your testimony, you have spent considerable 

time visiting small businesses across the country. I recently met 

with my constituents from my district who told me that you are familiar with the National Entrepreneur Center located in Orlando 

and have been supportive of the range of services that they offer. 

For my colleagues who may not be aware of the NEC, the center 

is a public-private collaboration between various community resource partners: SBA, Orange County, and the University of Central Florida, among many others. It is home to various chambers 

of commerce and SBDC and our SCORE chapter, and serves as a 

one-stop shop for many entrepreneurs and small business owners 

to receive free or low-cost business development training and assistance, and I want to thank you for your support of the NEC. 

Last week, our Subcommittee held a hearing on SBA’s entrepreneurial development programs, and we discussed the ongoing concerns that the SBA’s resource partners with the agency’s data collection. For example, the SBDCs in my State are concerned that 

the goals and metrics set by the SBA are not geared towards demonstrating quality of services and economic impact. Can you speak 

to this concern, and will you be meeting with leaders from the 

SBDC, SCORE, and WBCs to learn more about their programs 

firsthand? And then also, what do you think the metrics should be 

to measure quality of service? 

Ms. MCMAHON. It is interesting that you first spoke about the 

National Entrepreneur Center because it was very impressive. And 

actually, the head of that, Jerry Ross, and I met in my offices here 

in Washington just last week, because I think there are elements 

of it that could absolutely be incorporated with some of our SBA 

district offices that would make us more efficient and effective. 

Those two words I heard from Ranking Member Vela ́zquez. It is 

the two words that I constantly say from a management perspective at SBA, the two things that are your guiding principles here, 

are our programs effective and efficient? 

One of the things that I asked when I came onboard, I was sitting with our CFO and I said, ‘‘Tell me how we measure success 

at SBA. How do we measure success of our programs?’’ And while 

SBREP-219A with DISTILLER

12 

there are some really good metrics in place, I think we have room 

for improvement. Some have been put in place over the last year 

or so. But I am not really satisfied that we have the kind of metrics 

that we need. I think right now we are measuring more output 

than outcomes, and I want that tightened up because I want them 

to be efficient and effective, and I do think we have room for improvement. 

Ms. MURPHY. Great. And then another question is despite multiple attempts by this Committee, several agencies continually fail 

to meet their small business contracting goals. Why do you think 

this is the case, and how can we work together to ensure that agencies meet contracting goals and take their duty to contract with 

small firms more seriously? 

Ms. MCMAHON. Well, I think we absolutely have to be vigilant 

for that because I think it is a privilege, quite frankly, to get a government contract. You know, to get a contract from the greatest 

customer in the world is really quite a coup. And if it is not being 

valued and serviced and really looking at what we need to do, then 

I think we need to look elsewhere, and maybe that contractor does 

not deserve that contract. 

Ms. MURPHY. And then finally, as you know, the Small Business Investment Program has a legacy of empowering women in 

the private equity community through greater deployable leverage 

and rigorous standards for operating a fund. With your support for 

the program, we can continue to empower women and other represented communities in the private equity community to support 

them as they build their businesses through receiving that investment. In your opinion, what can we do as partners to ensure that 

the program is well supported for these purposes? 

Ms. MCMAHON. Well, as I read in my opening statement, after 

I left my company, my former company and started a new company, Women’s Leadership LIVE, one of the things that I did discover, what made me want to be involved in that particular company with my two other cofounders was looking at the availability 

of capital for women. I think it is an educational process on the one 

side. I did find, and this is not any sort of blame for women, but 

I did find out that in the business world, especially with startups, 

they are not quite as confident going forth. 

So part of what we need to do is to help them write their business plans. Help them where they are transitioning in their own 

company from a management level to a C suite, whether they are 

going to a board, mentorship and networking is so vital. And I 

think we have to provide that through our counseling at our 

Women Business Centers. I think that is really critical. And in our 

Office for Entrepreneurial Development it is a key thing to mentor 

because sometimes, as I said in my opening statement, you need 

a little wind beneath your wings. And what I mean by that is support systems. And so we are constantly evolving. In my short tenure at SBA, I have seen some of the progress we are making, but 

it is something I would like to expand. 

Ms. MURPHY. Great. Thank you. 

Chairman CHABOT. Thank you. The gentlelady’s time is expired. 

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13 

The gentleman from Mississippi, Mr. Kelly, who is the chairman 

of the Subcommittee on Investigations, Oversight, and Regulations, 

is recognized for 5 minutes. 

Mr. KELLY. Thank you, Mr. Chairman, and our ranking member. And thank you, Administrator McMahon, for being here. 

You know, small business and entrepreneurs, and those small 

ideas that start in garages or places everywhere, are the American 

dream that turn into giant corporations. And I do not think there 

is a better representative of someone who has done that, taken it, 

all this pain and strife and dreams and wishes and turned those 

into reality in something that is worldwide recognized, and so I 

thank you for that. I think you are the exact kind of idea and person we need in this job to make sure that other people have those 

same opportunities going forward. 

I am extremely concerned to make sure that we continue to 

reach out with veterans. I am a veteran and still currently serve, 

and so a lot of those guys have the right ideas, guys and girls. They 

have the right ideas. They have the right hearts. They have everything in place except sometimes they do not know how to do that. 

We have a VBOC at Mississippi State University, which is just 

right outside of my district, but does such a great job. And so presenting those ideas to veterans is very important to me. 

But I want to start with talking about Executive Order 13771, 

which the president signed, which says that, ‘‘We will reduce regulatory burdens by identifying two regulations for elimination for 

every one new regulation that we promulgate.’’ What steps has the 

Small Business Administration taken to identify rules and other 

requirements that could be repealed or streamlined? 

Ms. MCMAHON. Thank you very much. Just to, if I may, just 

to comment. Thank you for your compliment relative to where 

WWE went in the world and to come from recovering from bankruptcy to take a company public and to have a global brand is the 

American dream. And I really want to make it possible through efforts of SBA to make more entrepreneurs, to give them the opportunity of living the American dream. 

What we have done relative to the regulatory issue is to form an 

advisory committee that is now going through regulations, et 

cetera, at SBA, to see if there are those that we would like to get 

rid of. So it is an ongoing process. 

Mr. KELLY. And as kind of a follow-up, does the Small Business 

Administration plan to issue a Federal Register Notice to publicly 

solicit input from particular small businesses on regulations, guidance, and other reporting and recordkeeping requirements that 

should be repealed or streamlined? 

Ms. MCMAHON. I am always interested in hearing what our 

small businesses have to say, or have, you know, their suggestions, 

their concerns, their questions. We have conducted business 

roundtables and will continue to do that. And I do not think there 

is any better source of understanding what the perils and the 

issues are than to listen to the business community. Because if you 

are not there, you are not experiencing it and we need that input. 

Mr. KELLY. Thank you for that comment. I think you hit the 

nail on the head. We do not know the impacts as Congress or as 

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14 

administrators near as greatly as those small businesses who it is 

impacting. 

The final thing I want to talk about is transparency. It was an 

issue in the past with the SBA. For example, during the last administration, the SBA made decisions with no formal written 

record of the decision or how the decision was made. How will you 

ensure that the SBA is transparent under your leadership? 

Ms. MCMAHON. It is just something I will require and I will not 

tolerate it being any less. 

Mr. KELLY. And then finally, and I do not think I have enough 

time to really get into an in-depth answer of this, but one of the 

other things that I think is just so important that you look at as 

a new administrator in providing your leadership and ideas is the 

SOPs. We have over 150 SOPs, or standard operating procedures, 

throughout the Small Business Administration, and I just ask that 

you and your team look really, really closely with that to make 

sure that we have the right ones in place. And much like the executive orders, those parts and pieces and SOPs that are really no 

longer SOPs or we need, please do away with those and streamline 

it so it truly is a standard operating procedure instead of just a 

bunch of rules and regulations that no one complies with. 

And with that, Mr. Chairman, I yield back. 

Chairman CHABOT. Thank you. The gentleman yields back. 

I assume the administrator did not have any comments on that 

question? 

Ms. MCMAHON. Just quickly to say that that process is already 

in place. We are reviewing those and it is part of what our CFO 

is doing, our COO’s office, you know, with input from the other 

agencies as well, the other offices. So I am looking forward for 

streamlining. I am all about streamlining. 

Chairman CHABOT. Thank you. The gentleman yielded back. 

The gentlelady from New York, Ms. Clarke, is recognized for 5 

minutes. 

Ms. CLARKE. I thank you, Mr. Chairman and our Ranking 

Member Vela ́zquez. And I welcome Administrator McMahon here 

this morning, for giving your testimony. 

I wanted to ask a bit about the HUBZones. I am from New York 

City, and, in concept, the HUBZone program should be an economic 

boom. A recent GAO report found significant issues with HUBZone 

firms who are seeking recertification. In addition to the backlog 

that currently exists, the firms are not required to submit supporting documentation for their reviews. Is SBA taking any actions 

to correct these issues raised in the GAO report? And what actions 

are being taken to reduce fraud and abuse during recertification? 

Ms. MCMAHON. Well, thank you very much for that question. 

HUBZones, I will be frank, I do not think is one of our stellar programs right now because we need to look at them much closer. 

Now, I have not had much of an opportunity to really delve into 

the HUBZone issue, but I do know that there have been these 

questions raised. 

One of the things that I want to do, in fact, I have talked to Secretary Carson about visiting some HUBZones with him as he is 

coming in from HUD, and I think that that will give more of an 

insight into how we can make them more effective. But we have 

SBREP-219A with DISTILLER

15 

got a ways to go, and you have my commitment that I am going 

to be looking at it much closer. 

Ms. CLARKE. Wonderful. We hope to work with you to fine tune 

it because, conceptually, it should yield great things in terms of 

economic stimulation—— 

Ms. MCMAHON. I agree. 

Ms. CLARKE.—particularly in areas that have been stagnant for 

quite some time. 

My second question is while the overall number of loans—and 

this is going back to the 7(a) loan program—has increased, the percentage of (7)a loans going to women-owned and minority-owned 

firms have remained fairly stagnant, fairly flat, since 2010. What 

actions will SBA take to improve access to capital for these firms? 

Ms. MCMAHON. Well, thank you. And clearly what we are doing 

is making sure that we have more and more women especially applying for those loans. And I think that gets back to Women’s Business Centers and our Entrepreneurial Development Office to encourage the development of these businesses. But, you know, quite 

often a great idea does not make a good business, and I think part 

of what we need to do when we have entrepreneurs come into our 

offices for counseling, is to also take a look at it and let them know, 

you know what? This is a great idea, but it may not be the best 

idea. Here is how you might improve your business plan. Here is 

how you might think about how you would scale your business. 

And helping them walk through that whole process, then putting 

forth the opportunity to have access to capital, go for capital. 

But we are absolutely looking at our lending institutions as well 

to make sure that women are not being discriminated against because we know right now that women do not get as many loans. 

Often, there is a higher interest rate for that money. And you know 

what? That is part of our lender oversight, because we want to 

make sure that they are not doing that. 

Ms. CLARKE. Well, I am glad that you are looking at all aspects 

of this because indeed there is discrimination. And we need to call 

it what it is and remove those obstacles for women- and minorityowned firms that are already in business, but have been, for whatever reason, discriminated against and tend not to be given those 

opportunities through our traditional lending mechanisms. So I appreciate the fact that you are looking at this in a holistic manner. 

And with that, Mr. Chairman, I yield back. 

Chairman CHABOT. The gentlelady—— 

Ms. MCMAHON. May I just make another comment? 

You know, the entrepreneurial environment in our country over 

the past few years have been declining startups, but the startups 

that are on the rise are women businesses and they are also more 

successful. And also, women minority-owned businesses are even 

the lead in that. So it is certainly to the benefit of SBA, to our 

economy, to our country, to continue to grow this aspect. I mean, 

we are 51 percent—we, women are 51 percent—of the population, 

make 80 percent of the purchasing decisions in our home, so the 

economy misses out by not having that part of the population have 

the same access to capital and the same opportunity to be treated 

fairly and equally. 

Chairman CHABOT. The gentlelady yielded back. 

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16 

The gentleman from Kentucky, Mr. Comer, is recognized for 5 

minutes. 

Mr. COMER. Thank you, Mr. Chairman, Administrator 

McMahon. 

Ms. MCMAHON. Good morning. 

Mr. COMER. I am James Comer from Kentucky. Welcome. 

Ms. MCMAHON. Thank you. Good basketball there. 

Mr. COMER. Yeah, absolutely. We should have beat North Carolina, but that is another story. 

Ms. MCMAHON. Well, no, I am a North Carolina girl, so I was, 

you know. 

Mr. COMER. My first question is what is your definition of a 

small business? And I ask that because a lot of the Federal contracts that are awarded specify that a certain percentage of the 

contract is supposed to go to small business vendors or subcontractors. And a lot of my small business subcontractors do not get the 

contract and they complain and say that the company that won the 

contract was a big business. And I did not know if you had a definition of exactly what a small business was. 

Ms. MCMAHON. Before I came to SBA, when I thought about 

a small business, I thought about the barber shop on the corner, 

the deli down the street, the dry cleaning establishment, et cetera. 

I know that there are different criteria for different industries in 

SBA. A general rule is 500 employees or under. For manufacturing, 

it is a little bit bigger. There are some bottom-line aspects to it as 

well. But I think the bigger issue that you want to address is to 

make sure that it is not medium to large businesses that are given 

preferential treatment over our small businesses in our contracts 

and our capital access program and all of that. And that is something I want to be really vigilant about and have given that instruction. 

Mr. COMER. The SBA guarantees loans all over the country. I 

have been a director of a small bank, and some of the banks in my 

district do a lot of small business loans, SBA loans. Some of them 

do not because of the paperwork. Two questions. Just out of curiosity, do you have any idea what the delinquency rate is? I know 

this would have happened before you got there, but what percentage of SBA loans fail and the SBA has to cover those loans? 

And second, what are some things that we can do with President 

Trump? Obviously, he is focused on reducing the regulatory burden. Are there other things this Committee can do to reduce the 

regulatory burden to make it more advantageous for banks to do 

SBA loans? 

Ms. MCMAHON. Well, relative to the regulatory environment, it 

is such a big issue. A lot of what you hear from small businesses, 

which I heard when I traveled across the State of Connecticut was 

just the paperwork alone to comply with the regulatory environment, you know, they are small business owners. I mean, you have 

got, let us call it the CEO, who also sweeps up at night and closes 

the business, he does not have time or she does not have time to 

do it herself, or she does not have the income to hire the people 

to do that. So in all areas, if we can look at what regulations are 

really necessary, because nobody thinks that we should be able to 

SBREP-219A with DISTILLER

17 

just run and do things the way we want, you know, there are regulations that are very important. 

But I think it is incumbent upon us to listen to the small business community about what is choking them. And that is one of the 

things that I want to do is to have more and more listening sessions around the country so that we can help those things that 

SBA can directly affect as well as what suggestions or advice we 

might offer to the administration. This is what we are hearing. So 

if you would take that into consideration as well. 

Mr. COMER. And hopefully, we will do some things from a lending standpoint, like repeal Dodd-Frank, and do some things that 

will make it easier to obtain capital. But back to the question about 

the percentage of loans that are delinquent, do you have any idea 

of what that number would be? 

Ms. MCMAHON. No, I do not have the percentage, but I do 

know that we are reducing the default rate, which I think is good. 

And that goes into, also, you know, better oversight of our lenders 

because, ultimately, lenders make the decision as to whom they are 

going to have as a customer. We, then, guarantee that loan. 

Mr. COMER. Right. 

Ms. MCMAHON. So we want to make sure we are really qualifying our lenders so that they are really good at what they are 

doing. If we see a pattern or a trend of defaults in those areas, we 

know we have the wrong lenders in place. 

Mr. COMER. Thank you, Mr. Chairman. I yield back. 

Chairman CHABOT. The gentleman yields back. Thank you. 

The gentlelady from California, Ms. Chu, is recognized for 5 minutes. 

Ms. CHU. Administrator, I would like to ask you about the Community Advantage Lending program. This was the program that 

was started in 2011 by the SBA as a loan guaranty allowing certain mission-driven lenders, including CDFIs and micro lenders, access to 7(a) loan guarantees for up to $250,000 made to small businesses in underserved markets. In this case, underserved markets 

include low- to moderate-income communities in economically distressed areas, both urban and rural. The initiative has gained a 

great deal of success. In fact, each year it has become more and 

more active. And in February alone there were 3,093 loans that 

were approved for a total value of $390 million. What is even better 

is that the average loan size was $127,000, which is much smaller 

than other SBA guaranty programs. 

So I believe that it is imperative for the SBA to continue encouraging this kind of small-dollar lending activity, especially in the 

underserved markets and to support businesses that are oftentimes 

perceived as not bankable so that they can eventually become 

bankable. 

So Administrator McMahon, could you tell us your thoughts on 

the community advantage guaranty and whether it should be 

maintained, if not strengthened? 

Ms. MCMAHON. I definitely think it should be maintained. It 

kind of serves an interim area, if you will. It is not microloans 

which are up to $50,000, but it goes up to the $250,000 mark. Oftentimes, businesses are already in place and are growing, but in 

order to scale up or continue to grow, now they need some addiSBREP-219A with DISTILLER

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tional funding. And that is one of the things that the Community 

Advantage program can do is to help continue those businesses because clearly, as those businesses continue, they are going to hire 

more people. They are going to create more jobs and it is going to 

be clearly accretive to our economy. 

Ms. CHU. Well, let me ask this. Many of these mission-based 

lenders have reported great interest from local small businesses in 

getting these loans. However, since it is a pilot, the lenders face 

uncertainty because the initiative must be extended each time 

upon expiration. Do you think that there could be benefits to making the program permanent? 

Ms. MCMAHON. Well, I do believe in performance-based awards. 

So as we continue to look at the success of these programs, I think 

it is too new to say right now that it should be permanent. I think 

we should still continue to look at how it performs. And I am all 

in favor of that and want to continue programs that we are seeing 

that kind of success with because I think it helps so many small, 

but also getting close to a little bit of a medium-sized business. 

Ms. CHU. And on another note, Administrator McMahon, I was 

interested in learning about your years encouraging women to become entrepreneurs, and I want to thank Ranking Member 

Vela ́zquez for bringing up the issue of women having access to the 

SBIC funds. That is an issue that is very important to me. 

Last year, I held a field hearing in my district to learn more 

about why venture capital and angel investment is particularly difficult for women entrepreneurs to access, and we learned that it is 

because there are very few women in lending positions, and it is 

a problem because when you do have women in lending positions, 

they do tend to encourage more women borrowers and actually lend 

those monies. So the SBA’s SBIC program is so great because it 

provides a critical investment capital to small businesses across the 

country, but there are still too few SBIC investments in women-led 

firms and even fewer SBICs with women partners. And so while 

SBIC programs have a higher proportion of female managers than 

the broader VC community, more must be done to increase these 

numbers in both realms. So do you think there are ways to work 

within the SBIC program to ensure that there are more women 

qualified to become fund managers when the opportunities become 

available? 

Ms. MCMAHON. Well, I think one of the things we can look at 

when we are looking at these venture capital firms is what is the 

makeup of the group that is part of that company and say, you 

know what? We would like to see more women, and to then start 

to identify some of those venture capital firms that do have more 

women. I think we can clearly do that. 

Ms. CHU. Thank you. I yield back. 

Chairman CHABOT. The gentlelady yields back. Thank you. 

The gentlelady from Puerto Rico, Ms. Gonza ́lez-Colo ́n, is recognized for 5 minutes. 

Ms. GONZA ́ LEZ-COLO ́ N. Thank you, Mr. Chairman. Thank you, 

Ms. Ranking Member. And thank you for having us here in this 

public hearing and thank you, Administrator, for being here. Actually, I am inviting you to come to Puerto Rico and help us there. 

One of the questions I want to make is about the HUBZones. 

SBREP-219A with DISTILLER

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Ms. MCMAHON. I am sorry, what? 

Ms. GONZA ́ LEZ-COLO ́ N. HUBZones. The underutilized business 

zones, HUBZone program. 

Ms. VELA ́ ZQUEZ. I am sorry, I am just not understanding. 

Ms. GONZA ́ LEZ-COLO ́ N. HUBZone. 

Ms. MCMAHON. HUBZones. Sorry. I am sorry. Thank you. 

Ms. GONZA ́ LEZ-COLO ́ N. You may be aware, the expansion of 

those HUBZone designated areas is a topic that the General Accountability Office has been studying, and I aware that they are 

going to have a report this summer. But also, the Puerto Rico 

Oversight Management and Economic Stability Act, known as 

PROMESA, expanded the number of HUBZone designated areas, 

adding over 500 of those in the island. Can you generally speak 

about how this increase will help Puerto Rico’s economy if you can 

help us in that? 

Ms. MCMAHON. Well, thank you. And sorry that I was not understanding what you were saying. I apologize for that. 

Actually, I think SBA got in a little bit of trouble in Puerto Rico 

because we took a little bit of expansion and kind of made it more 

than island-wide and it was not authorized for us to do that. So 

we are dealing with that a little bit now. 

I actually have not looked at Puerto Rico so closely since I came 

on board, but what we have done, as a matter of fact, I asked one 

of the members at SBA who is a young man—actually, might even 

be here this morning. His name is Michael Morales. He was born 

in Puerto Rico. His grandparents still live there. He is a White 

House fellow with SBA. He is a lieutenant colonel in the Air Force, 

and I asked him to research Puerto Rico and some of the programs 

that we have in place, and he actually now has proposed a plan. 

He wants to go and visit the lenders and visit the communities and 

see how SBA can have more of an impact in Puerto Rico and what 

our programs ought to be. So we are taking that initiative, but it 

has just started. I just got the research. 

Ms. GONZA ́ LEZ-COLO ́ N. I know, and I really thank you for 

that, and I am able to help you in that. 

Ms. MCMAHON. Thank you. I might have to come myself and, 

you know, Puerto Rico is a very nice place to visit. 

Ms. GONZA ́ LEZ-COLO ́ N. I know. I can tell you that. And actually, I can drive you around. There are so many areas. One of those 

is—— 

Chairman CHABOT. Would the gentlelady yield? Would the 

gentlelady yield for a second? 

Ms. GONZA ́ LEZ-COLO ́ N. Yes. 

Chairman CHABOT. One thing I might bring to the administrator’s attention, and there is no reason for her to know this, but the 

gentlelady was the speaker of the house in Puerto Rico, so she is 

very familiar with virtually everything that goes on down there. 

And the ranking member has a lot of knowledge relative to Puerto 

Rico and she is chomping at the bit, I think, to say something. So 

if the gentlelady does not mind, I will give her additional time. 

Ms. VELA ́ ZQUEZ. Would you yield? 

Ms. GONZA ́ LEZ-COLO ́ N. I just want to have my time. I do not 

mind. 

Chairman CHABOT. I am going to give you a little extra. 

SBREP-219A with DISTILLER

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Ms. VELA ́ ZQUEZ. He will give you more time. 

Ms. GONZA ́ LEZ-COLO ́ N. Okay, perfect. 

Ms. VELA ́ ZQUEZ. Administrator McMahon, let me just stress 

the fact that Puerto Rico is in deep trouble financially. 

Ms. MCMAHON. Yes. 

Ms. VELA ́ ZQUEZ. And that we work here in Congress in a bipartisan way to provide tools for Puerto Rico to deal with the public debt, but yet, it requires more of the federal government. And 

in that sense I am working and I will be working with the chairman and the gentlelady from Puerto Rico to work on a bipartisan 

package that will help SBA put together a comprehensive way to 

help small business formation and economic development in Puerto 

Rico, and I am looking forward to working with you. 

Ms. MCMAHON. Thank you. And I look forward to that opportunity. You and I talked a little bit about that in your office, and 

I would be excited to help. 

Ms. VELA ́ ZQUEZ. Thank you. 

Ms. MCMAHON. And look forward to that. 

Chairman CHABOT. Thank you. And the chair would note that 

the gentlelady should be happy that we have put another minute 

back on there and we stopped the clock running, so you have got 

3 minutes and 1 second to continue. 

Ms. GONZA ́ LEZ-COLO ́ N. More than happy to hear that and that 

bipartisan effort. I thank the ranking member and Mr. Chairman 

for the help. 

And actually, I do understand that the work that the task force 

on PROMESA, the report that told us about to do something with 

the SBA and the island, is the right path to Puerto Rico’s economy. 

So I thank you, Ranking Member and the Chairman of the Committee, for allowing that to happen. 

There are 676 HUBZone areas representing as you may say 82 

percent of the island, the whole island, and one of the main questions regards or the concern is what is the main problem to achieve 

the 3 percent contract with the Federal Government? Because people do not know about how to do it. How do you think we should 

help or say the government may help the SBA administration to 

achieve the 3 percent prime contracting goal? 

Ms. MCMAHON. Well, as Ranking Member Vela ́zquez said, you 

know, these are programs that she is looking at as well, and I look 

forward to working with her. I do not have that answer today. 

Ms. GONZA ́ LEZ-COLO ́ N. Okay. 

Ms. MCMAHON. But I can tell you this, that the success rate 

in Puerto Rico when SBA has come in to help with small businesses has been there. So we would like to continue it. Finding 

lenders is paramount, but we also need to help with the counseling. 

It is going to be a big project and one that I am actually not qualified to talk about this morning. But I look forward to getting back 

to you. 

Ms. GONZA ́ LEZ-COLO ́ N. I thank you for your sincerity and honesty. I think that is what makes you a great administrator. 

Ms. MCMAHON. Thank you. 

Ms. GONZA ́ LEZ-COLO ́ N. One of the issues I would like to address is about I know the SBA is currently exploring some issues 

regarding the island seminars, visiting some towns. With that, I 

SBREP-219A with DISTILLER

21 

would like to help in that area and be the coordinator between 

State government and the Federal Government to make that goals 

to be achieved. 

One of the other areas is the Disaster Loan program and, as you 

already state, we are on an island so we get hit by hurricanes in 

a common year many times, and we saw what happened in 

Katrina, we saw what happened in Sandy. So we want to be able 

to know what responsibilities directly is the SBA role of the Disaster Loan program to the small business community? 

Ms. MCMAHON. Do you find that today there are deficiencies? 

Ms. GONZA ́ LEZ-COLO ́ N. In the past? 

Ms. MCMAHON. Yes. 

Ms. GONZA ́ LEZ-COLO ́ N. Yes. 

Ms. MCMAHON. Could you help me identify what they have 

been so that as we move forward with our programs we will know, 

okay, this is what did not work, this is where you did not step up 

to the plate to help us? Maybe there is a reason for that; I do not 

know. But we want, regardless of where the area is, our commitment to our Disaster Relief program is paramount. So I would like 

to know what the issues are so that we can be very effective in addressing them. 

Ms. GONZA ́ LEZ-COLO ́ N. I will do that, and thank you, Administrator, for your commitment to small business. 

Thank you, Mr. Chairman, I yield back. 

Chairman CHABOT. Thank you very much. The gentlelady 

yields back. 

The gentleman from Illinois, Mr. Schneider, who is the ranking 

member of the Subcommittee on Agriculture, Energy, and Trade. 

Ms. VELA ́ ZQUEZ. He just left. 

Chairman CHABOT. Oh, he just left. Okay. 

Mr. Evans is recognized for 5 minutes. Thank you. 

Mr. EVANS. Thank you, Mr. Chairman. 

Madam Administrator, in your statement you were speaking of 

revitalizing the agency and raising its profile as you want to initiate Small Business Development Centers, and I also understand 

the President also indicated that this is a priority. Now there is an 

opportunity to make honest assessments of the Small Business Development Centers and other entrepreneurial programs. Are you 

open to meeting with these people and can you speak a little bit 

to some of your thoughts and ideas at this point relating to these 

organizations? 

Ms. MCMAHON. Absolutely, and thank you for asking me that. 

Not only am I willing, I think it is mandatory to go in so that 

we can help evaluate, see where we need to be stronger and better. 

One of the things that I have talked about from the beginning at 

SBA, I mean, I come from a company that created its success from 

marketing and promotion. One of the things that I found about 

SBA is we do not toot our own horn enough. There are not enough 

people that know what our services are and how we can be helpful, 

so I really want to change that. I want our field offices to know 

that they have our support. I want to visit with them. I want to 

make sure that they are connecting with the community, connecting with lenders, and I think we cannot—I cannot get a handle 

on how all of the programs are operating if I am not visiting them 

SBREP-219A with DISTILLER

22 

and asking those questions. So not only am I willing, but it is clearly something I intend to do. And we look forward to working with 

any members who are here when we are coming into your districts 

because you obviously know your districts better than we do, so I 

would really look forward to that. 

Mr. EVANS. Can you speak to goals or metrics that either are 

in place or will be in place for programs that are geared to improving the performance, programs offered by SBA and quality services 

thus resulting in economic impact? I heard you talk a little bit 

about just generally asking what works and what does not. Any 

thoughts in terms about economic impact? 

Ms. MCMAHON. Well, I think the phrase that I used before was 

I think that our metrics right now—well, in the past they have already started to improve and to be reconfigured, but the metric 

that I am looking for is to measure outcomes, to measure successes, 

not to measure output. For instance, I will just use a little example. You know, if a worm is crawling along and he has got to get 

here and he is just crawling at a slow pace, he is just going to keep 

after it and keep after it and keep after it and keep after it. But 

he actually may not be taking the best path to get to his goal. Now, 

I want to make sure that everyone in SBA is taking the best path 

to get there, but before they start out, I want to make sure that 

the accountabilities are in place. 

One of the things that I found when I came, when I asked the 

question about how do we measure success, I clearly was not satisfied with the answer. So we are putting more metrics in place at 

this point, but in terms of giving you a specific example, just let 

me say that we are working across the board to make sure that our 

measurements, A, that people know what they are to start with 

and that they are going to be measured against those accountabilities. 

Mr. EVANS. Madam Administrator, we have obviously heard a 

lot of talk about tax reform, and obviously that seems to be across 

the board and the general discussion. What is your thoughts about 

the implementation of tax reform at this particular point and the 

potential impact it has? I mean, obviously there was a discussion 

of tax reform in 1986. Reality, here we are in 2017. The world has 

changed a lot since 1986. Give me a little thought about if you had 

your crystal ball relating to tax reform and its impact. 

Ms. MCMAHON. Well, I certainly do support President Trump’s 

policies for tax reform, for reducing taxes at a corporate level, for 

making sure that our middle-income taxpayers have greater breaks 

in tax reform, because I firmly believe that reduction in taxes will 

actually grow our economy. And when I first started my company, 

we were a sub S corporation, so all of our income passed through 

to sub S and we were taxed at the same rates. And I think that 

when we do pass tax reform, it needs to apply to those LLCs and 

those subchapter S corporations so that they recognize the benefit 

from tax reform and, therefore, can grow their businesses. So I 

think from a small business perspective, as well as from a large 

company and economy, tax reform is going to help us be more competitive in the world. So I am clearly supportive of the President’s 

efforts to do that. 

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23 

Mr. EVANS. Thank you, Mr. Chair. I yield back the balance of 

my time. 

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

time is expired. 

The gentleman from Kansas, Dr. Marshall, is recognized for 5 

minutes. 

Mr. MARSHALL. Thank you, Mr. Chairman. 

Madam Administrator, the National Small Business Administration recently met like 2 or 3 weeks ago and we have a great relationship back home with some of these people, and they walked out 

of that meeting and they said their biggest concern is health care. 

It overtook regulation. For years, overregulation had been their 

biggest concern. We spend most of the time up here talking about 

Medicaid and small individual groups. Do you have any suggestions or concepts, what are the biggest problems with health care 

for small businesses and what are your suggestions going forward? 

Is there anything that we can do working together to help with this 

biggest problem they are describing, health care? 

Ms. MCMAHON. Well, from my own experience, when I was 

campaigning in the State of Connecticut for the Senate, one of the 

things I heard so often from our small businesses was the increase 

in premium costs. Clearly under Obamacare, which had come into 

place at that time, they were having great difficulty. They were either wanting to stay on the side of the 50 employees or they were 

having to reduce benefits. They had asked their employees to increase their copays, but it had gotten to a point that they could not 

increase copays anymore, so they were faced with oftentimes laying 

off some of their employees. So that is the one specific example, you 

know, that I can cite that I heard over and over again was it was 

the cost of healthcare premiums. 

Now, you know, we know that employer health care is one of the 

best that we have in the country, and my former company, WWE, 

was self-insured because we—up to a certain level and then catastrophic came in and that is what the company paid for over and 

above. We were fortunate to be able to do that, but small businesses cannot. I would like to see consortiums where small businesses could buy in. I would like to be able to buy insurance across 

State lines because I do think competition is going to drive down 

the cost of health care, and small businesses really would be great 

beneficiaries of that. 

Mr. MARSHALL. And maybe just expand a little bit on that. So 

you would envision associations of small business, so maybe even 

the National Small Business Association could have their own 

health insurance plan across State lines? 

Ms. MCMAHON. Potentially, if that worked for them and we 

found that it was cost-effective. I do not know that particular studies have been done relative to that. If there are, I am not familiar 

with them, but I would be very interested in seeing them because 

as we talk to our small businesses as they are trying to plan and 

write their business plans, they have to look at what the cost of 

business is, whether they have mandates, whether they have more 

options is often a make or break situation for a small business. 

Mr. MARSHALL. Exactly. Let us talk about maybe overregulation for a little bit. Any specific examples, or what can your departSBREP-219A with DISTILLER

24 

ment do to help with the regulations? Or what would you suggest 

Congress be doing to work on these regulations that affect specifically small businesses? 

Ms. MCMAHON. Let me give you one example. Again, when I 

was campaigning, because that is when I was traveling to these 

500 different companies, there was a small business in Connecticut 

that used chemicals, et cetera, in its process for stripping metal 

and for applying the next coat of metal. And the CEO of that company said to me, he said, ‘‘Look, I absolutely believe that I should 

be regulated. You know, test to make sure I am not putting poisonous vapors into the environment. Make sure that I have got 

safety regulations in place because these are caustic chemicals.’’ He 

said, ‘‘I do not have any issue with that whatsoever.’’ And he said, 

‘‘But when regulators come in and they really do not find issues 

relative to those things, but feel that they must find something 

wrong,’’ he said, ‘‘I was fined $15,000 because the lettering on the 

men’s and women’s bathrooms was not at a size that had been 

specified in the regulation.’’ Clearly readable. Nobody was going 

into the wrong bathroom, but $15,000 can be a big hit to small 

businesses. 

So I mean, that is an extreme example, but it is an example of 

some of the things that a small business might face. And it was 

not as though the regulator said, ‘‘You know what? Fix this. I will 

be back in 30 days.’’ The fine was levied that day and he had to 

pay. 

Mr. MARSHALL. If I can ask my last question, what can we as 

a small business group here or in Congress do to help empower you 

to do your job better? What can we do to help you? 

Ms. MCMAHON. The fact that you are willing to sit with me and 

SBA, to counsel us, to show us where we have weaknesses, where 

we might can improve, or to show us where we are really doing 

well, and how can you and your local areas help us be more effective would be a great benefit to SBA, and we will seek your counsel 

and working with you. And I look forward to it. 

Mr. MARSHALL. Thank you, Madam Administrator. I yield 

back. 

Chairman CHABOT. Thank you. The gentleman’s time is expired. 

The gentleman from Illinois, Mr. Schneider, has returned, and he 

is now recognized for 5 minutes. 

Mr. SCHNEIDER. Thank you, Mr. Chairman. I apologize for 

stepping out. I am bouncing between two Committees and they 

called a vote. 

Ms. MCMAHON. I figured you had heard all you needed to 

know. 

Mr. SCHNEIDER. No, but I will tell you, with all due respect, 

Madam Administrator, I have been very pleased with what I have 

heard, and thank you for being here and sharing with us your perspective. I come from small business, as do you. I think it is so important. You touched on the growth of small business, the highlight 

that women entrepreneurs have been starting up businesses, but 

also the concern that we are not seeing enough startups. I will 

share the concern that since the Great Recession, typically, every 

previous recession it was small business that led us to the recovSBREP-219A with DISTILLER

25 

ery. In this one it is small business that has lagged and I think 

there is a number of reasons for that, including concerns about uncertainty and policy, access to capital, access to talent, which is so 

important. 

You talked about in your opening remarks the importance of trying to revitalize the agency and raise the profile of the SBA, your 

words. I just wanted to touch on that a little bit. What do you see 

as your vision? How do we go about doing that and how can we 

help you in that mission? 

Ms. MCMAHON. Thank you. One of the things I said when you 

were out was that I do not think SBA toots its horn enough, and 

I think we need to make sure that in the communities that there 

is a greater awareness of what benefits the SBA might bring. And 

I am a perfect example. Growing the business, I did not know 

about SBA. And when you are just starting a business that maybe 

does not have brick and mortar or hard assets and your business 

is really valued on cash flow, it would be incredibly helpful to have 

a SBA partner who could understand and see that progress and 

help be, you know, your advocate, maybe direct you to lenders who 

could help evaluate that. And I think that is one of the things that 

SBAs ought to do. 

My first couple of weeks as administrator, I was gathering different groups within the company because I wanted to hear what 

they had to say and we had this vibrant young group. I called them 

‘‘the kids.’’ That just shows how old I am. But they were very enthusiastic about social media, about Twitter, Facebook, all of the 

things that at WWE we used very, very well, and we are just beginning to use them in SBA. But I asked this group, you know, 

what do you see? How can we be better at what we are doing? We 

do not want to be your father’s SBA. We want to be today’s SBA, 

growing companies and making sure entrepreneurs are feeling 

more comfortable about taking risks. Because that is what entrepreneurs do; they take risks. And if they are operating in an environment where the risk is too great, they are not going to take the 

risk. So I think through education and through SBA being a little 

bit more vocal, it can help entrepreneurs understand that that is 

changing, that lenders are more willing to lend at this particular 

point. 

There was a terrible time where community banks, you know, we 

lost our community banks. Big banks bought them up and so there 

was not that access to capital that entrepreneurs had at one particular time, so I think we are seeing more and more of that today. 

So I want to make sure that—you always have to manage the 

downside, but that upside that you reach a little bit for the brass 

ring, but through counseling and good advice I think we can do 

that. 

So this group, back full circle, this group of young people that I 

had, I challenged them. I said, ‘‘I want you to come back in 2 

weeks. I want to see your marketing plan. I want to see what you 

want to do.’’ And they left there buzzing, their little groups in the 

hallways talking about what they could do. That kind of life in a 

company is just critical. So if you can generate that kind of internal 

buzz, you know you have got programs that are doing well. 

SBREP-219A with DISTILLER

26 

Our 7(a) loans are being very proficient, but what is going to 

happen when we get the morale issue? And we have dealt with a 

morale issue. If we can get that buzz going to our district offices 

and everywhere, you wait and see what kind of SBA programs get 

put into place, how many more jobs we create, how we encourage 

entrepreneurs to come in. And I am all about that. And these 

young people came back with a great plan and part of it is being 

implemented now. 

Mr. SCHNEIDER. Well, if I add just a couple things, entrepreneurs have dreams. Right? 

Ms. MCMAHON. They do. 

Mr. SCHNEIDER. They see a future. They see things. Hopefully, 

they see things that the rest of us do not see and that creates opportunities for more people. Oftentimes they may see the dream, 

but they do not see the how or they do not see the steps. If our 

shared role can be helping teach people the how, making it easier 

to access the how, which is both having talent, having capital, having the ability to write a business plan, but also clearing the obstacles in their paths and making sure that their paths are steps forward rather than having to go around barriers, and that is something I hope we can work together on. 

Ms. MCMAHON. Thank you. I think that would be critical, and 

I look forward to that. Thanks so much. 

Mr. SCHNEIDER. Thank you, and I yield back. 

Chairman CHABOT. Thank you. The gentleman’s time is expired. 

The gentleman from Iowa, Mr. Blum, who is the chairman of the 

Subcommittee on Agriculture, Energy, and Trade, is recognized for 

5 minutes. 

Mr. BLUM. Thank you, Chairman Chabot. Is that correct? 

Chairman CHABOT. It is correct, and I thank the gentleman for 

that. 

Mr. BLUM. I am a business person. I am slow, but I am 

trainable. 

Ms. MCMAHON. But you are not like all business people then. 

Mr. BLUM. Administrator McMahon, good to see you again. 

Thank you for being here today. Thank you for stopping by our office. I thoroughly enjoyed swapping stories with you about—— 

Ms. MCMAHON. So did I. 

Mr. BLUM.—our startups. The tough times. We both ended up 

with companies that went public, and I also would, first of all, 

thank you for that. 

Second, I would like to salute President Trump on his choice of 

yourself for this position. I have often thought that it makes a lot 

of sense to have someone in your position that has signed the 

fronts of paychecks, that has been there, done that. And we have 

that person in you, so I salute the President. Congratulations, and 

thanks for stopping by our office. I appreciate you very much. 

Ms. MCMAHON. Thank you. 

Mr. BLUM. 2008, we are well aware of what happened that year. 

Federal Government, the Federal Reserve, we had to bail out the 

big banks in the financial meltdown crisis. And a lot of taxpayers 

were upset by that, and rightly so. And rightly so. It seems to them 

SBREP-219A with DISTILLER

27 

that we privatized profits and socialized losses, and I am with 

them. We should not be doing these bailouts. 

So something I am always concerned about and ask about is the 

exposure to taxpayers, and I think of the loan portfolio, guaranty 

portfolio that the SBA carries. And I want to make sure that that 

does not somehow end up on the taxpayers’ backs. Maybe I will ask 

you, how large is that portfolio of loan guarantees today? 

Ms. MCMAHON. As for our SBIC program, it is about 14- or 15 

billion. Through just our loan programs we are up to about 24 million, 24-, 25 million I think is where we are. 

Mr. BLUM. Billion? 

Ms. MCMAHON. Mm-hmm. 

Mr. BLUM. Billion, yeah. The number I had was like 33 billion 

in total. It is not a gotcha question. 

Ms. MCMAHON. About right. 

Mr. BLUM. That is a lot of money. What is the default rate? Are 

you aware of what the default rate on those guarantees are? Because by nature they are a little bit riskier than your average loan. 

Ms. MCMAHON. You know, I am sorry, I should have that number for you today, but I do not. I just know that we carefully monitor our lenders and that is why we want to make sure we qualify 

our lenders so that we do not have that kind of default rate because we are guaranteeing it, yes. Taxpayers are at risk. 

Ms. VELA ́ ZQUEZ. Would the gentleman yield? 

Mr. BLUM. Absolutely, I yield. 

Ms. VELA ́ ZQUEZ. On 7(a), it is less than 1 percent. 

Mr. BLUM. Thank you. 

Ms. MCMAHON. And I started to say that, but I could not remember if that was exactly the right answer or not. 

Mr. BLUM. Given the risky nature, 1 percent is fantastic. That 

is great. That is a low default rate. Very good. 

Ms. MCMAHON. If the ranking chairman says it is less than 1 

percent, I buy that, yes, she is right. 

Chairman CHABOT. Do not argue with her either. 

Ms. MCMAHON. No, I am not going to argue with that because 

I know she knows her facts. 

Mr. BLUM. How are those loan guarantees reviewed? Are they 

reviewed by the normal bank examiners, the Federal Reserve and 

the State examiners that come through? Or does the GAO review 

those? How are those reviewed to make sure we are not sitting 

today on top of a future bad situation? 

Ms. MCMAHON. Well, I do know from internally at SBA, we 

look at them on a daily basis and we constantly are in touch with 

our lenders to make sure that they are lending to creditworthy people. And as I said before, they are the ones who qualify the lenders 

in terms of, you know, it is a regular bank, but I would be guessing 

to tell you how all that oversight goes. But I would be happy to get 

back to you with that because I do not—— 

Mr. BLUM. These are not gotcha questions. 

Ms. MCMAHON. Yeah, I do not know. You know, they are 

banks, so they are under the regulatory environment as all banks 

would be. But in terms of the totality of that I could not speak to 

that today. 

SBREP-219A with DISTILLER

28 

Mr. BLUM. And I believe my following statement is true, but you 

can confirm this and it is a feather in the cap of the SBA, by the 

way, I believe that the losses that are incurred on the loans are 

more than covered by the fees charged on all the loans. 

Ms. MCMAHON. They are. 

Mr. BLUM. So we are actually running a profit. Imagine that. 

It has to be one of the few agencies in the Federal Government who 

run a profit. 

Ms. MCMAHON. Well, we are at zero subsidy. We are at zero 

subsidy and that is where, you know, that is where we want to 

stay. 

Mr. BLUM. Congratulations to that. 

Ms. MCMAHON. Thank you. 

Mr. BLUM. And now I only have 45 seconds back. I want to address the 800-pound gorilla in the room that no one has asked you 

so far, but I will. And some of my constituents want to know this 

as well, Administrator McMahon, is why did it take John Cena so 

long to propose marriage to Nikki Bella? Now, remember, you are 

under oath. 

Ms. MCMAHON. You would have to ask him. 

Mr. BLUM. Thank you. And with that I yield back my time. 

Chairman CHABOT. The gentleman yields back. And the chairman has no idea, so I am not going to get into that. 

The gentleman from Florida, Mr. Lawson, the ranking member 

of the Subcommittee on Health and Technology, is recognized for 

5 minutes. 

Mr. LAWSON. Thank you, Mr. Chairman and Madam Administrator. 

Last week, I introduced a bill that provided support for women 

business centers. The bill clarified the mission of the Office of 

Women Business Ownership is to assist women entrepreneurs to 

start, grow, and compete in a global market. Our bill also raises 

the cap that organizations may receive to start and operate women 

business centers to $185,000 with an additional $65,000 available. 

In your testimony, you mentioned creative startup for women and 

entrepreneurship. What are your goals for women business centers 

and how can my office and SBA work together in providing the 

maximum amount of support for women development centers? 

Ms. MCMAHON. Well, you have certainly gone a long way already with your bill and we appreciate that very much. 

Basically, I think in the women business centers, they need advice and counsel, and to the extent that we can provide that with 

entrepreneurs who have had success, and to the extent that we can 

work with Congress to say in my district these are some things 

that we really need to address, that would be very helpful to SBA 

and we would look forward to working with you on that. 

Mr. LAWSON. Okay. Thank you very much. 

And the second question centers around the concern that was initiated by a colleague of mine, Congressman Emanuel Cleaver, who 

expressed concern about some of the lending practices by financial 

institutions where small business owners are looking for loans. 

What are the thoughts on this, and how can SBA work with CFPBs 

to provide small firms, particularly minority-owned firms, with discriminatory lending practices? 

SBREP-219A with DISTILLER

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Ms. MCMAHON. One of the things as I mentioned earlier that 

SBA is doing with its lender oversight, we are really focusing on 

all of the issues relative to our lenders. And to the extent that we 

find those practices are happening, it just will not be tolerated. 

Mr. LAWSON. Okay. Thank you very much, Mr. Chairman. 

Since I look forward to working with the administration on small 

business centers and this legislation that we have going, I think it 

is significant and going to make a very big difference in terms of 

where we stand with women in the small business market that 

yields so many jobs in this country. I yield back. 

Chairman CHABOT. Okay, thank you very much. The gentleman 

yields back. 

Ms. MCMAHON. May I have a comment? 

Chairman CHABOT. Absolutely, yes. 

Ms. MCMAHON. Actually, a lot of what I found when I started 

the company, Women’s Leadership LIVE, I wanted to make sure 

that access to capital, that lenders were not being discriminatory 

against women. And so, you know, I have had some really good 

conversations, some over dinner, some directly in offices, to just 

say, come on, what is up with that? I mean, you know, what are 

you doing relative to that? What is your thought process? How can 

we, if you have preconceived notions, how can we help dispel those? 

Or if we need to come back to you—we, I am talking about Women’s Leadership LIVE—if we need to come back to you with more 

concrete information, what is that that you need to see? What is 

that we are not providing that you are getting more from our male 

counterparts when they come in for businesses? What is making 

that sort of discrimination? 

And so I think that is part of what we need to continue to do. 

It is reaching out to the lenders and it is asking them why are you 

more comfortable, or at least apparently more comfortable, making 

these loans? What is it that we need to do to encourage you not 

to have blinders on, if you do? 

Chairman CHABOT. Thank you very much, Madam Administrator. 

Before I wrap up I would like to yield to the Ranking Member, 

who would like to make a comment. 

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

Madam Administrator. 

I would like to take this opportunity to encourage you to sit down 

and use the leverage of your agency in talking to lenders and trying to incentivize them to make smaller loans to women, minorities, because that is the area where we are seeing a vacuum and 

we need to address that. 

Ms. MCMAHON. Thank you. Above and beyond or enhancing the 

microloan area, as well as the community advantage area, are you 

speaking relative to those? 

Ms. VELA ́ ZQUEZ. In 7(a). The 7(a). 

Ms. MCMAHON. The 7(a), okay. 

Ms. VELA ́ ZQUEZ. The 7(a) program is there to provide lending 

to those who might have problems getting traditional loans in the 

private sector, but when you look at the portfolio and just see big 

loans made, not the $200,000 or $150,000 that are so needed for 

SBREP-219A with DISTILLER

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those who are starting their businesses and for women and minorities, then we have a problem. 

Ms. MCMAHON. Thank you. And we will work with you to help 

address those issues as well. 

Chairman CHABOT. Thank you very much. And the chair would 

just note a couple things. One thing, as you can see, the Committee 

takes its oversight roles very seriously and we really do work in a 

bipartisan manner in this Committee. We even compliment each 

other once in a while, and so there is an air of good feeling once 

you walk in that door back there. But the agency that you have 

been in charge of for all of 6 weeks now does have some longstanding challenges that certainly need to be addressed, and I 

think you are aware of that to ensure that the agency works as efficiently and effectively as possible for small businesses all across 

the country, and we hope to continue to work with you very closely 

to resolve these issues and look forward to your future appearances 

before this Committee. And hopefully, they will all be as pleasant 

as this. Right, Ranking Member? 

Ms. VELA ́ ZQUEZ. Oh, yes. 

Chairman CHABOT. Oh, yes, she said. 

I would request, we noted that the default rate in 7(a) is below 

1 percent, we think. There are a number of loan programs that the 

SBA has from 7(a) to 8(a) to microloans, et cetera. If you could 

have your folks prepare the latest figures on those just so we have 

them readily available and can keep an eye on them and making 

sure that they are within reason, or if they are not that we work 

on that. 

And I would also invite, if there are members who have additional questions that they would like to submit in writing, we 

would be happy to get those to you. If you could have your folks 

or if you could respond to them. 

And I would ask unanimous consent that members have 5 legislative days to submit statements and supporting materials for the 

record. Without objection, so ordered. 

And if there is no further business to come before this Committee, we are adjourned. Thank you very much. 

Ms. MCMAHON. Thank you very much. 

Chairman CHABOT. Thank you. 

[Whereupon, at 12:40 p.m., the Committee was adjourned.] 

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A P P E N D I X 

Taking Care of Small Businesses: Working Together for a 

Better SBA 

Testimony of Linda McMahon 

House Small Business Committee 

April 5, 2017 

Thank you, Chairman Chabot, Ranking Member Velazquez, and 

members of the Committee for inviting me to speak with you today. 

I’m so honored to be serving as Administrator of the U.S. Small 

Business Administration. I’d also like to express my gratitude to 

President Trump for the opportunity to join his Administration and 

for his support of small businesses. 

Today marks 50 days since I was sworn in as Administrator of 

SBA. I am continually impressed by the tremendous work being 

done by SBA’s team in support of our nation’s 28 million small 

businesses. My goal as Administrator is to revitalize the agency 

and raise its profile... and in turn, revitalize a spirit of entrepreneurship in America. My hope is that as more people learn about 

the services SBA provides, they will have the confidence, skills and 

resources they need to start or grow their own businesses, to invest 

in their communities, to create jobs, and to grow our economy. 

I feel a tremendous commitment to each of SBA’s stakeholders— 

our small business owners; our team at SBA; President Trump, 

who entrusted me with this position; and the taxpayers who expect 

us to use their dollars effectively and efficiently. 

When I first met with President-Elect Trump back in November 

about taking the top job at SBA, he communicated one clear, specific request to me: ‘‘Do a good job.’’ He said it with such sincerity, 

I knew he meant it and was expecting me to deliver. I responded 

that I would, adding, ‘‘If at any time my job isn’t good enough, I 

trust you will tell me.’’ And during my first town hall meeting with 

SBA’s employees last month, I asked every one of them to join me 

in that commitment: do a good job and expect to be held accountable. 

I have spent a lot of time getting to know our team, and letting 

our team get to know me. I want them to feel engaged and empowered and know their expertise is valued. Since our town hall meeting, the conversation has continued, whether in formal settings or 

chats on the elevator or on social media. In fact, our social media 

team tells me the Agency’s official Twitter feed has added more 

than 100,000 followers since I came on board. Last week’s Twitter 

chat called ‘‘Business Success Her Way,’’ promoting women entrepreneurship, was a trending topic nationwide. I am thrilled there 

is a buzz around SBA as it draws attention to the services the 

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32 

Agency offers—services that will ultimately help people start, scale 

and succeed in business. 

Our small businesses are our nation’s innovators and job creators, and I am committed to serving as their advocate. Last week 

I had the privilege of joining Vice President Pence visiting small 

business owners in West Virginia. Our host, Ron Foster, grew his 

construction supply company with the help of a 504 loan from SBA. 

I relate to entrepreneurs like Ron because I am an entrepreneur 

myself. I have shared the experiences of our country’s small business owners. 

My husband and I built our business from scratch. We started 

out sharing a desk. Over decades of hard work and strategic 

growth, we built it into a publicly traded global enterprise with 

more than 800 employees. This past weekend the business we created had a global audience of millions as it broadcast the 33rd edition of WrestleMania. I am proud of our success—I know every bit 

of the hard work it took to create that success. I remember the 

early days when every month I had to decide whether I should continue to lease a typewriter or if I could finally afford to buy it. Yes, 

that $12 a month really made a difference in our budget. 

Like all small business owners, I know what it’s like to take a 

risk on an idea, manage cash flow, navigate regulations and tax 

laws, and create jobs. Since stepping down as CEO of WWE in 

2009, I have worked to help more people have the opportunity to 

pursue those goals. 

As a candidate for the U.S. Senate in 2010 and 2012, I met with 

more than 500 small business owners—touring their shops, restaurants, offices and factories and sharing ideas during roundtable 

discussions. Job growth was a pillar of my campaign, and because 

small businesses are responsible for half of all private-sector jobs 

and the majority of new jobs, they were my focus. 

And for the past two years, I promoted women in entrepreneurship as co-founder and CEO of a startup called Women’s Leadership LIVE. I wanted to share my vast experience with others who 

are launching startups or looking to scale their businesses. 

Through live events and webinars, we educated entrepreneurs 

about things like applying for a loan and developing a business 

plan. We also worked to build their confidence. I always say that 

even entrepreneurs with the best ideas sometimes need a little 

wind beneath their wings. We shared our stories of successes and 

failures, our networks of contacts and resources, and our strategies 

for addressing challenges. And now through SBA, I am committed 

to offering small business owners the capital, the counseling and 

the confidence that will help propel them forward. 

Small businesses have had some tough blows in the past decade. 

I know what it’s like to take a hit, and I have learned it’s not how 

you fall, but how you get up that truly matters. Early in my career, 

when we were very young, my husband and I declared bankruptcy. 

We invested in a company we didn’t understand and trusted people 

we shouldn’t have. When that company went under, we were left 

holding the bag. We worked really hard to pay off those debts until 

we realized we just couldn’t. Bankruptcy was a really hard decision 

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and a tough time in our lives. We lost our home. My car was repossessed in the driveway. We had a young son and a baby on the 

way. We had no choice but to work hard and start building again 

so we would support our family. When our daughter Stephanie was 

born—a perfect little baby so full of promise and potential—I took 

it as a omen that things were going to be okay. We owed it to her 

and to our son that we would make it okay. And fortunately, we 

did. 

As I have visited small businesses all over the country, I have 

seen that same resiliency over and over again. Entrepreneurs are 

fighters. They work hard, and when they get knocked down by a 

recession or a natural disaster or simply a change in consumer demand, they turn to their creativity to make it better. But sometimes they need a helping hand. 

Now that I am the SBA Administrator, I am committed to ensuring that our agency is as strong as it can be to lift up as many entrepreneurs as it can. My commitment extends to making sure that 

all services we offer to our customers are delivered effectively and 

efficiently and, most importantly, that SBA and our partners are 

offering what small businesses actually need to grow, innovate and 

create jobs. With small business as the driver of our economy I believe our country will remain strong, too. 

Thank you for the opportunity to speak with you today. I am 

happy to take your questions. 

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Questions for the Record 

Committee on Small Business 

Hearing: ‘‘Taking Care of Small Business: Working Together for a 

Better SBA’’ 

April 5, 2017 

Chairman Steve Chabot 

1. SBA has nearly 150 standard operating procedures. Only 

a small subset are available on the Agency’s website. According 

to the Freedom of Information Act, SBA must make its standard operating procedures and manuals available to the public. 

Do you plan to make all these documents available on SBA’s 

website? 

2. A significant portion of SBA’s budget is devoted to providing outreach and technical assistance to small businesses 

through its successful partnerships with SBDCs. WBCs and 

SCORE. Unfortunately, SBA has created a number of its own 

untested initiatives that duplicate the training and assistance 

that these proven organizations or other federal agencies provide. Under your leadership, will the SBA re-focus itself on 

proven programs rather than untested SBA initiatives? 

3. We continue to see a lack of resources serving and less 

populated areas, while city centers have a plethora of options 

for startups and small businesses. What will you do to ensure 

the entrepreneur in a less populated area has the same SBA 

resources available to him or her? 

4. With large prime contracts, the large prime contractor is 

required to create a subcontracting plan, which maximizes 

small business utilization as subcontractors. While large 

primes must act in ‘‘good faith,’’ SBA has yet to define ‘‘good 

faith’’ compliance. This failure has weakened oversight, letting 

large prime contractors off the hook. What action will SBA 

take to strengthen compliance with subcontracting plans to 

maximize small business utilization? 

5. Executive Order 13771 issued by President Trump on January 30, 2017 requires federal agencies to take significant 

steps to reducing regulatory burdens by identifying 2 regulations for elimination for every 1 new regulation they would like 

to promulgate. 

a. What steps has SBA taken to identify rules and other 

requirements that could be repealed or streamlined? 

b. Will SBA issue a Federal Register notice to publicly 

solicit input from small businesses on regulations, guidance and other reporting and recordkeeping requirements 

that should be replaced or streamlined? 

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6. Executive Order 13777, which President Trump issued on 

February 24th, requires agency heads to designate a Regulatory Reform Officer within 60 days and establish a Regulatory Reform Task Force. 

a. Have you designated a Regulatory Reform Officer, and 

if so, who is that person? 

b. Have you established a Regulatory Reform Task Officer, and if so, who is serving on it? 

7. SBA is required under the Small Business Act to appoint 

small business owners, operators, or officers to the Regional 

Regulatory Fairness Boards for terms of three years or less 

after receiving recommendations from the chair and ranking 

members of the Committees on Small Business in the House 

and Senate. In the past, SBA has not adhered to these requirements. What will you do to ensure that the agency complies 

with these requirements? 

8. What is the agency doing to improve the user-friendliness 

of its website to ensure that small businesses can find the information they need? 

Rep. Roger Marshall 

1. Administrator McMahon, on March 27, 2017, President 

Trump announced the new Office of American Innovation initiative at the White House aimed at reducing government bureaucracy and streamlining federal agencies, in partnership 

with many high-profile CEOs. There is little mention of the inclusion of small businesses in this project, even though entrepreneurs are constantly developing new, innovative ways to 

grow their businesses. Are there ways we can encourage the 

involvement of small businesses in this initiative? 

Rep. Don Bacon 

1. Congress, and this Committee in particular, has been very 

supportive of the Office of Advocacy’s work to reduce regulatory burdens on small businesses. As you know, the Office of 

Advocacy is housed within, but independent from, the SBA. 

Once a confirmed Chief Counsel for Advocacy is leading the office, how do you plan to work with him or her to improve the 

regulatory environment for small businesses? 

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Question for the Record 

Committee on Small Business 

Taking Care of Business: Working Together for a Better SBA 

April 5, 2017 

Responses by SBA Administrator Linda McMahon 

1. Executive Order 13771 issued by President Trump on 

January 30, 2017 requires federal agencies to take significant steps to reduce regulatory burdens by identifying 2 

regulations for elimination for every 1 new regulation they 

would like to promulgate. 

a. What steps has SBA taken to identify rules and 

other requirements that could be repealed or streamlined? 

b. Will SBA issue a Federal Register notice to publicly 

solicit input from small businesses or regulations, guidance and other reporting and recordkeeping requirements that should be repealed or streamlined? 

SBA Response: 

SBA has formed a regulatory reform task force and solicited recommendations from all of its program offices. We have also worked 

to create a process to identify and prioritize regulations for elimination or modification. Yes, SBA has drafted and will soon publish 

a Federal Register notice to solicit input from small businesses and 

other members of the public. 

2. SBA is required under the Small Business Act to appoint small business owners, operators, or officers to the 

Regional Regulatory Fairness Boards for terms of three 

years or less after receiving recommendations from the 

chair and ranking members of the Committees on Small 

Business in the House and Senate. In the past, SBA has not 

adhered to these requirements. What will you do to ensure 

that the agency complies with these requirements? 

SBA Response: 

SBA will consult the Chair and Ranking Members of the Committees on Small Business in the House and Senate as we search 

for qualified candidates to serve on the Regional Regulatory Fairness Boards. 

3. Administrator McMahon, on March 27, 2017, President 

Trump announced the new Office of American Innovation 

initiative at the White House aimed at reducing government 

bureaucracy and streamlining federal agencies, in partnership with many high-profile CEOs. There is little mention of 

the inclusion of small businesses in this project, even 

though entrepreneurs are constantly developing new, innovative ways to grow their businesses. Are there ways we can 

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encourage the involvement of small businesses in this initiative? 

SBA Response: 

SBA is constantly working with the White House to provide the 

voice of small business on ways to reduce regulatory burdens for 

small business overall. 

4. Congress, and this Committee is particular, has been 

very supportive of the Office of Advocacy’s work to reduce 

regulatory burdens on small businesses. As you know, the 

Office of Advocacy is housed within, but independent from, 

the SBA. Once a confirmed Chief Counsel for Advocacy is 

leading the office, how do you plan to work with him or her 

to improve the regulatory environment for small businesses? 

SBA Response: 

Administrator McMahon looks forward to working closely with 

the Chief Counsel for Advocacy on ways to reduce the regulatory 

burden for small businesses. Though the Office of Advocacy is independent from the SBA, they provide invaluable advice on the impact of regulations, as well as economic research concerning the 

small business environment. 

5. SBA has nearly 150 standard operating procedures. 

Only a small subset is available on the Agency’s website. According to the Freedom of Information Act, SBA must make 

its standard operating procedures and manuals available to 

the public. Do you plan to make all these documents available on SBA’s website? 

SBA Response: 

SBA has traditionally posted to its public facing website, those 

standard operating procedures that our customers need to complete 

applications and to review program products, services and requirements. The fifty-nine SOPs found on the SOP webpage reflect that 

approach. The remaining eighty-six SOPs are generally internal operating procedures, and those that are non-privileged are available 

to anyone who might request them. SBA will continue to make 

sure that SOPs that affect our customers and partners are posted 

for easy access and use. 

6. With large prime contracts, the large prime contractor 

is required to create a subcontracting plan, which maximizes small business utilization as subcontractors. While 

large primes must act in ‘‘good faith,’’ SBA has yet to define 

‘‘good faith’’ compliance. This failure has weakened oversight, letting large prime contractors off the hook. What action will SBA take to strengthen compliance with subcontracting plans to maximize small business utilization? 

SBA Response: 

Section 1821 of the National Defense Authorization Act for Fiscal 

Year 2017 (NDAA), PL 114-318, approved Dec. 23, 2016, directed 

SBA to provide examples of failure to make a good faith effort with 

a subcontracting plan. The NDAA established a 270-day deadline 

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for SBA to act. In accordance with the NDAA, SBA is in the process of defining the characteristics of what constitutes failure to 

make a good faith effort. SBA will use this definition to evaluate 

Large Business Prime contractors that have a required small business subcontracting plan but may not be meeting the negotiated 

goals for the given contract. SBA’s GCBD office is engaging with 

civilian and DOD agency contracting officers, industry representatives, and the Defense Contract Management Agency (DCMA) to 

develop good faith characteristics that reflect realistic and measurable efforts to comply. This will enable contracting officers to make 

necessary actions with contractors that are not attaining their negotiated goals and not meeting the threshold of good faith. SBA anticipates issuing guidance within the 270 day deadline established 

in Section 1821 of the NDAA. 

7. A significant portion of SBA’s budget is devoted to providing outreach and technical assistance to small businesses 

through its successful partnerships with SBDCs, SBCs and 

SCORE. Unfortunately, SBA has created a number of its 

own untested initiatives that duplicate the training and assistance that these proven organizations or other federal 

agencies provide. Under your leadership, will the SBA refocus itself on proven programs rather than untested SBA 

initiatives? 

SBA Response: 

As soon as I arrived, I put all initiatives on hold. I did this so 

that we could dive deeper and truly learn whether each initiative 

should continue, then review and decide the future of some of these 

initiatives. As we continue with the review process, it’s important 

to state that SBA is committed to ensuring that taxpayers’ dollars 

are spent wisely, and on programs that prove to be beneficial. 

8. We continue to see a lack of resources serving rural and 

less populated areas, while city centers have a plethora of 

options for startups and small businesses. What will you do 

to ensure the entrepreneur in a less populated area has the 

same SBA resources available to him or her? 

SBA Response: 

One of my top priorities as Administrator is to ensure that entrepreneurs in rural communities have the same resources available 

to them as those in metropolitan areas and other communities. Toward that end, I am pleased to report that just this month the Office of Entrepreneurial Development announced the availability of 

supplemental funding to Small Business Development Companies 

that prioritized efforts to increase business development in rural 

communities. In addition, I am committed to entering into more 

public-private partnerships to allow us to leverage the private sector’s knowledge and experience via existing SBA entrepreneurial 

development and business assistance programs in order to further 

address rural development issues. SBA is also a member of the 

President’s Rural Prosperity Task Force led by the Department of 

Agriculture to provide insights and support for small businesses in 

rural area across the nation. 

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Congresswoman Yvette D. Clarke 

Taking Care of Business: Working Together for a Better SBA 

with SBA Administrator Linda McMahon 

April 5, 2017 at 11:00 

RHOB 2360 

————————————————————————————— 

Talking Points/Remarks 

• Thank you Mr. Chairman and Ranking Member Velazquez and 

a pleasant good morning to everyone. 

• A special good morning to Ms. McMahon, who is here with us 

for the first time today. 

• As we all know, small businesses are the backbone of our economy—and the Small Business Administration is essential to ensuring their success. 

• The SBA’s professional staff of over 3,000 people oversees programs that allow women, veterans, historically disadvantaged minorities, and businesses located in economically distressed communities to prosper for the benefit of us all. 

• These programs help entrepreneurs in Central Brooklyn and 

across the country take risks that improve their lives and enrich 

our economy. 

• However, this is not to say that SBA management could not 

be improved. 

• Numerous reports have shown that participation in the 

HUBZone Program and 8(a) programs is declining. 

• Similarly, the participant pool for the 7(a) program is becoming 

less diverse and numerous programs, including the Disaster Assistance Program and Service-Disabled, Veteran-Owned Small Business Program could benefit from stronger oversight. 

• Addressing these challenges is hard enough under the best of 

circumstances, but would be made even harder by the five percent 

proposed cuts from this administration. 

• I look forward to hearing more about your ideas for addressing 

these challenges and to working together to make small business 

ownership attainable for all Americans. 

Æ 

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