U.S. GOVERNMENT PUBLISHING OFFICE

34–741 WASHINGTON : 2019

SHUTDOWN LESSONS: SBA CAPITAL ACCESS 

PROGRAMS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON INVESTIGATIONS, 

OVERSIGHT, AND REGULATIONS 

OF THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED SIXTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

FEBRUARY 26, 2019 

Small Business Committee Document Number 116–004 

Available via the GPO Website: www.govinfo.gov 

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Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

NYDIA VELA ́ ZQUEZ, New York, Chairwoman 

ABBY FINKENAUER, Iowa 

ANDY KIM, New Jersey 

SHARICE DAVIDS, Kansas 

JARED GOLDEN, Maine 

JASON CROW, Colorado 

JUDY CHU, California 

MARC VEASEY, Texas 

DWIGHT EVANS, Pennsylvania 

BRAD SCHNEIDER, Illinois 

ADRIANO ESPAILLAT, New York 

ANTONIO DELGADO, New York 

CHRISSY HOULAHAN, Pennsylvania 

VACANT 

STEVE CHABOT, Ohio, Ranking Member 

AUMUA AMATA COLEMAN RADEWAGEN, American Samoa, Vice Ranking Member 

TRENT KELLY, Mississippi 

TROY BALDERSON, Ohio 

KEVIN HERN, Oklahoma 

JIM HAGEDORN, Minnesota 

PETE STAUBER, Minnesota 

TIM BURCHETT, Tennessee 

ROSS SPANO, Florida 

JOHN JOYCE, Pennsylvania 

ADAM MINEHARDT, Majority Staff Director 

MELISSA JUNG, Majority Deputy Staff Director and Chief Counsel 

KEVIN FITZPATRICK, Staff Director 

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(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. Judy Chu ......................................................................................................... 1 

Hon. Ross Spano ...................................................................................................... 2 

WITNESS 

Mr. William M. Manger, Associate Administrator, Office of Capital Access, 

United States Small Business Administration, Washington, DC .................... 3 

APPENDIX 

Prepared Statement: 

Mr. William M. Manger, Associate Administrator, Office of Capital Access, United States Small Business Administration, Washington, DC .... 11 

Questions for the Record: 

None. 

Answers for the Record: 

None. 

Additional Material for the Record: 

None. 

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SHUTDOWN LESSONS: SBA CAPITAL ACCESS 

PROGRAMS 

TUESDAY, FEBRUARY 26, 2019 

HOUSE OF REPRESENTATIVES, COMMITTEE ON SMALL BUSINESS, SUBCOMMITTEE ON INVESTIGATIONS, OVERSIGHT, AND REGULATIONS, Washington, DC. 

The Subcommittee met, pursuant to call, at 10:01 a.m., in Room 

2360, Rayburn House Office Building, Hon. Judy Chu [chairwoman 

of the Subcommittee] presiding. 

Present: Representatives Chu, Burchett, and Spano. 

Chairwoman CHU. Well, good morning. The committee will come 

to order. We thank everyone for joining us this morning, and I 

want to especially thank our witness for being here today. 

The recent government shutdown was an acutely painful experience for our Nation’s small businesses. It was 35 days of missed 

paychecks, delayed loans, and strained budgets for too many of our 

Federal employees, contractors, and small business owners. Perhaps most concerning to small firms was the she uncertainty of 

how long the shutdown would last. 

Though the government is now back open, the damage to our 

economy is lasting. During the shutdown, so many entrepreneurs 

and small business employees took extraordinary measures to 

make ends meet, and they are still fighting to get back on their 

own two feet. It is clear that no business or family should be put 

in this position. Not only were business owners feeling the pain, 

several Federal agencies had to plan for the worst and cease operations, and the Small Business Administration was one of them. 

Ironically, the one Federal agency with the sole responsibility of 

helping small firms was in the position of not being able to do its 

job. The shutdown forced SBA to suspend many of its critical services, including the processing and approval of small business loans. 

This included the Office of Capital Access and loans made under 

SBA’s 7(a), 504, and Microloan programs. As a result, SBA could 

not approve loans that were already within the SBA system, nor 

could they take on any new loans. This essentially froze all SBAbacked lending activities for 35 days. 

The good news is that the government is back open again, and 

SBA is back to processing and approving loans for small businesses. Yet, I know the agency has much to do in order to adequately ensure the stability of small business financing. 

Today’s hearing gives us the opportunity to hear from Associate 

Administrator for the Office of Capital Access, Bill Manger, about 

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how he and his office handled the prospect of a protracted lapse in 

appropriations, the challenges that he and his team faced upon reopening, and what guidance the office gave borrowers and lenders 

seeking loan guarantees during the shutdown. 

It is important we understand the extent of economic injuries 

caused to entrepreneurs as they sought capital, many of whom rely 

specifically on SBA loans because they have had trouble securing 

affordable credit elsewhere. 

I look forward to today’s hearing, and I thank Mr. Manger for 

testifying. I would now like to yield of the Ranking Member of the 

subcommittee, Mr. Spano, for his opening statement. 

Mr. SPANO. Thank you so much, Madam Chair. It is a privilege 

to serve with you on the committee. And I look forward to supporting you, and I look forward to a very, very productive term 

here serving with you on this committee. 

Thank you, Madam Chair, again. Small businesses are coming 

off a banner year of increased optimism levels and confidence 

scores. From investing in their businesses, their workers, and their 

communities, the Nation’s smallest firms were busy in 2018. Positive economic news has continued in 2019 with U.S. unemployment 

near record lows, real wage growth, and wage gains across the Nation. 

But despite these trends, small businesses, entrepreneurs, and 

startups still face headwinds when it comes to financing their endeavors. Landing a conventional or traditional bank loan is often 

out of reach for them; thus, putting their American dream on hold. 

With all other options exhausted, small businesses have the ability 

to turn to the Small Business Administration, and there are many 

capital access programs to assist with financing needs. 

Unfortunately, last month’s partial government shutdown halted 

many of SBA’s programs and created a buildup of loans waiting to 

be processed. With SBA again up and running, I look forward to 

today’s hearing focusing on SBA’s Office of Capital Access. The Office of Capital Access administers some of SBA’s most important 

government guaranteed programs including the 7(a) loan program, 

the 504/CDC loan program, and the Microloan program. All three 

of these programs partner with financial institutions to deliver assistance to creditworthy firms that cannot access traditional or conventional lending markets. Due to lender fees in the programs, 

many of them are and have been running at zero cost to the American taxpayer. 

Combined, these programs support hundreds of thousands of jobs 

on an annual basis. From my home State of Florida which is approximately 3.3 million individuals employed in the small business 

sector to Ohio and beyond, these jobs are transforming the country’s economy. 

I look forward to hearing from the Associate Administrator regarding the operating plans that they have in place during and 

after a government shutdown, and additionally, I am looking forward to an open discussion on other matters in SBA’s lending 

world in 2019. 

In my humble opinion, Congress must continue to create an environment where small businesses, entrepreneurs, and startups can 

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flourish, grow, and create jobs. Simply put, when they are moving 

forward, so is the American economy. 

Thank you, Madam Chairwoman, and I yield back. 

Chairwoman CHU. Thank you, Mr. Spano. And if Committee 

Members have an opening statement prepared, we would ask that 

they submit it for the record. 

I would like to take a minute to explain the time rules. Mr. Manger will get 5 minutes to testify. Each Member gets 5 minutes for 

questioning. There is a lighting system to assist you. The green 

light will be on when you begin, and the yellow light will come on 

when you have 1 minute remaining. The red light will come on 

when you are out of time, and we ask that you stay within that 

timeframe to the best of your ability. 

I would like to now introduce our only witness today, Mr. William Manger. Mr. Manger is the Associate Administrator for the 

Office of Capital Access at SBA. He has held this role since March 

2017 and is responsible for the SBA’s loan program policy, technology, operations, and oversight. 

Prior to his current SBA appointment, Mr. Manger served as 

Managing Director at Brock Capital Group, a boutique investment 

bank in New York City, where he advised and supported small to 

medium-size enterprises in their efforts to raise capital and expand 

their businesses. From 2007 to 2009, he served as Associate Administrator for Field Operations at SBA. Mr. Manger holds an 

MBA from the Columbia Business School and a BA from Trinity 

College in Hartford, Connecticut. 

Welcome, Mr. Manger. You are now recognized for 5 minutes. 

STATEMENT OF WILLIAM M. MANGER, ASSOCIATE ADMINISTRATOR, OFFICE OF CAPITAL ACCESS, UNITED STATES 

SMALL BUSINESS ADMINISTRATION 

Mr. MANGER. Thank you, Chairman Chu, and Ranking Member 

Spano and Members of the Subcommittee. I appreciate the opportunity to testify today about the recent Federal funding lapse and 

the status of our SBA lending programs. With several new Members on the Subcommittee and before discussing the lapse, I 

thought it might be helpful to talk briefly about SBA and the Office 

of Capital Access. 

As many of you know, the SBA provides tools and resources that 

are of great value to America’s 30 million small businesses. SBA’s 

programs have been helping small businesses get on their feet and 

grow since our inception in 1953. Our job in the Office of Capital 

Access is to administer programs that make capital available to entrepreneurs who would otherwise be unable to access capital 

through conventional means. 

While the SBA works with lenders to provide loans to small businesses, the agency doesn’t lend money directly to small business 

owners. Rather, we reduce risk for lenders through loan guarantees. These lending programs, however, were closed during the 

lapse in appropriations. For a total of 20 full business lending days, 

SBA was unable to approve loans and was not able to accept new 

loan applications. Throughout the lapse, we posted a notice on our 

financial system, and I engaged industry as needed to respond to 

questions. 

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We also closely examined our program functions to make sure we 

complied with the Antideficiency Act. While most routine activity 

in the Office of Capital Access ceased to operate, a few excepted 

and exempt operations were functional. These included the administrative closing of certain previously approved and obligated 504 

loans, limited lender oversight and risk management of our loan 

portfolio, Microloans through the intermediaries since they had already received funding, disaster loan processing through our servicing centers, and our online lender match platform which automatically matches small businesses seeking financing with SBA approved lenders. 

Once funding was restored for SBA operations, our loan systems 

were immediately operational, and we published an information notice to notify all lenders that SBA was open for business. As a result of process improvements put in place by Administrator Linda 

McMahon, our ability to get back to business was greatly enhanced. For example, by the end of 2018, we had cut in half the 

time it takes to process and approve loan applications. These developments played a key role in dealing with the volume of applications once our systems were again open. 

To provide you an update on that progress, as of this past Friday, SBA has now approved over 7900 loans for a total of $3.7 billion since we resumed operations on Monday, January 28. I am 

very proud of the hard work and dedication of our SBA employees. 

Through their efforts, we are now back to pre-lapse levels in all of 

our lending categories. This includes loan origination, and loan 

modifications in our 7(a) and 504 programs. 

I also want to share with the committee some action that we took 

in response to your February 12 hearing regarding the funding 

lapse. In that hearing, the committee heard from a local brewing 

company who was interested in expanding their operations through 

an SBA loan guarantee. At the time of the hearing, however, SBA 

has not received any paperwork from them. And in response to that 

hearing, our staff reached out to that company. I wanted to let you 

know that we have since received their request and approved their 

loan modification. 

Madam Chair and Members of the Subcommittee, thank you 

again for inviting me to testify. I look forward to your questions 

and continuing to work together on behalf of small businesses 

across the country. Thank you. 

Chairwoman CHU. Thank you, Mr. Manger. I will begin by recognizing myself for 5 minutes. 

Mr. Manger, the shutdown essentially froze all SBA-backed lending, but many loan applications had already been submitted to 

SBA prior to the shutdown and were pending review when the government shutdown began. At the same time, lenders continued submitting loan applications to SBA for approval during the shutdown. 

This means that there were two sets of pending loan applications, 

those that were submitted pre-shutdown and those submitted during the shutdown. In total, how many such loan applications were 

pending when SBA reopened? 

Mr. MANGER. Madam Chairwoman, so when the lapse in appropriations took place at midnight on the 21st of December or the 

22nd of December, we had probably about a couple hundred loans 

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that had come in on a non-delegated basis. But just so you understand, most of our loans, over 80 percent of our 7(a) loans come in 

on a delegated basis. That means they come into our electronic system and are funded in real-time. In fact, in a matter of seconds. 

So that is the majority of our 7(a) which is our largest program. 

Those that did not come in on a delegated basis, that come into our 

centers on a non-delegated basis to be reviewed by SBA staff, we 

had probably a couple hundred, and those we were unable to process at that time. 

In the 504 program, though, the way the 504 program operates, 

we actually approve and obligate the funding of those loans when 

the loan application comes into our system. So what we did during 

the shutdown is we had some excepted employees that were able 

to close 504 loans that had come in prior to the lapse in appropriations that had been already approved and obligated, so those were 

taken care of. 

In terms of those that came in during the shutdown, we turned 

our system off, our CAFS, our central service system off, when the 

shutdown took effect. So actually, there were no loans coming into 

a queue during the shutdown. Once the funding had been restored 

and the lapse was over in January, we reopened that Monday 

morning, the 28th of January, with the funding that we had on the 

CR, and all the loans then that came in at that point were handled. 

So really, there was no backlog of loans in the system because 

the system actually had been shut down. 

Chairwoman CHU. But you did have some that were non-delegated. So how did your office strategically work through this backlog of loans? For example, did you prioritize by date, loan amount, 

or some other factor? 

Mr. MANGER. So what we did was we did do it on a first in, 

first out basis, FIFO basis. We did also, in our information notice, 

that we sent out to the public once we reopened in January, we 

said to our lending partners that if there was an urgent loan that 

needed to be taken care of because the applicant was up against 

a deadline, they had a way to send an email to our center. That 

loan would be specifically prioritized, which we did in several instances where the borrower was up against a deadline that needed 

to be met. 

So once we reopened, again, we brought on some additional resources, and we were able to work through the huge volume. I 

mean, $3.7 billion since January 28 is pretty spectacular. And all 

of those have been approved. And in fact, the different categories 

for loan modifications, we are down now to pre-lapse levels, and we 

were able to do that within 4 weeks. 

Chairwoman CHU. So as a result of the shutdown, small businesses were in dire need of financing because SBA lending programs were not available. And you said that for those 4 weeks, 

that basically shut down the loan application process. When you 

opened up again, did you see an uptick in loan applications? 

Mr. MANGER. Absolutely. We had a tremendous amount of volume come in in the first several days, and it actually has remained 

high. We have now come back actually a little bit stronger than the 

position we had been pre-lapse, so you know, we have seen an incredible increase in our lending over the last month. 

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Chairwoman CHU. Let me also ask. Is there any way to insulate 

lending programs from being frozen due to a lapse in appropriations and to be able to have other entities be able to take over this 

process of lending if there is such a shutdown? 

Mr. MANGER. So Chairwoman Chu, because of the Anti-deficiency Act, we are prohibited from putting guarantees on the loans 

as we usually do. We would be encumbering assets of the Federal 

Government that we didn’t have a right or authorization to do. And 

so, because of the Antideficiency Act, we were unable to make new 

loans during the lapse in appropriations. 

I do want to point out that the one program that actually was 

still up and running during the lapse in appropriations was, in 

fact, the Microloan program. The way the Microloan programs 

works, it is actually a program where we make a loan to a not-forprofit lending intermediary who in turn makes the loan to the 

small business. 

Much of the authorization and the appropriation for those microlenders had been made to the lenders prior to the lapse in appropriations, so they already had money that they then could loan to 

the small businesses. And during the lapse in appropriations, our 

microlending partners were continuing to make microloans. 

And in fact, our Microloan program this year is doing extremely 

well. We are up 3.5 percent over last year’s record. We have had 

a record in that program recently, and I am very pleased to tell you 

some of the statistics on that program; it is doing extremely well. 

In fact, in the last year we have increased our lending to African 

Americans in that program by 5 percentage points, 33 percent used 

to be what we would lend in that program to African Americans. 

This past year, it has gone up to 38 percent, so we are very pleased 

with the performance of the Microloan program. 

Chairwoman CHU. Well, thank goodness for that. Well, my time 

has now expired. The Ranking Member, Mr. Spano, is now recognized for 5 minutes. 

Mr. SPANO. Thank you, Madam Chair. Thank you, Mr. Manger, 

for coming, and thank you for your testimony, and thank you for 

your very good work with the programs. And kudos to you for getting the program up and going so quickly, for getting caught up, 

and thank you for providing us regular updates as to the status of 

that process, and we appreciate that very much. 

I have a few questions. It has been a busy couple of months, obviously. Can you share with us what your office has planned for the 

remaining part of the fiscal year, calendar year? Do you anticipate 

rolling out any new policy notices, SOPs or other regulations? And 

also, if so, can you provide a timeline and details? 

Mr. MANGER. Sure. Thank you very much for that question. So 

in fact, just last week, we rolled out an update to our SOP. It is 

SOP 50 10 5K, and so it was following on from the J that had been 

launched last year. We try and have updates to that program on 

an annual basis if we can to keep up with the market. And again, 

we launched—we introduced it, but it does not take effect until 

April 1, so it gives us time and our lenders time to adjust to any 

of the changes in the SOP for 45 days. And again, we will be out, 

you know, providing classes and webinars with the lenders prior to 

the April 1, you know, effective date. 

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We also currently have a rulemaking that is in process. This was 

actually primarily to promulgate rules for our Express program 

which has existed actually for 20 years and has never operated on 

rules. It was only operating on SOP, and that is not good policy. 

So one of the first things I did when I came into this position was 

say we need to promulgate rules for the Express program because 

all of the programs should be operating under regulation and not 

just SOP. 

So that was launched where we actually made it available to the 

public at the end of September, and we are going through the comments that we have received. We have received an awful lot of comments, so we are going through that. Then it has to go to OMB for 

review, and then finally, the final rule will probably be promulgated sometime later in the summer. 

Mr. SPANO. Good. Thank you. You already answered my second 

question, so thank you for doing that. 

The last Congress that then Chairman Chabot and former Ranking Member Vela ́zquez introduced H.R. 4743, The Small Business 

7(a) Lending Oversight Reform Act of 2018. It went on to pass the 

House and the Senate, and the President signed that into law last 

June. Can you provide the committee an update on how the implementation of this law is coming and any next steps that we should 

be anticipating? 

Mr. MANGER. Sure. Thank you very much for that question too. 

So part of that law, there was a report that was due to Congress 

by December 1 of this year. We got that to the committees, and we 

are implementing through regulation and actually, in some aspects 

of the SOP, updates so that we are in compliance fully with the 

statute that passed and was signed by the President last June. 

I believe we have 1 year to finalize that rule, that legislation in 

rulemaking, and so we are going to be able to meet that deadline 

by the end of June. I think it was the 21st of June last year that 

the President signed the bill, so we will make that deadline. And 

we are working diligently on that, and we take very seriously the 

operations in our office of credit risk management. 

Mr. SPANO. Excellent. Thank you so much. And then, if you 

would, for those of us who don’t have a real in-depth understanding 

of the programs, give us an idea, if you would, what you believe 

the greatest challenges are that we face in 2019 with regard to the 

7(a) program, the 504/CDC, and the Microloan. What is it that you 

would like to achieve, and what are the challenges that you face 

this year? 

Mr. MANGER. One of the challenges we are taking on is to make 

sure that our loan programs are available to all Americans no matter where they live. We have put into effect a fee reduction for 

loans made in rural areas as well as HUB zones, Historically Underutilized Business zones, because we want to make sure that 

again, people that need loans that live in rural America as well as 

in HUB zones have access to the loans that we make available. 

And so we have offered fee relief on loans up to $150,000 if they 

are made in a HUB zone or a rural area, and that is one of our 

big initiatives. Administrator McMahon signed an MOU with Secretary Sonny Perdue of the Department of Agriculture. And we are 

working jointly with Agriculture to make sure we are reaching out 

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to the rural parts of the country and making sure that we have a 

robust lending environment in rural parts of the country as well. 

Mr. SPANO. Thank you. Madam Chair, I yield back. 

Chairwoman CHU. Thank you. The gentleman’s time has expired, and now the gentleman from Tennessee, Mr. Burchett, is 

now recognized for 5 minutes. 

Mr. BURCHETT. Thank you, Chairlady. It is actually Burchett, 

birch like the tree, and et like I just et breakfast, so thank you. 

Thank you so much, Chairlady, and I appreciate that. I always 

enjoy it when somebody misspeaks my name so that I can correct 

them like that, and so it is all in good fun. 

Thank you, Ranking Member Spano, for the great work you have 

done. It has been enjoyable working with you, brother. 

I had a bunch of questions, but I think they have already been 

asked, but there was one that I was concerned about, and maybe 

you have answered this or not. If you have, just tell me to go on 

and watch the notes, okay. But is there any legislation that we as 

Congresspeople can focus on to help access to capital for small business owners, any legislation that is coming down the pike or some 

that may be just in your wish book that you have? 

Mr. MANGER. Thank you very much for that question. You 

know, the President’s budget will be coming out in March, but I 

can speak about last year’s budget. We did ask that we increase 

the maximum for Express loans. These are usually smaller loans 

that rely heavily on the lenders’ underwriting criteria. And in exchange for that, we reduce the guarantee from the Federal Government on average from 75 percent down to 50 percent. So it is a 

great program because it is only a 50 percent risk to the taxpayer, 

and we would like to see that program increased from $350,000 

which is the cap right now to $1 million. 

In fact, during the Recovery Act, the program was allowed to go 

up to $1 million. Then that expired, that sun set, but we are asking 

through the President’s budget again to increase the cap on Express loans up to $1 million. So that is something we think would 

be very helpful. 

The Express program has not been performing as well lately, and 

we think that is because the cap is too low. Even if you took into 

effect inflation, we would be well over half a million dollars now 

in that program. So it needs to grow with the times, and anything 

you can do to help us increase the Express Loan cap, we would appreciate it. 

Mr. BURCHETT. All right. I am writing some notes down. You 

sparked my interest. You said the taxpayers are only on the hook 

for 50 percent. How does that work? Is that some of that new math 

I have been hearing about, or is that—— 

Mr. MANGER. So the way our programs work, Congressman, is 

the Federal Government places a guarantee on our 7(a) loans 

which is our largest program. Last year we did over $25 billion in 

the 7(a) program. So we put a guarantee on average of 75 percent. 

If it is a small loan, in fact, the guarantee goes up to 85 percent, 

so that is how we mitigate risk to our lending partners, and they 

are able to make loans to individuals and small businesses that 

they would not normally make a loan to because they don’t meet 

their conventional criteria. 

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In the Express program, because we give more authority to the 

lender and their own underwriting criteria, we lower, we decrease 

the guarantee from the Federal Government down to only 50 percent, but the lenders like it because it is much easier for them to 

process those loans. It is much faster. 

The program is greatly used as a revolving line of credit for those 

businesses that need a revolver in place to be able to draw upon 

when they need it. For example, they might have a seasonal business, and they need to draw money at certain times of the year. 

So that is a great program. And again, because we reduce the guarantee that the taxpayer is on the hook for down to 50 percent, it 

is a benefit to the taxpayer as well. But the $350,000 cap is just, 

at this point, too low, and we would like to see that increased. 

Mr. BURCHETT. How are they—you said that these are loans 

that normally wouldn’t be able to be made because of some circumstances. Are they bad risks? Give me an example. You don’t 

have to give me the bureaucrat thing. I am running out of time, 

and I want to get—you go ahead. 

Mr. MANGER. Sure. So here is an example, you know. There are 

many people who would like to start a restaurant. And if they go 

into their bank and they say look, I am wanting to open a restaurant. I have never been in the restaurant business, but I would 

like to start this business. I know I would be good at it. I am a 

great cook. I want to open this business, and the bank says you 

know what? That is just way too high risk an industry. We can’t 

give you a loan for that. You have no experience. We are not going 

to do it. 

But with the SBA guarantee, we mitigate that risk to the lender. 

Again, on average, a 7-day loan is a 75 percent guarantee. So by 

taking that guarantee and putting that in place, the lender then 

says all right. My risk is mitigated at least by 75 percent. We are 

going to take that risk on. We are going to make this loan to you 

so that you can open that restaurant that you have always wanted 

to open. 

Mr. BURCHETT. Okay. One last question. 

Mr. MANGER. Sure. 

Mr. BURCHETT. I have got 13 seconds. How much is a 

Microloan? 

Mr. MANGER. A Microloan goes up to $50,000. But what is really interesting is the average size of a Microloan is only $14,000, 

and that is very, very impactful for the businesses, the small businesses that need just that amount of capital. And we have seen tremendous growth in that program, and we hope that it will continue 

to grow. 

Mr. BURCHETT. Okay. Thank you. 

Sorry, Chairlady. Sorry Chairlady I went over. I apologize, 

ma’am. 

Chairwoman CHU. Thank you for the questions, and we want to 

thank the witness for taking time out of his schedule to be here 

today. 

The bottom line remains that for 35 days, our country’s main avenue for responsible small business lending was shut down. 

Though we may never fully know the exact magnitude of the shutdown, we do know that the impact on the economy was far more 

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severe than our country’s entrepreneurs deserve. I think my colleagues on the other side would agree that it should never happen 

again. 

So I thank you, Mr. Manger, and your whole team that got right 

back to work on day one after the shutdown to get our entrepreneurs back on their feet, and already you have made the SBA 

whole. 

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 the committee, 

we are adjourned. Thank you. 

Mr. MANGER. Thank you. 

[Whereupon, at 10:30 a.m., the subcommittee was adjourned.] 

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A P P E N D I X 

Statement of William M. Manger 

Associate Administrator 

Office of Capital Access 

U.S. Small Business Administration 

before the 

House Committee on Small Business 

Subcommittee on Investigations, Oversight, and Regulations 

Hearing on ‘‘Shutdown Lessons: SBA Capital Access 

Programs’’ 

February 26, 2019 

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State of William Manger 

Associate Administrator 

U.S. Small Business Administration 

Thank you, Chairwoman Chu, Ranking Member Spano, and 

members of the subcommittee for inviting me to speak with you 

today. It is my pleasure to appear before you as the 116th Congress 

gets underway. I look forward to building a strong and open relationship with all of you moving forward. 

As some of you may know, the SBA provides tools and resources 

that are of great value to America’s 30 million small businesses, 

which account for over 58 million jobs. As Associate Administrator 

for the U.S. Small Business Administration’s (SBA) Office of Capital Access, it is my job to administer programs that make capital 

available to small business entrepreneurs who would otherwise be 

unable to access capital to start or expand a business through conventional means. 

Before assuming my role as the Associate Administrator for the 

Office of Capital Access, I had the honor to serve the agency as the 

Regional Administrator for Region 2, based out of New York, from 

2005 to 2007, and then as the Associate Administrator for the Office of Field Operations in Washington, D.C. from 2007 to 2009. 

From the beginning of my time with the SBA, I have been able to 

witness the positive impact our programs have on communities 

across the country. 

America’s small businesses are our nation’s innovators and job 

creators, and I am committed to serving as their advocate. The role 

that the SBA and the Office of Capital Access plays in our credit 

markets fills an important gap in the lending marketplace. Our 

agency aims to help small businesses obtain credit that is otherwise unavailable through conventional lending. As many of you are 

aware, entrepreneurs certainly have the will and drive to succeed, 

but at times, access to capital unfortunately proves to be an insurmountable hurdle. That is where we come in. The SBA works with 

lenders to provide loans to small businesses. The agency doesn’t 

lend money directly to small business owners but does reduce the 

risk for lenders through loan guarantees. Our programs have been 

helping small businesses get on their feet and grow since our inception. 

During the last two years, Administrator Linda McMahon has 

placed an emphasis on agency governance to ensure that our entire 

agency, including our Office of Capital Access, is running as efficiently and effectively as possible. Her leadership before, during, 

and after the recent lapse in appropriations, has greatly improved 

our ability to get back to business. 

Regarding the lapse, and in addressing today’s hearing topic, my 

testimony will focus on three areas: 

1. How the recent lapse impacted SBA’s loan programs; 

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2. What actions the Office of Capital Access took during the 

lapse; 

3. An update on SBA’s loan program operations since funding was restored by Congress. 

Due to the funding lapse, our business lending and surety programs were closed from December 22 through January 27, a total 

of 20 full business lending days. SBA was unable to approve loans 

during this period and was not able to accept new loan applications. Applications for SBA-guaranteed surety bonds were also not 

able to be processed by SBA. All new secondary market 7(a) loan 

pools were stopped and purchasing of SBA-guaranteed loans was 

also halted. Throughout the lapse, our Capital Access Financial 

System contained the following notice: 

• Due to the lapse in appropriations, SBA is not able to approve new 7(a) or 504 loans. Please refer to the SBA website at 

www.sba.gov/partners/lenders for more information on SBA’s 

7(a) and 504 loan programs. Limited staff is available at SBA’s 

servicing and liquidation centers to continue 7(a) and 504 loan 

program servicing and liquidation activities. 

While most routine activity in the Office of Capital Access ceased 

to operate, a few excepted and exempt operations were functional 

during the lapse. These included: 

• The administrative closing of certain previously-approved 

and obligated 504 loans; 

• Continued applications and servicing actions on disaster 

loans (SBA’s Office of Disaster Assistance uses the loan program operations of the Office of Capital Access to process and 

service disaster loans); and 

• The online Lender Match platform, which automatically 

matches small businesses seeking financing with SBA-approved lenders. 

During the lapse, I remained engaged with external stakeholders, including the trade associations, to help communicate information to lenders, as necessary. We also took steps to ensure 

that there would be no impairment to government property while 

the loan program operations were idle. For example, the Director 

of the SBA Office of Credit Risk Management was brought in as 

an excepted official to ensure that risk management in the SBA 

loan portfolio, including critical, time-sensitive lender reviews and 

oversight, was not significantly compromised. 

Once Congress restored funding for SBA operations, our loan 

program systems were immediately operational on Monday, January 28, and normal business in the Office of Capital Access resumed. An Information Notice was published to notify all lenders 

that SBA was open for business. The detailed notice covered such 

topics as interim loans, servicing actions, report filings, as well as 

expedited requests. 

Since the agency resumed full operations, I am proud to report 

on our progress. Through February 14, our lending data is as follows: 

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• 6,075 7(a) loans have been approved for a total of $2.64 

billion; 

• 588 504 loans have been approved for $416 million; 

• 800 secondary market loans pending sale have been processed; 

• Surety bond applications have all been reviewed and processed with $188 million in bond guarantees having been approved. 

Over 80% of SBA 7(a) guaranteed lending is submitted to SBA 

by preferred SBA lenders on a delegated basis, and SBA can turn 

those applications around in a matter of days. 7(a) and 504 loans 

that are not submitted under delegated processing are sent to SBA 

loan processing centers for review. Under Administrator 

McMahon’s leadership, SBA has dramatically improved the time it 

takes to review and process a non-delegated loan for a guarantee 

at the centers. In fact, the turn time has been cut in half by implementing process improvements over the last two years. 

That said, there are non-delegated loans that have been submitted for review since January 28 that we estimate will take additional time. Our loan processing centers are expediting urgent loan 

application reviews while also ensuring fairness so that loans are 

processed as they have come into the system. We have also budgeted overtime to allow for loan center staff to address these loans. 

As of now, the agency feels it can handle any resource needs 

through our existing budget. 

In conclusion, SBA’s loan programs are fully operations, we have 

made significant progress in approving new loans, and we are actively addressing any delays in our non-delegated loan processing 

reviews. I am committed to ensuring that the Office of Capital Access works efficiently in supporting small businesses seeking financing after the lapse in appropriations. 

Thank you, Chairwoman Chu, for inviting me to testify here 

today. I look forward to answering your questions and continuing 

our work together to help advance small businesses across this 

country. 

Æ 

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