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[Senate Hearing 115-20]
[From the U.S. Government Publishing Office]

                                                         S. Hrg. 115-20

                    NOMINATION OF LINDA E. McMAHON,
        TO BE ADMINISTRATOR OF THE SMALL BUSINESS ADMINISTRATION

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

                                 HEARING

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                          AND ENTREPRENEURSHIP
                          UNITED STATES SENATE

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            JANUARY 24, 2017

                               __________

    Printed for the Committee on Small Business and Entrepreneurship
    
    
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            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

                     ONE HUNDRED FIFTEENTH CONGRESS

                              ----------                              
                    JAMES E. RISCH, Idaho, Chairman
             JEANNE SHAHEEN, New Hampshire, Ranking Member
MARCO RUBIO, Florida                 MARIA CANTWELL, Washington
RAND PAUL, Kentucky                  BENJAMIN L. CARDIN, Maryland
TIM SCOTT, South Carolina            HEIDI HEITKAMP, North Dakota
JONI ERNST, Iowa                     EDWARD J. MARKEY, Massachusetts
JAMES M. INHOFE, Oklahoma            CORY A. BOOKER, New Jersey
TODD YOUNG, Indiana                  CHRISTOPHER A. COONS, Delaware
MICHAEL B. ENZI, Wyoming             MAZIE K. HIRONO, Hawaii
MIKE ROUNDS, South Dakota            TAMMY DUCKWORTH, Illinois
JOHN KENNEDY, Louisiana
          Skiffington E. Holderness, Republican Staff Director
                 Sean Moore, Democratic Staff Director
                            
                            
                            C O N T E N T S

                              ----------                              

                           Opening Statements

                                                                   Page

Risch, Hon. James E., Chairman, and a U.S. Senator from Idaho....     1
Blumenthal, Hon. Richard, a U.S. Senator from Connecticut........     1
Murphy, Hon. Christopher, a U.S. Senator from Connecticut........     2
Shaheen, Hon. Jeanne, a U.S. Senator from New Hampshire..........     5

                                Witness

McMahon, Linda E., of Connecticut, to be Administrator, Small 
  Business Administration........................................     6

                          Alphabetical Listing

America's Small Business Development Centers
    Letter dated January 14, 2017................................   106
Association of Women's Business Centers
    Letter dated January 26, 2017................................   107
Blumenthal, Hon. Richard
    Opening statement............................................     1
Casey, Maura, Connecticut resident
    Letter.......................................................   108
Federal Allies Institute
    Letter dated January 24, 2017................................   109
McMahon, Linda E.
    Testimony....................................................     6
    Prepared statement...........................................     9
    Responses to questions submitted by Ranking Member Shaheen 
      and Senators Booker, Cantwell, Coons, Heitkamp, Hirono, 
      Inhofe, and Markey.........................................    52
Murphy, Hon. Christopher
    Opening statement............................................     2
National Association of Development Companies
    Letter dated January 23, 2017................................   110
National Association of Government Guaranteed Lenders
    Letter dated January 23, 2017................................   111
Risch, Hon. James E.
    Opening statement............................................     3
Rounds, Hon. Mike
    Letter from the Small Business Administration Office of 
      Advocacy dated October 1, 2014.............................    25
Shaheen, Hon. Jeanne
    Opening statement............................................     5
Small Business and Entrepreneurship Council
    Letter dated January 23, 2017................................   112
Small Business Investor Alliance
    Letter dated January 24, 2017................................   114
Small Business Technology Council
    Letter dated January 26, 2017................................   115
U.S. Chamber of Commerce Small Business Council
    Letter dated January 30, 2017................................   116

 
                 NOMINATION OF LINDA E. McMAHON, TO BE
           ADMINISTRATOR OF THE SMALL BUSINESS ADMINISTRATION

                              ----------                              

                       TUESDAY, JANUARY 24, 2017

                      United States Senate,
                        Committee on Small Business
                                      and Entrepreneurship,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:31 a.m., in 
Room SR-428A, Russell Senate Office Building, Hon. James E. 
Risch, Chairman of the Committee, presiding.
    Present: Senators Risch, Rubio, Paul, Scott, Ernst, Inhofe, 
Young, Rounds, Kennedy, Shaheen, Cantwell, Cardin, Heitkamp, 
Markey, Booker, Coons, Hirono, and Duckworth.

    Chairman Risch. The Committee will come to order. This is 
the time and place for the hearing to review the qualifications 
and start our advise-and-consent process, as afforded by the 
Constitution, for Mrs. Linda McMahon to head the SBA.
    Linda, thank you so much for being here, and we have 
Senators Blumenthal and Murphy to introduce Mrs. McMahon, and 
both of these gentlemen have run against Mrs. McMahon, and vice 
versa, so I hope they did not bring their files on oppo 
research along.
    Senator Blumenthal. We have been trying to forget, Mr. 
Chairman.
    [Laughter].
    Chairman Risch. But in any event, Senator Blumenthal, the 
floor is yours, and thank you so much for gracing us with your 
presence.

   STATEMENT OF HON. RICHARD BLUMENTHAL, A U.S. SENATOR FROM 
                          CONNECTICUT

    Senator Blumenthal. Thanks, Mr. Chairman. Thanks to you and 
Ranking Member Senator Shaheen. I am pleased to join my 
colleague in introducing our fellow resident of Connecticut, 
Linda McMahon. We know her as a fellow citizen of Connecticut, 
but also as a successful business leader, as the co-founder and 
former CEO of the WWE, and also as a very generous contributor 
to many significant philanthropic and charitable causes and 
educational institutions in Connecticut, including, for 
example, Sacred Heart University near where we live.
    In my view, Mr. Chairman, I recommend her because I think 
she would be an excellent fit for this agency based on her 
experience and expertise as a business leader. She knows, as I 
do, that small businesses are the backbone of our economy. They 
are the most vibrant and vital job creators. They not only 
innovate by fostering new jobs, but they also invent new 
products. They are the startups in every sense, and they embody 
the American dream. Having visited many of them in Connecticut, 
I know how they create jobs and new products and opportunities 
for others. And the SBA plays an integral role, as this 
Committee well knows, in supporting small businesses 
financially but also encouraging them with expertise and 
experience.
    And Linda McMahon has that kind of expertise and 
experience. She is a tireless leader and a tenacious fighter. 
Her professional life has been about building businesses. She 
has started and struggled in the entrepreneurial trenches, 
meeting payrolls, hiring and firing, working hard for a vision. 
And although we have known our share of differences, I have 
never questioned her unwavering drive and focus.
    She has used her business to help veterans and women 
realize their own dreams and opportunities, and I am hopeful 
that under her leadership the Small Business Administration 
will continue its focus on veterans and women. She has played 
an integral role in spearheading opportunities and dreams for 
women, and that has been the focus of her professional life 
most recently.
    So I am pleased to be here to introduce her and recommend 
her to the Committee. She understands the needs of states like 
Connecticut who are still working hard to recover from the 
economic recession, who need new jobs, and I hope that she will 
continue to have Connecticut at the top of her mind as she 
assumes this new role, and I look forward to working with her, 
and I know the other members of the Committee will as well.
    Thank you very much
    Chairman Risch. Thank you, Senator Blumenthal. I was hoping 
she was going to have Idaho at the top of her mind, but----
    [Laughter.]
    Senator Blumenthal. I will let her say that.
    Chairman Risch. I do not think she will.
    Senator Murphy, thank you for coming. We are all busy these 
days, I know, and it is tough to push things aside to get here. 
But thank you so much. The floor is yours.

   STATEMENT OF HON. CHRISTOPHER MURPHY, A U.S. SENATOR FROM 
                          CONNECTICUT

    Senator Murphy. Well, thank you very much, Chairman Risch, 
Ranking Member Shaheen, members of the Committee. It also gives 
me great pleasure to help introduce our fellow Nutmegger, Linda 
McMahon, as the President's nominee to serve as the next 
Administrator of the Small Business Administration.
    As you said, Mr. Chairman, this visual is going to be a 
little amusing and surprising to folks in Connecticut who 
watched the three of us duke it out over two long Senate 
campaigns. But you know what? Politics cannot work if political 
grudges never die, and political adversaries have to find a way 
to work together after the fight is over. And I am here today 
to support Linda not because we have magically become of one 
mind on how we approach every problem that this country faces, 
but because I have confidence that she is going to give good, 
sound counsel to President Trump when it comes to policy 
affecting small businesses. And I believe that she has the 
passion for this job that is vital.
    At its core, the SBA's mission is simple: to help Americans 
start, build, and grow businesses. And virtually every owner 
and starter of a small business wants to one day be the owner 
of a big business. And before you today sits a very talented 
and experienced businessperson who did just that. Over the past 
several decades, Linda has shepherded her small business from a 
small one-desk operation to an incredibly profitable enterprise 
with hundreds of employees throughout the world. And she also 
understands the unique challenges, as Senator Blumenthal said, 
facing women business owners. She co-founded the Women's 
Leadership LIVE organization that helps equip women to become 
successful business leaders. Her work there assures me that she 
is going to build on the significant momentum of her 
predecessor in the Obama administration.
    The Federal Government has just recently surpassed its 5-
percent contracting goal for women-owned small businesses for 
the first time in history, and I have confidence that Linda 
McMahon is going to further empower women to create and foster 
thriving businesses with the help of partner organizations like 
the Women's Business Development Council, which has had success 
in Connecticut mentoring and nurturing women-owned small 
businesses.
    Listen, I saw firsthand the fight that Linda brings to any 
endeavor that she takes on, and I am sure we will have 
disagreements, but I will never question whether she has the 
experience and the determination necessary to lead this great 
agency. And I would really urge the members of this Committee 
to support her nomination. I am very pleased to join with 
Senator Blumenthal to introduce her to you today.
    Chairman Risch. Well, Senator Murphy, thank you so much. 
Senator Blumenthal and Senator Murphy, we will advise the 
Guinness World Book of Records about this event and get it duly 
noted. You are certainly welcome to stay, but knowing that we 
are all drinking out of a fire hose these days, you certainly 
can be excused. And I am sure you will see this when you need 
to see it. So thanks so much. Thank you for coming.
    Senator Blumenthal. Thank you, Mr. Chairman. Thanks for 
this opportunity.

OPENING STATEMENT OF HON. JAMES E. RISCH, CHAIRMAN, AND A U.S. 
                       SENATOR FROM IDAHO

    Chairman Risch. Thank you.
    Linda, so you know where we are headed here and for 
everyone else, I am going to make a very brief opening 
statement. I am going to yield to Senator Shaheen to do 
likewise. And at that point, we will administer the oath, which 
is required. And by Committee rules, I will do that. And then 
the floor will be yours to make an opening statement, and then 
as you can see, you have a list of people with deep, probing 
questions who will then take turns at you from each side.
    In any event, first of all, thank you for coming to meet 
with me and spending the time that you did, and thank you for 
being willing to take on this important appointment. The Small 
Business Administration is not a large Federal agency as 
Federal agencies go, but to a businessperson, a small 
businessperson, it can be one of the most important and 
critical endeavors that the Government undertakes.
    You and I had the opportunity to talk about a couple of 
endeavors that the SBA does. The SBA, of course, is known for 
its loaning to small businesses, and you will find, I think, 
when you drill down, that there is a very robust fleet of 
lenders out there who service the small business community 
through the Small Business Administration. And I think you will 
be well satisfied with how they operate, what they do, and the 
work they do for small business.
    Of more importance to me, actually, because that part of 
the operation is doing so well, are the efforts that the SBA 
undertakes to try to level the playing field for small 
businesses. When we talk with every business these days--it 
used to be, when I started in politics, the most hated 
organization of any government was the IRS. The IRS has fallen 
way back, and the other agencies that do the regulatory things 
that the Government does have really risen to the top. In my 
State, in our dealing, the EPA is way up there. And after that, 
there are others that come in behind. But if you ask any 
businessman today, be it a small businessman or a big 
businessman, but particularly small business, what is the 
biggest challenge that you face today? And, invariably, they 
will not say, well, it is access to capital, or taxes are too 
high, or what have you. They will tell you the regulatory 
structure of the Government in America today is strangling 
businesses. And you will find that--everybody at this table can 
tell stories about Government agencies coming into small 
businesses and causing them a great deal of difficulty.
    We have an operation within the SBA called the Office of 
Advocacy. They are supposed to be independent. They have not 
been. They are supposed to stand up and complain loudly every 
time the Federal Government does something that affects small 
businesses. There is a process in place for them to actually 
formally do this. It has not worked very well. I am hoping as 
we go forward that we are going to be able to make it work 
better. The poster child for that was the rule that was 
proposed regarding Waters of the United States, and there the 
finding--and so the Office of Advocacy rightly complained and 
said, look, this is a big problem, especially for small 
businesses, especially for small businesses in agriculture, and 
others, too. And the agency said, oh, no, we are making a 
finding that this will not have a significant impact on 
businesses. You have got to be brain dead to reach that kind of 
a conclusion.
    So, in any event, I know that you share my concern with 
that, and I hope we will be able to work together to try to do 
more for small businesses. We all know, when the Government 
puts out a regulation, if you are General Electric corporate, 
and it comes in, they hand it to an army of lawyers and 
compliance officers and what have you to take care of it. If 
this comes to a guy that is fixing lawn mowers in his garage 
and he gets a multi-page inquiry from the Federal Government, 
it becomes a big problem for him and cuts into his work 
dramatically.
    So we will work on that as we go forward, and I look 
forward to hearing your thoughts on that.
    And with that, I would like to yield to my distinguished 
colleague, Senator Shaheen.

OPENING STATEMENT OF HON. JEANNE SHAHEEN, RANKING MEMBER, AND A 
                U.S. SENATOR FROM NEW HAMPSHIRE

    Senator Shaheen. Thank you very much, Mr. Chairman. Thank 
you for holding today's hearing, and congratulations on taking 
over the gavel as Chairman of this Committee. We have had the 
opportunity to work together in the past very well.
    Chairman Risch. We have.
    Senator Shaheen. And I look forward to working with you 
over this coming session to address the needs of small 
businesses.
    I also want to recognize the new members of the Committee: 
Senator Duckworth on the Democratic side, and on the Republican 
side Senators Inhofe, Young, and Rounds. Welcome to this 
Committee. I think you will find that this is a Committee that 
works in a very strong bipartisan way to address the concerns 
of small businesses. So I look forward to continuing to do 
that.
    I am also very pleased to welcome Linda McMahon, who is 
President Trump's nominee to head the Small Business 
Administration. I appreciated the opportunity to meet with you 
and to hear your passion for the work that small businesses do.
    I got on this Committee in 2008 after I got elected to the 
Senate because small business is such a concern for New 
Hampshire. Ninety-six percent of our employers in New Hampshire 
are considered small businesses, and they are not just 
important to New Hampshire and to so many of the states 
represented on this Committee. But they are the engine of the 
economy that drives this nation. Two out of every three jobs 
that are created are created from small businesses. They are 
also leaders when it comes to innovation. They produce--and 
this is a statistic that is one of my favorites. They produce 
14 times more patents than large businesses. I am not sure that 
most people appreciate the innovation that occurs in our small 
businesses. But, unfortunately, unlike big business, our small 
businesses have not yet fully recovered from the Great 
Recession.
    For example, according to a Harvard Business School 
analysis, small businesses loans have dropped by 20 percent 
since the financial crisis while lending to large firms has 
increased by 4 percent. That is why SBA and its programs are so 
critical. Last year alone, the SBA backed more than 70,000 
loans to small businesses, supporting $29 billion in lending 
and nearly 700,000 jobs. The SBA also helped small businesses 
win more than $90 billion in Federal contracts and provided 
counseling to more than a million entrepreneurs.
    But, of course, there is more work to be done, and that is 
why you are here, Mrs. McMahon. So I know that you share those 
goals and values for what we need to support small business in 
this economy, and I look forward to hearing your statement 
today and your response to questions. Thank you.
    Thank you, Mr. Chairman.
    Chairman Risch. Thank you, Senator.
    I will warn you that--Senator Shaheen referred to the new 
members of this Committee. They may be new members to this 
Committee, but these people have been around awhile, so do not 
think you are going to get softball questions from them.
    [Laughter.]
    So, with that, I would ask you to stand and be sworn. If 
you would raise your right hand, please? Do you solemnly swear 
to tell the truth, the whole truth, and nothing but the truth, 
so help you God?
    Mrs. McMahon. I do.
    Chairman Risch. Thank you very much. Now, I understand you 
might have some introductions of your own.
    Mrs. McMahon. Yes, I certainly do. I am very proud to 
introduce this morning my daughter, Stephanie, and her husband, 
Paul Levesque. Yes, please stand up.
    Chairman Risch. All right. Thank you. Welcome.
    [Applause.]
    Mrs. McMahon. And I have wonderful friends who have 
traveled from around the country to be here today, so I am very 
appreciative of their presence as well. So thank you.
    Chairman Risch. Thank you very much. Well, at this time, 
the floor is yours for an opening statement.

     STATEMENT OF LINDA E. McMAHON, OF CONNECTICUT, TO BE 
          ADMINISTRATOR, SMALL BUSINESS ADMINISTRATION

    Mrs. McMahon. Thank you very much.
    Thank you, Chairman Risch, Ranking Member Shaheen, and 
distinguished members of the Committee. I am honored to have 
your consideration to serve as the head of the U.S. Small 
Business Administration. I would like to thank Senators 
Blumenthal and Murphy for their kind introductions, and it was 
nice to be on a really even playing field today. I would also 
like to express my gratitude to President Trump for this 
opportunity to join his administration and his confidence in 
me.
    As an entrepreneur myself, I have shared the experiences of 
our Nation's small business owners. We are more than our 
products and services. We are people. We are families. The 
small businesses that are the engine of our national economy 
are driven in part by people working to put food on the table, 
pay for kids' braces and swimming lessons, save for college, 
and prepare for their own retirement. Whether it is an organic 
farmer or an app developer, with one employee or a hundred, we 
can never forget that small businesses are people with goals 
and values that cannot be calculated just on a profit-and-loss 
statement. If I have the honor of being confirmed as the head 
of the SBA, I will do my best to advocate on their behalf.
    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. I am proud of our 
success. I know every bit of the hard work that 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, believe it or not, 
that $12 a month at that time made a difference in our 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.
    In my travels throughout Connecticut in 2010 and 2012, when 
I was campaigning, I met with more than 500 small business 
owners--touring their shops, restaurants, offices, 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 have 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 educate 
entrepreneurs about things like applying for a loan and 
developing a business plan. We also work to build their 
confidence. I always say that even entrepreneurs with the best 
ideas sometimes need a little wind beneath their wings. Women's 
Leadership LIVE hopes that by sharing our stories of success 
and failure, our networks of contacts and resources, and our 
strategies for addressing challenges, we can give small 
business owners the confidence that will help propel them 
forward.
    Small business owners do not just need confidence in 
themselves; in order to take a risk, they need confidence in 
the economy. Should I have the honor of being confirmed to lead 
the SBA, I will work to revitalize a spirit of entrepreneurship 
in America. Small businesses want to feel they can take a risk 
on an expansion or a new hire without fearing onerous new 
regulations or unexpected taxes, fees, and fines that will make 
such growth unaffordable. We want to renew optimism in our 
economy.
    Small businesses have had some tough blows in the past 
decade. I know what it is like to take a hit, and I have 
learned it is not how you fall, but it is 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. Bankruptcy was a really hard decision and a 
very tough time in our lives. We lost our home. My car was 
repossessed in our 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 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 did.
    As I visited small businesses all over the country through 
Women's Leadership LIVE, 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. If I am honored to be confirmed, I will work to guide SBA 
as that helping hand in the most efficient and effective way 
possible.
    I believe in leadership by example. As a CEO, I never 
expected employees to do anything I was not willing to do 
myself. I believe in setting expectations and holding people 
accountable, but trusting them to do the job for which they 
were hired. If confirmed, I look forward to working with the 
SBA staff. I am eager to learn from their experience and their 
expertise. I will listen, and their ideas, concerns, and 
recommendations will be taken seriously. I know there will be 
new challenges in a government setting, but I will commit 
myself with the same responsibility to deliver value to the 
taxpayers of America as I did to shareholders of my company.
    Over the past 2 weeks, I have had the pleasure of meeting 
with many members of the Committee, and I appreciate the kind 
words of encouragement I have received. Thank you very much for 
the opportunity to speak with you today, and I would be very 
happy to answer your questions.
    [The prepared statement of Mrs. McMahon follows:]
    
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Risch. Thank you very much. We appreciate that.
    The way we are going to do this is we are going to use what 
they call the early bird method or first-come/first-served 
method. We are going to go back and forth between Republicans 
and Democrats. I will go first, but I am going to reserve my 
time to interject as I see appropriate as we go down the pike. 
And, with that, I will yield the floor to my friend Senator 
Shaheen.
    Senator Shaheen. Thank you, Mr. Chairman, and thank you for 
your statement, Mrs. McMahon. I know we discussed this issue 
when you came to visit me, but I think it is important to give 
you an opportunity to address it in the Committee because you 
have been quoted as saying that you supported merging the SBA 
into the Department of Commerce. That proposal has been a major 
concern for businesses in my home State who believe their voice 
in Washington is already not loud enough. And so I wonder if 
you could clarify your position and whether you believe SBA 
should continue as a stand-alone agency or whether you think it 
should be merged into another agency.
    Mrs. McMahon. Thank you very much, Ranking Member Shaheen, 
for the question and the opportunity to clarify. When I was 
running for the Senate in Connecticut, I was a strong advocate 
for reducing duplicative programs, and as part of my campaign, 
I talked about the list every year that the GAO puts out of 
duplicative programs.
    During that time, President Obama had indicated that he was 
looking to merging some of the agencies. When I was asked if I 
supported merging SBA into Commerce, I really was not focused 
on SBA or Commerce; I was focused on the concept of merging 
agencies or reducing duplicative programs so that we could 
reduce those costs.
    I am a firm believer that SBA needs to be a stand-alone 
agency. I am very proud that President Trump has kept it as a 
Cabinet post, and I intend to serve my full term and execute as 
well as I can to advocate on behalf of small businesses.
    Senator Shaheen. Well, thank you very much for clarifying 
that. In New Hampshire, SBA has made significant progress over 
the past 4 years, and we have seen growth in both lending and 
government contracting. And to some extent, this has been 
because of the work of so many of SBA's resource partners, such 
as the Small Business Development Centers, the Women's Business 
Center, SCORE, volunteer mentors, Veterans Business Outreach 
Centers, and district offices. And I think these partners are 
really critical to the mission of SBA and helping small 
businesses.
    So as Administrator, how would you identify opportunities 
to maximize SBA's resource partners and provide adequate 
funding for their staffing and programs?
    Mrs. McMahon. Well, first of all, I look forward to going 
to our different districts and our different regions and 
meeting with those SBA members, A, the leaders and the managers 
in those offices to hear about what programs are working, what 
programs are not. I do not have a working knowledge today of 
how successful those programs have been except to know that, 
from you, you have seen that success, and many of the other 
members that I have talked to. So I would want to continue to 
encourage our outreach.
    My former company, WWE, we were always concerned about 
veterans and the returning veterans and how to have jobs, and 
WWE is part of Hire a Veteran program, so that veteran aspect 
of helping them create jobs.
    As I have already stated, I have been very forthcoming in 
wanting women entrepreneurship to grow and continue to support 
that. It is very near and dear to my heart. So I will continue 
that outreach with all of our different organizations and 
continue to mentor through the Women's Centers as well.
    Senator Shaheen. Thank you. I am pleased to hear that, and 
I know the resource partners in New Hampshire and across the 
country will be very pleased to hear that as well.
    As we discussed in our meeting, one of the most important 
ways SBA can help small businesses is by making sure they have 
access to Federal contracting, and Senator Murphy mentioned in 
his introduction that we saw for the first time last year that 
women small business owners had reached 5 percent in terms of 
access to Federal contracts, so it is a milestone, but a very 
slow start to what we need to do more of.
    And so I wonder if you could talk about how you plan to 
work with Federal agencies to increase small business 
opportunities for Federal contracts.
    Mrs. McMahon. I would first like to fully understand, you 
know, what those projects are and how we can best fit the 
businesses to those contracts. You know, I think that in terms 
of the prime contracts and the subcontracts, we need to make 
sure that we have got that adequate representation for that 
growth. So I would want to make sure that our businesses have 
the right outreach, the right advocates in those markets, and 
that is what I would focus on, is trying to make sure we have 
those right advocates.
    Senator Shaheen. Thank you. My time is up, but I just 
wanted to make a point, Mr. Chairman, of announcing that I am 
going to enter a question into the record on behalf of 
Congresswoman Nydia Velazquez, who is the Ranking Member of the 
House Small Business Committee, and it relates to the ongoing 
situation in Puerto Rico. It is something, again, that you and 
I discussed when we met, Mrs. McMahon. So I will be submitting 
that for the record.
    Chairman Risch. Thank you very much.
    Senator Paul.
    Senator Paul. Congratulations and welcome.
    Mrs. McMahon. Thank you.
    Senator Paul. I think the Chairman put it very well when he 
said that small businesses are worried about regulation. The 
cost of regulation is a big deal to small businesses, 
particularly when you just imagine, you know, if you have a 
thousand banks or you have one bank, your compliance cost is 
much greater, obviously, if you have one bank than if you can 
spread it through a thousand banks or 10,000 employees. This 
goes on across America.
    In addition, we have another problem. We actually have big 
businesses that come to Washington and actually are in favor of 
regulation because they see it as an impediment to smaller 
competition. So I think small business does need a voice, and I 
hope you will be a good voice for small business.
    I guess what I would like to ask is: In your opinion, do 
you think we are overregulated? Underregulated? Do you think 
regulations are a problem? Do you have any ideas about how the 
Small Business Administration might be run to help with the 
regulatory burden?
    Mrs. McMahon. Thank you very much, Senator, for your 
question. What I heard constantly when I was campaigning 
through the State of Connecticut from small businesses was the 
overregulation environment which is costing them time, effort, 
and money that they could not focus on their business. I think 
we forget sometimes that in small businesses, especially mom-
and-pop companies that are starting up--and I have a special 
place in my heart for them--that, you know, they are the chief 
cook and bottle washer. You know, they are the CEO, the CFO, 
they are the janitor. They are every other thing. So when they 
get a packet of regulation forms that they have to fill out in 
order to comply with regulations, A, they do not know what to 
do with it; B, they cannot afford to hire lawyers to get them 
through the regulatory environment. So either they become more 
at fault and not in compliance, or they have taken time away 
from their business to do it.
    And so it is really difficult for small businesses to have 
to suffer under, I think, that kind of burden of the regulatory 
environment.
    Senator Paul. One of the other burdens or costs of small 
business is taxes, and I probably would not discount it from 
regulations. I would probably say it is about equal. You know, 
a lot of small businesses pass through their income LLCs as 
individual income, so a moderately successful small business 
might be paying 39.6, you know, income tax, but then in 
addition you have got an ObamaCare tax, so you are like 43, 44, 
before you--God forbid you live in the Northeast and have a 12-
percent state income tax on top of that. So I think there is a 
great burden. You will not get to necessarily address tax 
policy directly unless there are ways you can as the Small 
Business Administration. But you also will be a voice in the 
Cabinet, and I would just like to hear your thoughts on, I 
guess, in general the same question. Are we overtaxed or 
undertaxed? Is our tax structure currently an impediment to the 
formation of small businesses?
    Mrs. McMahon. Well, thank you, and having first started out 
as a Sub. S Corp., and then Women's Leadership LIVE that I 
started as an LLC, I fully understand how the pass-through 
aspect of that income works. And I do think that if we are 
involved in tax reform, we do need to consider how to also make 
it a level playing field for those pass-through companies. So I 
would be a strong advocate for that.
    Senator Paul. Thank you. Good luck.
    Mrs. McMahon. Thank you.
    Chairman Risch. Thank you very much, Senator.
    Senator Cardin.
    Senator Cardin. Mrs. McMahon, first of all, thank you very 
much for being willing to serve in this public position. And we 
also thank your family because this will be a family sacrifice. 
If you think you have traveled before, this is a big country, 
so we thank you for your willingness to serve.
    Mrs. McMahon. Thank you.
    Senator Cardin. You have already heard the numbers. I could 
go over the half a million small businesses in Maryland, over a 
million jobs. But I will focus a little bit on the individual 
companies that I have visited where I see a small business 
developing a way to deal with diagnosing student athletes on 
head injuries, or I see new drugs being developed along the I-
270 corridor that are going to help quality of life, or I see a 
small business developing a better way to help other businesses 
deal with their administrative costs. I see it in our national 
defense. So many of these small companies are figuring out 
better weapons systems or ways that we can test our weapons 
systems for efficiency. All of that is the creativity of small 
business.
    They all had one thing in common. They all used the 
services of the Small Business Administration. They used it for 
mentoring and developing a business plan because at times it is 
difficult to know exactly what a bank needs in order to be able 
to get a loan. They used the services of SBA for capital 
because that is very challenging for small businesses to get 
particularly venture capital to be able to take those risks. 
They used the Small Business Administration as an advocate to 
make sure that they got fair government procurement, and 
particularly in this region, government procurement is a very 
important part of opportunities for small business.
    So as you and I talked in the office--and I thank you very 
much for our personal visit--we need an advocate as the Small 
Business Administrator in that dealing with other agencies. We 
talked about the procurement issues. We talked about the 5 
percent for the women. There is also a set-aside for small 
businesses. We have minority businesses, veteran-owned 
businesses. One thing is in common. When an agency, a big 
agency, is doing their procurement, they at times like as few 
contractors as possible because they have to evaluate every 
contract that is there, and they tend to bundle into large 
contracts that make it virtually impossible for small 
businesses to be a prime contractor. We have attempted to pass 
anti-bundling legislation so that that is not done.
    Can you just share with me how you intend to advocate on 
behalf of small businesses, particularly among the other 
government agencies, to make sure that procurement is fair to 
help small businesses grow?
    Mrs. McMahon. Thank you very much for mentioning that again 
because we did have a good conversation about that. I have 
found that, you know, the best way to obfuscate what it is you 
are really trying to do is to bundle things or just stack stuff 
on top of it. So I would really like to peel back some of that 
bundling and take a look at it so that we have the opportunity 
for our small businesses to really have that fair shot. They 
should not just continue to get squeezed out. And I would want 
to be their advocate. I would want to hear from them. I would 
want to find out, well, how did this happen? How can we get 
around this? Whom do we need to speak to? How can I advocate 
more strongly on your behalf? What avenues have you gone down 
or what other avenues do you need to go down so that we can 
reach in and make this more about you? And I would be working 
very hard to advocate for our small businesses.
    Senator Cardin. I appreciate that. I also appreciate your 
response in regards to what you have done for veterans, 
returning warriors. To me, that is an extremely important part 
of our commitment to help veterans and returning warriors in 
regards to small business.
    I shared with you the initiative that was developed by the 
private sector in my State. The Montgomery County Chamber of 
Commerce instituted a Veteran Institute for Procurement. It was 
a national effort to bring its returning warriors to help 
mentor them into starting small businesses and leadership. And 
as a result, over 700 veteran-owned businesses have been helped 
by this program in Maryland. It received help from the Small 
Business Administration to make this a national program, and I 
would just urge you to look at these types of programs because 
they really do help the entrepreneur spirit for our returning 
warriors, and we must do whatever we can to help them in coming 
back to our country.
    Mrs. McMahon. Thank you very much. Just one quick comment 
is that I serve on the board of a company called American 
Corporate Partners, and it is a mentoring company for returning 
veterans to help them make the transition between the military 
and the private sector. And so the outreach is to companies and 
corporations that then mentor these men and women who are 
returning and guide them and often have them come into that 
company and spend days with different members of the executive 
or whatever branch that they want to be in, and it has been 
very successful.
    Senator Cardin. Thank you. The last point I would make is 
that, in regards to access to capital, it is particularly 
difficult for minority businesses. I hope that we can work 
together to find ways that we can do more outreach to help 
access to capital for particularly minority businesses.
    Thank you, Mr. Chairman.
    Chairman Risch. Thank you very much.
    And we will go to Senator Inhofe.
    Senator Inhofe. Thank you, Mr. Chairman. Well, Linda, I 
figured if Chairman Risch can call you Linda, I can, too, and I 
will.
    Mrs. McMahon. Thank you.
    Senator Inhofe. And I want to tell you how much I 
appreciate your taking the time that you did. If you spent as 
much time with everyone as you did with me, you have been 
pretty busy. You are taking this very seriously.
    Mrs. McMahon. Yes.
    Senator Inhofe. And I particularly enjoyed our visit 
because I have been there. You know, we have very similar 
backgrounds. You were a lot bigger than I was. I did not get up 
to the numbers that you did, 800 employees, but I can remember 
spending 20 years getting beat up by the bureaucracy, so I 
understand a little bit about it, and I think that the office 
that you have has the opportunity to do so much more than it 
has done in the past.
    We have a guy named Tom Buchanan who is the head of the 
Oklahoma Farm Bureau, and when I talked to him about the 
problems that the farmers are having, not just in my State of 
Oklahoma, which is a farm state, but throughout America, he 
said, ``It is nothing that is in the agriculture bill. It is 
the overregulation of the EPA.'' Now, those are his words, and 
my words, too.
    And so we watched this happen. He said, ``Of all the 
problems that we had, of all the overregulation, the one that 
scared us the most was WOTUS,'' the water bill. And as you 
know, there are a lot of people, a lot of liberals, who would 
prefer to take that jurisdiction away from the states and give 
it to the Federal Government. And there was quite an effort 
there.
    Now, I bring that up as an example, because you have, as 
you and I discussed, in your department that you are going to 
be responsible for the Office of Advocacy. Now, the Office of 
Advocacy is where--it is an independent office, and its purpose 
is to advocate on behalf of small businesses to other agencies 
and weigh in on their rulemaking. And during the last 
administration, the office has been pretty much ignored. And so 
you are going to have to start from a zero base. Have you given 
a lot of thought to how you are going to have this Office of 
Advocacy there and available for people who it was designed for 
originally?
    Mrs. McMahon. Thank you very much. Well, if I have the 
privilege of being confirmed, I would really like to strengthen 
that office, because I have always been a defender of the 
little guy, and we need someone who is going to go to bat for 
our small businesses. And I am just the girl to do that.
    Senator Inhofe. And why do you think it was not done 
before? Why do you think it was not done during the last 
administration? We had many--you know, I have 300,000 small 
businesses in my State of Oklahoma. I did not hear from all of 
them, but almost all of them, on the problem. So how are you 
going to revive that?
    Mrs. McMahon. I think I have to first find out why it did 
not work. I have heard that comment from more than one, that 
the Office of Advocacy really needs to be strengthened and to 
be able to have some teeth when it goes to the other agencies 
to say, you know, you are not complying, and why are you not 
complying. And as of right now, those teeth are not there. And 
I need to find out why, and I do not know why. But I will get 
back to you, and I look forward to working with you on that.
    Senator Inhofe. Well, that is good, and I would assume that 
the number of people who are working, there are a lot of people 
who have not been as responsible and responsive to small 
businesses, and you will have a chance to determine who they 
are and, if necessary, make changes. I would assume that would 
be an accurate statement.
    Mrs. McMahon. Thank you very much.
    Senator Inhofe. All right. They have within there the Small 
Business Innovation Research program that provides funding for 
the small businesses to develop and commercialize new, 
innovative technologies, and companies receiving the SBIR 
funding stand a much better chance of bringing their ideas to 
market than those not receiving the funding. In recent years, 
many rural states, including Oklahoma, have underperformed in 
this funding.
    Can you tell me what changes the SBA can make to improve 
this?
    Mrs. McMahon. Well, again, thank you. It is a little bit 
difficult to say exactly what you are going to do when you do 
not really understand what has been done here to date. I do 
understand SBIR has been so helpful with the research and 
development aspect and providing that kind of research for 
startups, and I would like to understand what those startups 
need, how we can continue with SBIR funding.
    Senator Inhofe. Have you been able to get the benefits of 
SBIR and what they are doing in your company? Or do you know 
people personally who have?
    Mrs. McMahon. I do not.
    Senator Inhofe. I see. Okay. Well, I look forward to 
working with you.
    Mrs. McMahon. Thank you.
    Chairman Risch. Thank you, Senator.
    Senator Heitkamp.
    Senator Heitkamp. Thank you, Mr. Chairman, and thank you 
for attending our Committee hearing last week on the 
Subcommittee on Regulatory Affairs and Federal Management. It 
was all about small business and all about the small business 
advocacy role that SBA should be playing that we were 
disappointed that may not have been as aggressive as what they 
should have been in the last several years, and I look forward 
to continuing to work with Senator Inhofe on a legislative 
solution to a lot of our problems.
    Chairman Risch. I noticed when I left that Subcommittee, no 
one's hair was on fire, so----
    Senator Heitkamp. No. Mr. Chairman, it was a great 
discussion, and we welcome you at any point, Linda, to our 
Subcommittee. I think it is a great place for gathering, for 
talking about the cross section between small business 
interests and regulatory reform.
    I wish just for a minute that you had been able to turn 
around when you were speaking about the challenges you had and 
had seen the pride and affection in your daughter's face. It 
was quite lovely. It is clear you have a great relationship, 
and my mother's heart just got a little warmed by that 
affection. And I think it is what so many small businesses are 
about. They are about families. And they are about working 
together and learning how to overcome struggles.
    But I want to talk about two groups of entrepreneurs that I 
think are looking for a different level of engagement and 
involvement--we have talked a lot about programs--and the first 
is young entrepreneurs and the second are native entrepreneurs. 
And thank you so much for coming to my office. We had a great 
discussion. But I am concerned that young entrepreneurs 
frequently may be able to write the best app or write the best 
program, but they somehow do not know how to translate that 
into business.
    I personally believe that we are experiencing a computer 
failure in financial literacy in America. That is finding its 
way into the business community. And I am interested in your 
thoughts, and I am going to just throw in the native piece, and 
then you can have the rest of my time.
    Native Americans have experienced a lot of economic 
challenges, really from the initial engagement in this country. 
The challenges that SBA has in Indian country are exacerbated 
by the challenges we have with jurisdiction and the challenges 
that we have with making sure that there is a commercial code 
that people can rely on. And so I think I am interested in how 
you can work with both these groups of entrepreneurs to engage 
a future for small business in America, especially in Indian 
country, but among young entrepreneurs.
    Mrs. McMahon. Obviously, I have more experience with young 
entrepreneurs than I do in Indian country, and I would look 
forward to working with you in understanding more of the 
situations that are in your state relative to how the Small 
Business Administration can be beneficial to our Indian small 
business developers. So I look forward to that, so thank you.
    Young entrepreneurs, I have found, are great with ideas. 
Some of them have a great business savvy. Some of them have no 
clue what to do. They are in their garage or they are in their 
dorm room, or wherever it is they are, they have developed this 
unbelievable app, they have got all kinds of stuff and all, 
suddenly, boy, if somebody is going to buy me and I am going to 
be a millionaire. But it does not always work that way. And I 
think there is a discipline that needs to be shown more to our 
young entrepreneurs. I sit on the Board of Trustees of Sacred 
Heart University in Connecticut, and one of the things we do is 
incubate small business development there, and as we strive to 
sort of walk these young entrepreneurs through the steps of 
business, but they are actually creating businesses. They have 
developed T-shirts and hats with logos, understanding 
intellectual property, and all of that and how that is managed, 
so that whole educational process is like, ``Wow, this is how 
it works.'' But they are making a success of it, and they are 
running successful businesses. And we need to continue that, 
not just in our universities, but I have kids, you know, in 
high school, they do not know how to balance a checkbook, and, 
you know, it is like, really, we need to have that fundamental 
understanding, I think, of basics of economics as we move 
forward to develop this next generation of our young business 
people.
    Senator Heitkamp. I do not think there is any dispute here 
that we need to grow the financial literacy in order for people 
to be successful. I saw it when I was tax commissioner. People 
with great ideas, great ability, did not know how to file even 
the simplest of tax forms, and so--not that we should not have 
fewer tax forms, but there is going to be a need for some tax 
forms to be filed, and so I look forward to continuing our 
discussion, especially about the challenges of Native Americans 
and entrepreneurship.
    Mrs. McMahon. Thank you very much.
    Chairman Risch. Thank you, Senator Heitkamp.
    Senator Ernst.
    Senator Ernst. Thank you, Mr. Chair, and thank you, Mrs. 
McMahon, for being here today. And I appreciate the time you 
took to sit down with me and many other members of this 
Committee. And I want to say a special thank you as well to 
Senators Blumenthal and Murphy for being here today, because I 
think so many times we get caught up in partisanship that we 
forget that there are many issues that we are very, very 
passionate about that share a bipartisan nature. So I want to 
thank them as well for being here to support you today, and I 
know that many members of this Committee love to work on things 
together, especially when it comes to regulatory reform, tax 
reform, and others. So I want to thank them for that.
    Now, we sat down in my office and talked about a number of 
issues, and one of the issues that I brought up as we sat down 
was a project that I have been working on over the last year, 
and it is legislation that gives small businesses a stronger 
voice in the regulatory process, and it is called the ``Prove 
It Act.'' And the legislation did pass out of this Committee 
last year, and we worked really hard with the folks at SBA in 
the Obama administration to get their input and feedback, 
because the goal is to make sure that the bill is bipartisan 
and that it is a success.
    So we did talk about it, and the purpose of the Prove It 
Act is to strengthen the voice of small business owners and 
provide incentives to agencies to improve the quality of their 
certifications and analysis when they are actually writing a 
rule. And, simply put, the Prove It Act says if there is a 
battle of analysis between different agencies on the economic 
impacts of a rule, then there should be a third party that will 
step in, review the facts, and then issue an objective 
assessment. And as you know, the Small Business Office of 
Advocacy testified in front of this Committee last year because 
they were in disagreement about the analysis that EPA and the 
Corps, the Corps of Engineers, had completed on the WOTUS rule 
and believed that the rule would have significant economic 
impact on small business.
    And as well, with this Prove It Act, there were a number of 
organizations that supported it. The NFIB, the Chamber, and the 
Women Impacting Public Policy, all of those organizations 
supported it.
    Can I get a commitment from you to work with me on this 
legislation and help implement it, especially given the desire 
by our President to make sure that we are reducing regulatory 
reform, especially on small businesses?
    Mrs. McMahon. Senator Ernst, thank you very much, and I did 
enjoy our meeting. And when you talked to me about this 
legislation, I thought, ``Wow, isn't that just a really common-
sense thing?'' And I think we just need more common sense in 
government. If you have got two sides and cannot agree, you 
have a referee; you have a third party that comes in. And I 
liked also what you were telling me about the bill, which is 
that it actually would make the agencies work together before 
it had to become like a public event and help with drafting the 
legislation. So I think that it is a very good piece of 
legislation that I would like to learn more about and would 
look forward to working with you to make sure that we can 
support our small businesses.
    Senator Ernst. Great. Thank you. I appreciate that so much.
    Then on a related topic, too, what are your goals just in 
the first few months, should you be confirmed? What are your 
goals in the first few months at the SBA?
    Mrs. McMahon. There are so many things to look at, and, 
obviously, we want to be mentors to our entrepreneurs. We want 
to grow and create jobs. But if I had to walk in the first day 
and someone were to say to me, ``You know, what is the first 
thing you really want to look at today?'' I would say I want to 
take a look at our disaster relief program, because disasters 
do not pick a time. They happen. And we need to be prepared for 
those disasters.
    I do not know how effective they have been. I know that 
when Sandy hit a few years ago, Hurricane Sandy, you know, the 
devastation up the East Coast and in my State of Connecticut 
and New Jersey--and I am sure Senator Booker can speak to 
that--there was a delay in time of response from SBA. I do not 
know if that is because it was a massive storm, it went so far, 
resources were not there. But we need to get ready for that. 
Just two nights ago, tornadoes in Georgia that killed 19 
people. So we have to be ready for disaster relief.
    When our small businesses are put out of business for a 
while, you know, the economy suffers because they are out of 
business. We need to get those funds to them if they are out of 
their homes, to make those direct loans to them and their homes 
so they can get back and functioning and be families. So that 
is a real passion that I think we really need to take a strong 
look at.
    Senator Ernst. That is really great. Iowa is not immune to 
those natural disasters, and in Iowa, 97 percent of our jobs 
come from small businesses. So thank you very much, Mrs. 
McMahon.
    Thank you, Mr. Chairman.
    Mrs. McMahon. Thank you. Thank you, Senator.
    Chairman Risch. Thank you, Senator Ernst.
    Senator Duckworth.
    Senator Duckworth. Thank you, Mr. Chairman. And, Mrs. 
McMahon, thank you so much for spending so much time with me 
yesterday, and I appreciated your candor and willingness to 
address my concerns that have to do with WWE's use of 1099 
employees, especially as it pertains to the health of your 
performers. You are going to head SBA and promote small 
businesses, and I do not want that to become the standard that 
small businesses use 1099 employees to avoid paying and 
providing the health benefits and the protections for small 
businesses employees just like anyone else. Also, I appreciated 
you addressing my concerns about potential monopolistic 
practices at WWE. So thank you.
    You know, Congress created the SBA to achieve two goals: to 
help American small businesses and to make sure these firms win 
a fair amount of government contracts. I want to focus on that 
second goal.
    As a Member of Congress committed to making government work 
better, I am concerned that our Federal procurement system is 
not meeting the needs of American small businesses. And in 
Illinois, 98 percent of our businesses are small businesses, 
and they employ 46 percent of the people living in Illinois. So 
they are a significant portion of our economy.
    I often hear from Illinois small businesses who are 
frustrated by jargon-filled, clunky, and complex Federal 
websites, things like FedBizOpps and SAM.gov; they are very 
confusing online tools. And these tools may be fine for large 
corporations who have teams of accountants and lawyers to weed 
through them and figure out what they mean, but you and I 
talked a little bit about how a CEO at the very beginning--you 
also--has to be the chief cook and bottle washer and janitor of 
the enterprise. I think these Federal tools are failing small 
businesses who want to do business with the government but just 
do not know where to start.
    Simply put, the Federal Government is falling short in 
tapping the full potential of the millions of American small 
businesses who are ready to help agencies achieve their mission 
with the innovative products and services that they can 
provide.
    So, if confirmed, will you commit to working with me to 
streamline and modernize these vital online Federal contracting 
tools?
    Mrs. McMahon. Thank you very much, Senator. Well, as 
someone who herself is technologically challenged, I can 
certainly understand the frustration of many small business 
owners who are trying to break through the morass of looking at 
confusing websites. I think it is very important that we make 
our tools the simplest and most direct way they can be so that 
they are easy to use. If you just make things too complicated, 
there are many who will give up before they can even try to get 
through, and they do not have the resources to have it 
explained.
    So I would look forward to working with you, if I am 
confirmed, so that we could sort through this and say, okay, 
let us bring someone else in, let us hear from these people, 
what is it they really need so that when those websites get 
developed and refined, they actually do become a very useful 
tool.
    Senator Duckworth. Thank you. And once companies have used 
those tools to try to get some of these contracts of the 
government, will you commit also to working with me to improve 
the small business prime contracting and subcontracting goals 
for each agency? We spoke a little bit yesterday about this, 
that small businesses have a hard time competing for some of 
these goals, the veteran-owned businesses and women-owned 
businesses. I spoke a little bit about the frustrations at the 
VA, for example, a major bureaucracy. I am hoping that you will 
focus on working with me to improve those goals across the 
Federal Government and to hold agencies accountable for 
providing minority-owned, women-owned, and veteran-owned small 
businesses with a real fair portion of the Federal contracts.
    Mrs. McMahon. I am very happy that we have gotten to 5 
percent. I would like to see that go up. So, yes, I would look 
very forward, should I be honored to be confirmed, to working 
with you and all the members of the Committee. And I have been 
invited to several of your states to come and visit with the 
SBA offices, and I really look forward to that. As a matter of 
fact, I would be very happy to sign right up to visit many of 
the states that are here. Thank you.
    Senator Duckworth. I will not make you come to Chicago in 
the winter.
    [Laughter.]
    And just finally, I want to address the prospect of the 
President's potential $1 trillion infrastructure program, which 
he spoke about on the campaign trail as a candidate. He seemed 
to be recommitting himself to a significant, much-needed 
investment in our infrastructure across this country. Again, 
this goes back to making sure that small businesses have a shot 
at those contracts because small businesses are operating in 
our home towns all across the country. They are not just 
clustered in large cities, and they can really bring jobs and 
development to the local area.
    So I hope that you will commit to working with me to make 
sure that special attention is paid to providing small 
businesses with a fair opportunity to compete for work, 
particularly disadvantaged small businesses enterprise, when it 
comes to that infrastructure program.
    Mrs. McMahon. I would look very forward to doing that, and 
I faced some of those same issues when I ran for the Senate in 
Connecticut, that small business often talked about they were 
shuttled over and they did not get their fair share. So I would 
look very forward to doing that.
    Senator Duckworth. Thank you so much.
    Mrs. McMahon. Thank you.
    Senator Duckworth. I yield back, Mr. Chairman.
    Chairman Risch. Thank you, Senator Duckworth.
    Senator Rounds.
    Senator Rounds. Thank you, Mr. Chairman.
    Mrs. McMahon, I most certainly appreciated the time that 
you spent with me in my office as well, and a lot of our 
discussion had to do with the size of the Federal Government 
with regard to the amount of regulatory overreach that I 
personally feel has been involved, not just over the previous 
administration but over a series of administrations.
    As you may have heard, since 2008, though, more than 25,000 
new regulations have been issued for American businesses under 
the Obama administration. Some estimates find that the economic 
impact of these new regulations has reached nearly $727 billion 
and requires 460 million new hours of paperwork. That is on top 
of compliance costs of nearly $2 trillion for all Federal 
regulations, or more than 11 percent of our GDP.
    The SBA's independent Office of Advocacy is, I believe, a 
truly important voice in standing up for small businesses 
against these regulations and the burdens that they would 
impose on small businesses. The Office of Advocacy intervenes 
in the regulatory process when possible, and it really helps to 
inform other regulators about the impacts on small businesses.
    Some of the other members here have already indicated their 
concern with the capabilities of this particular Office of 
Advocacy. I would like to go specifically to what happened in 
the last year where the Office of Advocacy stepped in on behalf 
of many small businesses in the United States. In fact, many 
family farms and ranches that would have been impacted by the 
EPA's Waters of the U.S., the WOTUS, rule that Senator Inhofe 
and Senator Ernst have both identified earlier. As you may 
recall from our meeting in the office, the Small Business 
Administration's Office of Advocacy sent a letter, which I 
would like, Mr. Chairman, to submit for the record today.
    [The letter follows:]
    
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    They sent this letter on October 1, 2014, to the EPA's 
Administrator, Gina McCarthy, and Major General John Peabody of 
the U.S. Army Corps of Engineers criticizing the WOTUS rule and 
its impact on small business. And, in fact, they actually 
recommended that the entire rule be withdrawn.
    Now, that was apparently ignored. The rule continued 
forward. I would like to know, if you are confirmed as the 
Administrator of the SBA, would you be willing to write a 
similar letter recommending that this rule be withdrawn once 
again and reminding our new Administrator of the EPA of the 
damage that it has done to small businesses, farmers, and 
ranchers alike?
    Mrs. McMahon. Thank you very much, Senator, for that 
question. I would look very forward to working with you and the 
other Senators that--Senator Ernst and others who have brought 
up especially the issue of WOTUS. In fact, I think it was 
Senator Ernst, when I met with her, who told me that if a small 
business in her State wanted to expand, it would have to get 
approval from the Federal Government in order to do that. I 
clearly think that is overreach, and I would look forward to 
working with you and other members of the Committee to make 
sure that we have the right regulations in place and not 
overburdensome ones.
    Senator Rounds. Just to put it a little bit more directly, 
would you consider, if necessary, if WOTUS is not withdrawn, 
would you consider reissuing that letter once again through the 
office, similar to the way that it was done last time, but this 
time addressing it to the new Director or the new Administrator 
of the Environmental Protection Agency under the new 
administration?
    Mrs. McMahon. I would like to find the most effective way 
to put teeth in that Office of Advocacy, and if that is one of 
the ways to do that, I would like to work with you to see if we 
could make that happen.
    Senator Rounds. So I can take that as an ``almost yes''?
    Mrs. McMahon. I am looking forward to working with you on 
that.
    [Laughter.]
    Senator Rounds. All right. Let me move on. Mrs. McMahon, 
under the Obama administration, fees were waived for a number 
of qualifying 7(a) loans, including the up-front one-time loan 
guarantee fees and ongoing servicing fees for 7(a) loans of 
$150,000 or less for fiscal years 2014, 2015, and 2016.
    If you are confirmed as the Administrator, would you 
consider looking at the continuation of these waivers?
    Mrs. McMahon. I would like to make sure that we are making 
it as easy as possible to get these loans and to help our small 
businesses. And I would like to take a really strong look at: 
What did we accomplish by that? How long was it in effect? Did 
we get real feedback from small businesses that this was 
beneficial? So when I have those answers, I certainly would 
want to see what the merits of that are.
    Senator Rounds. Very good. Thank you.
    Mrs. McMahon. Thank you.
    Senator Rounds. Thank you, Mr. Chairman.
    Chairman Risch. Thank you very much, Senator Rounds.
    Senator Hirono.
    Senator Hirono. Thank you, Mr. Chairman.
    It is good to see you. Thank you for the time that we spent 
together. I first of all want to commend you for the comments 
that you made regarding President Trump's comments about women, 
and I asked you to be a strong voice for women. And should you 
be the confirmed Administrator, will you commit to preserving 
the programs and funding that exist to promote women and 
minority entrepreneurship and work with this Committee to 
improve these programs?
    Mrs. McMahon. I definitely want to be a strong advocate for 
women, for our small businesses, and, yes, for our minorities 
in business, our veterans. I want to work with the Committee 
and with Members of Congress to make sure that we have the 
right regulations to help our businesses grow.
    Senator Hirono. I think that you have an understanding of 
the special challenges that are faced by women entrepreneurs, 
having been one yourself, and minority-owned businesses and 
veterans. And so those are groups that I particularly am also 
focused on to make sure that they have the kind of support from 
SBA that they should get.
    We have heard a lot about access to capital. That is 
something that you mentioned hearing about when you were 
running for office. Have you identified the specific factors 
that lead to difficulty in accessing capital? Because unless 
you know what the causes are, we cannot make the appropriate 
changes. So since access to capital has been mentioned by you a 
number of times, have you identified those causes and what you 
would do about them as SBA Administrator?
    Mrs. McMahon. Thank you for your question. Let me share a 
story with you. When I was running for the Senate in 
Connecticut, there was a company that was in the rural area up 
in the northeastern corner of Connecticut. We call it ``quiet 
country.'' And it was an entrepreneur who made grips that 
looked kind of like springs, and they are made by hand. And in 
his company he had probably eight to ten; they were mostly 
women who were making these particular grips and springs. And 
he had built his business from two or three people and added 
people. He had gotten loans from his community bank before, 
bridge loans, when it was time for him to expand a bit or he 
was a little bit cash shy. He knew his community banker. And 
now he had work orders and more business coming in. He wanted 
to hire new workers, but in order to do that, he needed to add 
on to his facility.
    And so he went to see his same community banker, and the 
banker told him, he said, ``Well, the problem is you are asset 
rich but you are cash poor.'' And he said, ``Well, I totally 
get that, because if I had the cash, I would not need to be 
here to get through this time.''
    And what his banker told him was, ``In the past, I have 
been able to loan you this money, but today, under the new 
regulatory environment that we find ourselves in, you no longer 
qualify as you did before, and you would have to 
overcollateralize this loan in order for me now to make the 
loan to you.'' That meant that he had to put up all of his 
assets--his house and other assets--in order to collateralize a 
much smaller loan.
    And while entrepreneurs are very happy to take managed 
risks, that was just simply too much. So he did not expand, and 
he did not grow his business. He did not hire those next 
people. And that is an example of a regulatory environment, I 
think, that does not allow our small businesses to grow.
    Senator Hirono. Well, let me note that. I have heard those 
comments also from small businesses in my State, and I visit 
with a lot of them. But some of those resulted from the 
financial collapse and the underregulation of the financial 
services industry on Wall Street. So there is usually a cause 
and effect. And I am with you in trying to resolve some of 
those issues for our small businesses, but there was a reason 
that the collateral rules changed, because there were all these 
uncollateralized loans which led to the economic collapse.
    I want to make the point that we hear a lot about 
overregulation. When I talk with my small businesses and they 
say that, it is easy enough to say we are in an overregulated 
environment, but I always ask them, ``What specific regulation 
is it that is causing you trouble?'' Because unless we identify 
them appropriately, we can sit here and talk about 
overregulation and not really get to the heart of it.
    I will give you an example. There was an orchid farmer, if 
I recollect correctly, and he could ship his cut flowers, but 
for some various reasons, he could not ship the whole flowers. 
And these were all clean flowers, all of that. And so we worked 
with, I think it was, USDA to change that.
    So I would like to ask you whether--when we actually move 
to improve the regulatory environment, that you would ask those 
very specific kinds of questions so that we get to the heart of 
whatever the regulation is that is causing them problems as 
opposed to some kind of, you know, ``Oh, yeah, we are 
overregulated.'' That does not take us very far, in my opinion.
    Mrs. McMahon. Thank you for that comment, too. I do not 
know how you change regulations if you cannot identify them.
    Senator Hirono. Good.
    Mrs. McMahon. Just exactly what you said. We have to know 
their negative and positive impact so that we can change them 
or enhance them. And I am committed to doing that for sure.
    Senator Hirono. Thank you. I know that my time is up, but I 
am really glad that you mentioned one of the first things you 
would do is look at disaster relief, because SBA, being on the 
ground when disaster strikes--and all of our states have 
experienced that--that is really important. I was surprised, 
pleasantly surprised by your response to that question.
    Thank you.
    Mrs. McMahon. Thank you.
    Chairman Risch. Thank you, Senator Hirono.
    Senator Scott.
    Senator Scott. Thank you, Mr. Chairman.
    Good to see you again. Thank you for being here, and thank 
you for your willingness to serve.
    According to the 2016 NFIB survey of problems and 
priorities that small business owners listed, they listed 
things like cost of health insurance, unreasonable regulations, 
Federal taxes, tax complexity, economic uncertainty, and 
locating qualified employees as some of their top concerns.
    As a business owner, I know that you can identify with many 
of these concerns, and if you are confirmed, how will your 
experience play a role when determining if the SBA could 
alleviate some of the concerns of small business owners?
    Mrs. McMahon. Thank you very much, Senator. Having walked 
in the shoes of small business owners, I understand how 
difficult it is when you are in a cash flow business and not a 
brick-and-mortar business. It is very difficult to have access 
to capital and get loans when you really have no collateral 
against that except your own cash flow. So I know that there 
are a lot of startups that face those kinds of issues in 
getting capital. So I know how to talk to them a little bit 
about that. I know how to talk about their cash management, and 
this is what you need to do, and I advise all startup 
companies, once you start making a little profit and you can 
put it away, get a line of credit, because when you need it, 
you cannot get it. And I think that it is really important 
advice to small companies. But to manage your cash very, very 
carefully, because cash flow is really a great part of the 
success, and undercapitalization is one of the reasons that a 
lot of small companies fail. So having walked in those shoes, I 
absolutely understand that.
    Senator Scott. Absolutely. One of the things that you 
mentioned, the cash flow, and certainly looking for qualified 
local employees, I assume that you have had some success with 
local qualified employees like Triple H and The Rock and other 
folks, but--I thought that was funny as well.
    [Laughter.]
    I was looking for a way to throw in my WWE, you know----
    Chairman Risch. Good job.
    Senator Scott. I am enamored with the concept. I grew up in 
the South, so we went and watched NWA, now WWE, and WWF and the 
whole 9 yards. So that is just my plug. God bless you. He 
turned pretty red over there.
    [Laughter.]
    He does not do that on TV.
    I do think that one of the challenges that small businesses 
face is how to align the jobs in the marketplace with the 
skills in the marketplace. I was a small business owner for 20 
years or so, and I will tell you that attracting the right 
talent to the right market is a very difficult task. I think it 
is like 64 percent of new jobs are being created in small 
businesses. So the reality of it is, in places like Colorado, 
they will need one type of employee with a skill set that 
matches what is available in Colorado. In South Carolina, the 
number one tourist destination in the world, where you should 
come visit very soon, the reality of it is tourism drives a lot 
of our entrepreneurship. How do we align the opportunities and 
access to jobs with those folks looking for those jobs in that 
marketplace?
    Mrs. McMahon. Thank you, and maybe a little bit different 
twist on that as well. I continue to say ``when I was 
campaigning.'' However, that was like a 4-year period when I 
really did learn a lot about what was going on in my State. And 
what I found out was that in many instances there were not as 
much a shortage of jobs as there were trained people for those 
jobs. And I think we have to like refocus how we are looking at 
the jobs market. Sitting on the Board of Trustees at Sacred 
Heart, I took a look at some of the educational programs that 
we have and asked: Are we reaching out to our corporations and 
our companies that are surrounding our university to understand 
what kind of shifts or changes do we need to make in order to 
fulfill that employment stream?
    And I think we are starting to be a little bit more 
successful in that, but we have a long ways to go. But that is 
one of the things that I have sort of really committed to, just 
even before I was asked to do this, but I would like to 
continue to make sure we are training our folks for the jobs 
that are there.
    Senator Scott. I have just about 30 seconds left, Mr. 
Chairman. I will just close with a comment. I hope that as our 
new head of the SBA you will look for ways to create synergy 
within government, perhaps our technical schools on the local 
level--it does not matter what level of government--that you 
will look for ways to create that synergy that will provide 
really an alignment of those jobs and skills in the marketplace 
where those jobs are available. I think that is a great place 
for SBA perhaps to take a unique perspective on their mission 
and find ways to improve the outcome of the average person who 
starts in a very difficult place and finds entrepreneurship as 
a path forward. It would be wonderful for us to see that happen 
under your leadership.
    Mrs. McMahon. Thank you very much.
    Senator Scott. Thank you, ma'am.
    Chairman Risch. Thank you, Senator Scott. The Chamber of 
Commerce back home will be delighted with your line of 
questioning.
    Senator Scott. Thank you, sir.
    Chairman Risch. I appreciate it.
    Senator Coons.
    Senator Coons. Thank you, Chairman Risch, Ranking Member 
Shaheen. Welcome, Mrs. McMahon. I thought we had a very 
constructive and formative meeting last week, and I really 
appreciate the chance to sort of share stories of 
entrepreneurship and job growth. And I am thrilled to have the 
opportunity to continue that conversation.
    It was mostly about the key role the SBA can play in 
helping small businesses grow great jobs and the importance of 
accessibility of capital, strength of IP, the value of 
mentoring programs like SCORE, the value of other areas of the 
Federal Government like the Manufacturing Extension Partnership 
which can help small businesses to grow.
    My own home State of Delaware, which I have invited you to 
visit, not to be outdone by Senator Scott, we also have a great 
beach community which we hope you will come visit. There are a 
number of iconic businesses at the Delaware beaches--Grotto's 
Pizza and Dogfish Head--that started with SBA loans, that 
helped them grow--in their early stages, I should say. And so I 
think you will see on both sides of the aisle here a knowledge 
of and enthusiasm for the real impact that SBA has had in our 
home States, and the folks who lead SBA in Delaware have done a 
terrific job and worked very well with my office. And I love 
doing small town visits where we will go up and down the main 
street and see, whether it is 7(a) or 504 or SCORE, the impact 
that SBA programs can have.
    When we met, we talked about your knowledge of and 
experience with intellectual property using trademarks and 
licensing to protect some of the key innovations that your 
business engaged in. And I talked about my passion for patents 
and for making sure that small businesses know how to protect 
what they have got and what they can bring to the market.
    Do you agree it is important to educate small businesses 
about how they can protect what they invent or innovate, 
whether it is through patents or trademarks or other IP? And is 
that something you think we could work on together?
    Mrs. McMahon. It is something that was such a large part of 
WWE, and from the very beginning, we wanted to make sure at WWE 
when I was there--and I started the program. Sometimes you 
bring a little bit of knowledge, and you can be dangerous. Or 
you have enough knowledge to know you have to go further and 
ask somebody with expertise. And it was very important that as 
the company developed intellectual property, that we protected 
it, that we copyrighted the television shows or our music 
programs or our magazine works. It was very important that we 
registered trademarks, you know, in the particular 
classifications to protect. You have invested so much money to 
grow and develop that product or that intellectual property. 
But if you do not protect it and then someone else takes it 
away from you, you do not have a leg to stand on because you 
did not defend your own property.
    So it is really important to make sure that young 
businesses understand the value of what they create and that 
they need to protect that. And you have to expend some money to 
do it, but in the long run, you are protecting your investment.
    Senator Coons. I look forward to working with you on that. 
As the lead Democratic appropriator on the subcommittee that 
funds the SBA, we also talked about how this is an area of 
general broad agreement on a bipartisan basis in what is often 
an otherwise contentious subcommittee. And I think the fact 
that you are introduced positively by two gentlemen you ran 
against recently was a moment of agreement about the skills and 
the value that you bring that is worth remarking on.
    In Appropriations, it is my hope that we will also work 
together on the 7(a) program to make sure we are finding the 
right balance between promoting needed loan programs while 
avoiding a return to subsidy.
    Let me just mention two other things before my time runs 
out. I have had the joy of working with Senators Enzi and 
Roberts on extending the R&D tax credit in a way that can help 
innovative startups, companies that use technology and 
innovation in order to grow quickly. And I would be grateful 
for any help you could offer in our working together to inform 
more small businesses that are technology centered about that 
opportunity.
    And then, last, Senator Risch and I worked together in the 
last Congress to advocate for the SCORE program, something that 
was launched in Delaware by DuPont retirees----
    Mrs. McMahon. Yes, I remember we talked about that.
    Senator Coons [continuing]. A mentoring program that helps 
small businesses that really need to get their first business 
plan together or that need someone with relevant sectoral-
specific skills. So I would be interested in hearing whether 
you could see your way toward supporting SCORE and seeing this 
as a critical program for your time as SBA Administrator, if 
you are confirmed.
    Mrs. McMahon. Thank you very much. You know, statistics 
show, whether it is women-owned businesses or whatever business 
there is, that you are more successful with mentors because it 
is someone that you can talk to, who can give you advice, and 
especially underscore when we have had these executives who 
have come in and taken it upon themselves--these are very 
seasoned and accomplished professionals, and to be able have 
that as a resource I think is fantastic. I would really like to 
see more and more mentoring because we will have more 
businesses be successful.
    Senator Coons. Well, it is a strikingly low-cost and high-
impact Federal program. I would love to work with you on that 
in more detail in the future. Thank you for a chance to be with 
you again today, and I am grateful that you have stepped up and 
are willing to take on this important role in the Trump 
administration. Thank you.
    Mrs. McMahon. Thank you very much.
    Senator Coons. Thank you, Mr. Chairman.
    Chairman Risch. Thank you, Senator Coons.
    Senator Young.
    Senator Young. Thank you, Chairman, Ranking Member. It is 
so good to be with you, Mrs. McMahon, to have someone of your 
caliber and experience----
    Senator McMahon. Thank you.
    Senator Young [continuing]. Willing to put yourself forward 
and serve in this capacity.
    One of the advantages to being lower on the proverbial 
totem pole here is I get to hear all the brilliant questions of 
my colleagues. One of the disadvantages is I have to rework my 
questions when those brilliant questions are ones I intended to 
ask, so I will attempt to ask you some things that have not yet 
been addressed.
    But by way of background, I come from a small business 
family as well. My dad has grown a commercial HVAC 
distributorship over the years, and now my brother has taken 
over that business, and I understand the unique challenges, 
unique opportunities that are associated with small businesses. 
This town tends to be rigged oftentimes against the little guy 
or woman, as it were, on account of regulatory burdens, 
sometimes foisted with great deliberation by larger businesses 
to crowd out competition from upstarts. Our tax code is another 
example.
    The Small Business Administration--and it has been 
mentioned many times here--I think has an opportunity, perhaps 
unrealized to its full extent, to advocate on behalf of small 
businesses in each of the different Federal agencies across the 
Federal Government through the Office of Advocacy. And you have 
already indicated that is going to be a real point of emphasis 
on your part.
    The Regulatory Flexibility Act of 1980 tasks this Office of 
Advocacy with monitoring Federal agency compliance with the act 
and assisting regulatory agencies during all stages of 
rulemaking development to mitigate the potential adverse impact 
of rules on small entities, blah, blah, blah.
    So that seems like a lot of work. This is, comparatively 
speaking, a small department when you compare it to, say, the 
Department of Defense and whatnot. So I would be very 
interested, say 180 days into your service, to get feedback to 
this Committee, to my office in particular, about what you have 
learned with respect to the Office of Advocacy, how its 
operations might be improved, if there are additional 
authorities or resources required to advocate on behalf of our 
nation's small businesses and young firms. That would be 
instructive, I think, to all of us. Do I have your commitment 
to provide that report, should you become our next head of the 
department?
    Mrs. McMahon. I look very forward to reporting back to all 
the members of the Committee the things that I have found I 
think throughout SBA, where I have found issues or problems 
that I need your help and guidance, and I hope that you would 
not hesitate to reach out to me to say, ``Look, these are some 
things I really want you to take a look at,'' because I am 
going to be drinking from a fire hose for a while, continuing 
to, and it is going to be a lot for me to absorb, and I would 
like to be the most effective at it that I can.
    Senator Young. So will you make every effort----
    Mrs. McMahon. Yes, I will.
    Senator Young [continuing]. Within 180 days to provide a 
report with respect to the Office of Advocacy and the things I 
mentioned?
    Mrs. McMahon. I will get back to you as soon as I can with 
that in that time period.
    Senator Young. All right. That is fair enough. Thank you.
    Mrs. McMahon. Thank you.
    Senator Young. The second question just pertains to basic 
government efficiency and effectiveness and avoiding 
duplication, something you indicated earlier is important to 
you. Can I get a commitment from you that you will work with me 
to find efficiencies and ways to streamline the work at the 
SBA?
    Mrs. McMahon. I definitely want to streamline where we need 
to streamline, and where we need to add, we need to add. And, 
yes, I look forward to working with you and everyone on the 
Committee to do that.
    Senator Young. And, lastly, I know back in my great State 
of Indiana, we have stumbled upon some unique approaches to 
assisting our small businesses, some which might be replicated 
by other states. No doubt other states have their own examples 
to put forward. So I think there might be an opportunity for 
the Small Business Administration to be an effective 
clearinghouse for best practices emerging from the local level 
or state level, perhaps even best practices that we have seen 
in other countries. So with your commitment to work with me on 
that effort, perhaps we will be able to assist our small 
businesses.
    Can I get your commitment to explore those opportunities as 
well?
    Mrs. McMahon. Yes. I am a firm believer in best practices. 
And I think as we look across all of what is going on relative 
to SBA, we will identify some areas that need to be shored up 
and others that need to be changed or some that need to be 
removed. So, yes, I like best practices.
    Senator Young. Thanks so much.
    Chairman Risch. Thank you very much, Senator Young, and we 
will go to Senator Markey.
    Senator Markey. Thank you, Mr. Chairman, very much.
    Mrs. McMahon, we talked in my office. I raised this issue 
of net neutrality with you, and the reason I did was that it is 
not really well understood that 68 percent of all venture 
capital goes to software and Internet startups, and they are 
small businesses, just beginning.
    One of your counterparts over at the Federal Communications 
Commission, the new Chairman-designate, is talking about 
repealing those rules, which really does make it possible for 
new startups to be able to reach all 320 million people in 
America, which is the business model that venture capital and 
other investment money flows that way. And, again, we have the 
next generation of startups.
    Are you familiar with that net neutrality issue? And what 
is your kind of general philosophy towards those areas of 
economic development in the small business area in our country?
    Mrs. McMahon. Thank you very much, Senator. I think 
yesterday when you and I spoke about it, I said thank you for 
informing me of this and educating me more about this. I have 
not dealt with net neutrality in any of the businesses that I 
have been involved in. I understand your concern from yesterday 
that we do not want any restrictions on access to the Internet 
because it can impede small businesses. So I would like to 
continue to learn more about that and to learn more from you 
about that and how it can be used most effectively.
    Senator Markey. And I thank you.
    SBIR, some staggering numbers from Massachusetts since the 
program was created in 1982. Massachusetts small companies have 
received 20,000 small business grants, and 2,300 new firms were 
created out of those grants, creating tens of thousands of new 
jobs in our State. And we very much rely upon SBIR grants as 
part of our long-term business planning.
    Senator Shaheen and I and others, we have been advocating 
to make this a permanent program. Have you had a chance to look 
at SBIR? And what would you think about the prospect of your 
support for making it a permanent program?
    Mrs. McMahon. I have just begun to familiarize myself with 
it, and I have talked with many of the Senators who are on the 
Committee who have said how important SBIR has been to their 
constituents, especially in the world, as you and I talked 
about yesterday in small businesses, of technology and startups 
and what a large proportion they are now of small businesses, 
especially in your State. So I want to delve more into that and 
to see how we can best utilize SBIR to make sure if we need to 
enhance it, let us do that. If we need to make it permanent, I 
want to know why that is beneficial, so I would like to 
continue to learn from you and Ranking Member Shaheen and 
others about that.
    Senator Markey. Okay. Thank you. And climate change: 
Climate change is real, it is happening. We see it along the 
coastlines especially of our country. And over and over again, 
FEMA and the SBA have had to respond in order to give help to 
Louisiana, affected by historic flooding, or along the 
Northeast, with historic storms that hit our coastlines. And in 
each instance, FEMA and the SBA have responded to these natural 
disasters. Climate change is only going to get worse.
    Have you looked at that issue of what that impact is and 
what planning SBA might have to make in order to deal with 
these changing conditions, especially its impact on small 
businesses?
    Mrs. McMahon. I have learned from you yesterday about the 
warming of the waters, Massachusetts up to Maine and around 
through the Cape Cod area.
    Senator Markey. The fastest warming body of water in the 
world.
    Mrs. McMahon. And I found that a fascinating statistic. And 
you indicated to me how it is driving the cod north, lobsters 
north, and so the fishing, the fishery industry there, is 
really being impacted by that climate change. Those are very 
real statistics that I want to learn more about and to know not 
only as it relates to Massachusetts but where else in our 
country where small business, I think, can be affected and we 
should take a more active role.
    Senator Markey. And I would just say in conclusion that 
after the Tsarnaev brothers attacked Boston on Memorial Day in 
2013, the SBA stepped up to help all the small businesses in 
that area so that they could recover. And I think that is just 
another great function of the SBA that is not fully understood. 
Whether it be natural disaster or manmade, the SBA has been 
there, and hopefully under your leadership we can see a 
continuation of that great tradition. Thank you.
    Mrs. McMahon. Thank you very, very much.
    Chairman Risch. Thank you, Senator Markey.
    Senator Booker.
    Senator Booker. Thank you very much, Mr. Chairman.
    Mrs. McMahon, I want to thank you for being here. It means 
a lot to serve your country and to step forward and be willing 
to make the kind of sacrifices you are going to have to make in 
this position, so I am grateful for your patriotism.
    Mrs. McMahon. Thank you.
    Senator Booker. I want to also just say, when your daughter 
and son-in-law stood up, I just want to say for the record that 
your daughter is far more fierce and intimidating than your 
son-in-law.
    [Laughter.]
    He and I are about the same age, almost exactly the same 
age, and Paul is letting himself slip a little bit. So after 
this, maybe we should go to the Senate gym so I can give Triple 
H some triple help in getting back in shape.
    Mrs. McMahon. I am not sure, but Stephanie could give you a 
mean hip toss.
    [Laughter.]
    Senator Booker. I believe that.
    Real quick, New Jersey had some good years. In fiscal year 
2015, we received about $750 million in SBA loans with over 
$500 million of that going to underserved communities. As mayor 
of Newark, New Jersey, I was blown away by how minority women 
in particular are doing such an extraordinary job in our 
country of starting businesses.
    I am proud to support a lot of the programs that are 
focused on them, and I am wondering if you support a higher cap 
for the SBA to be able to make additional loans in fiscal year 
2017 and 2018?
    Mrs. McMahon. Well, what I would first like to see is: Are 
all of our loans being made effectively? Are the loans that we 
are making going where we think they are going and have the 
results that we want to see? I do not have a handle yet on 
whether or not that metric is in place for that accountability. 
I want to make sure we are serving more and more minority small 
business owners, our veterans, our Native Americans. But I need 
to know, first of all, are the loans we are making effective.
    Senator Booker. Right.
    Mrs. McMahon. And if they are, then let us increase it.
    Senator Booker. I really appreciate that response, and the 
stimulative effect of these loans is in many ways far more 
powerful than other uses of government dollars. The traditional 
indices that banks use to evaluate the loans, something I 
learned from Kiva, which I am sure you are aware of, that is 
doing incredible micro-loan work, by using other indices that 
are untraditional, they have loan repayment rates that beat 
traditional loans. That is something that I think the SBA 
should be looking at to try to figure out other ways to get 
capital into the system.
    Something else that your predecessor did that I think is 
great, trying to correct for really bad policy coming out of 
the 1990s, was that a lot of folks who were in prison for 
nonviolent drug use, many of them for doing the things that two 
of our last three Presidents admitted to doing, would come out 
of prison and have paid their debt to society, but would not be 
able to get Pell grants, would not be able to get food stamps, 
would not be able to get public housing, stripped in many ways 
of their ability to compete economically.
    What your predecessor did was to make changes to help 
formerly incarcerated citizens, many of whom are approaching 
parole, be available to get micro loans from the SBA. It was a 
remarkable change, and some of our great entrepreneurs are 
people who made mistakes in the past. I just want your 
commitment that that is something that you are going to look to 
continue as a practice.
    Mrs. McMahon. Well, I certainly would like to know more 
about it, and it sounds like something that has been effective, 
and I would like to be able to see if it has been.
    Senator Booker. I appreciate you looking into that. Again, 
most Americans, one out of ten is violating drug laws, and, 
unfortunately, those drug laws are enforced disproportionately 
on poor people and minorities at rates that are astonishing if 
you are African American in this country. No difference between 
blacks and whites for using drugs or dealing drugs, but you are 
arrested almost four times more likely, which means you are 
four times more likely to be stripped of opportunities to 
compete economically. And your attention to continuing that 
program is something that would be really helpful.
    Mrs. McMahon. Thank you.
    Senator Booker. There has been a lot of talk about the SBA 
and transparency. I just want to make sure that you are 
committed to helping us to have transparency when it comes to 
loans so we could have better metrics about how your loans are 
doing and being directed towards different populations that 
have been mentioned here. I really appreciate that.
    Really quickly, I have a lot of problems with regulations 
as well. That is something I think there is a lot of 
opportunities for people to work on both sides of the aisle. 
Take, for example, the fact that the number one employer in 
America, if you include contractors with the Federal 
Government, is the Federal Government. It creates tremendous 
jobs. But as we have heard from others, navigating that 
Byzantine labyrinth of complicated rules and regulations is 
difficult.
    Take, for example, just the people who manage our pension 
funds, which has hundreds of billions of dollars in pension 
funds, management given to one major outlet, while emerging 
managers, which states use to manage their pension funds, often 
women-run businesses, often minority businesses, actually 
outperform the big folks. But because of the way these 
regulations are, it is very hard for those smaller businesses 
to complete. In the technology field, this is really difficult 
because small tech firms, which often provide greater service, 
cannot even compete for government grants because the way it is 
promulgated is just too difficult to navigate.
    And so I just want your commitment that, as you look at 
small businesses in general, looking inward here at the way we 
do our processes is really critical to empowering small 
businesses, and if we can help to lower these regulations, make 
space for smaller businesses to compete for larger contracts or 
to break down those large contracts into smaller, bite-size 
opportunities, we will help to fuel our economy in a 
significant way. It is something that as a member of the 
Cabinet, with all these other Cabinet members who push billions 
of dollars out into the private market, for you to be a voice 
for someone who says let us look at a way to empower small 
businesses, it can make a majorly impactful difference and 
actually get government better service for their dollars. Is 
that something that you will be focused on?
    Mrs. McMahon. I absolutely want to advocate for our small 
businesses and having that access to compete.
    Senator Booker. Thank you very much.
    Chairman Risch. Thank you very much, Senator Booker.
    Senator Kennedy.
    Senator Kennedy. Thank you, Mr. Chairman.
    Mrs. McMahon, I enjoyed our visit in my office. I 
appreciate your time. I think you will be a great addition to 
Mr. Trump's team.
    Mrs. McMahon. Thank you.
    Senator Kennedy. I have just got a couple of questions. Do 
you understand how hard it is to start or expand a small 
business in America today?
    Mrs. McMahon. Yes, sir. I have had that experience. I know 
very well what it takes.
    Senator Kennedy. I mean, Senator Booker talked about this, 
but let us just start with the regulation. Here is what small 
business people tell me every day. They do not complain about 
specific rules or paying their fair share. This is what they 
tell me. They tell me, ``We need simpler rules. We need fewer 
rules. We need quicker decisions by the bureaucracy. We need 
government workers who will answer the phone. We need 
government websites that a normal person can navigate.'' That 
is all they are asking for.
    Now, it has been my experience--and I have been in America 
longer than I have been in Washington. I have been a Senator 
for 3 weeks. You cannot be for jobs if you are against 
business. And businesswomen and businessmen need five things: 
they need low taxes, they need reasonable regulation, they need 
capital, they need decent infrastructure, and they need a 
skilled workforce.
    Now, I realize SBA cannot provide all of those, but tell me 
how at SBA you are going to help small businesswomen and small 
businessmen get those things.
    Mrs. McMahon. Well, for one thing--and thank you very much, 
Senator Kennedy, and I, too, enjoyed our visit. I think a lot 
of what you have talked about, if I were fortunate enough to be 
confirmed----
    Senator Kennedy. You will be.
    Mrs. McMahon [continuing]. I would like--thank you. Did you 
hear that?
    I think it is really important that we do mentor these 
small businesses. You know, a lot of times, if someone has a 
wonderful idea, this is my business, this is what I want to do, 
I am going to come in and I am going to show you, and they come 
in with sort of an abstract business plan. And even if you help 
them sort of get that business plan right and get all the t's 
crossed and the i's dotted, sometimes you have to look at them 
and say, ``This is not a good idea. This business really does 
not look as though it has the legs to succeed.'' And I think 
often there is not enough of that kind of mentoring.
    But I think that, you know, all of the other things that 
you have identified, it is like a blueprint for success--you 
know, lower taxes, fewer regulations, and all of that. But 
sometimes you do not have the basic understanding of what it is 
going to take to have a successful business. And there needs to 
be that aspect of mentoring as well, and I think that will help 
us grow more quality businesses that do have the opportunity to 
succeed.
    Senator Kennedy. Well, lots of small businesses fail. I 
understand that. But what I think is happening in our country 
is that a lot of really smart people are just afraid to try. 
They are afraid of their chances of success. They just think 
there are none. They just start looking at the different 
permits and regulations and rules, and on top of that you have 
got to have the capital, and many people have to put a second 
mortgage on their home. You know, it is just insurmountable.
    And here is what I hope you will do, Mrs. McMahon, because 
I do believe you will be confirmed. I think you are very 
qualified for this position.
    Mrs. McMahon. Thank you.
    Senator Kennedy. And I think the President has chosen well. 
But I am familiar with what SBA does, and I know you are, too. 
But I hope you will go beyond just SBA. I hope you will be the 
advocate for small business in this administration, because in 
my state, 90 percent of our jobs are created by small 
businesswomen and small businessmen who are taking a risk. And 
it is risky. And sometimes they fail. But when they stop 
trying, at least in my part of America, we are in real trouble.
    So I hope you will take on that role. If there is something 
I can do to help you, let me know. Good luck.
    Mrs. McMahon. Thank you. I do not think that I could be an 
advocate for SBA if I were not an advocate for small business. 
I think they are one and the same.
    Senator Kennedy. Thank you. I yield back my full 24 
seconds, Mr. Chairman.
    Chairman Risch. Thank you, Senator Kennedy. We appreciate 
it.
    And, Senator Shaheen, we are back to you.
    Senator Shaheen. Thank you, Mr. Chairman. And I only have 
two questions, and I know that we may be waiting on one or two 
more other people. But as you are aware, the Small Business 
Administration is a relatively small investment in this 
economy. If you look at how it compares to many other agencies 
within the Federal Government, their budget is not one of the 
largest. Let us just put it that way. And yet as we have heard 
from all the members of this Committee, small businesses are 
very important to this country's economy, to job growth, and we 
need to do what we can to support them.
    It is particularly true in rural America, I think. New 
Hampshire does not have very many large cities. We are mostly a 
rural state, and much of America is also. And when there are 
cuts to the SBA, that has an inordinate impact on rural America 
because one of the places that they can get support, as you 
have heard, is from the SBA, for mentoring, for guidance on 
issues that come up with their business, for loans. So it is 
very significant.
    I want to hear from you that you will be an advocate for 
the budget of the Small Business Administration, because what 
we saw in the last Republican administration is that they cut 
SBA's budget by about 32 percent. So can you reassure me that 
you will do everything you can to advocate for SBA in the 
current administration?
    Mrs. McMahon. Absolutely. I want to make sure that we have 
the right budget to accomplish what we need to accomplish. And 
it may be that, if I have an opportunity and I am confirmed, if 
I am looking at one aspect of expenditure, to say, you know, I 
think we can best take some of these dollars and move it over 
here.
    Senator Shaheen. Sure.
    Mrs. McMahon. I think those are the right ways to look at 
our budget and then to make sure that we are asking for the 
right kind of appropriation, but let us lay out our programs. 
Here is really what we want to accomplish, and here is what it 
is going to take.
    When I was a CEO, I often--when it was budget time, we went 
back to zero-based budgeting. You had to justify your 
department and your expenditures. And it is funny. That is a 
pretty sobering experience. And so while I am not advocating 
that necessarily at SBA, I do think there is a peeling back of 
my understanding of the budget and where those dollars are 
being spent and if they are being spent effectively.
    My commitment to this Committee will be that I will be an 
advocate to make sure that SBA runs effectively and 
efficiently.
    Senator Shaheen. Thank you. I appreciate that. And 
effectiveness, obviously, is a goal that we all share.
    With that in mind, I just wanted to call your attention to 
what was reported this week, that the new administration is 
preparing budget cuts based on a blueprint that was published 
by the Heritage Foundation--you may have seen this--because the 
blueprint endorsed cutting funding for several programs that I 
think are very important to small business. One is the SBIR 
program, the Small Business Innovation Research program, and we 
have heard from a variety of members attesting to the 
importance of that program. We have seen it in New Hampshire in 
terms of job creation and providing innovation to the 
Department of Defense. In fact, at a hearing before the Armed 
Services Committee, we heard from experts that the most 
effective existing program to help our military get the 
innovation they need is the Small Business Innovation Research 
program. So I would urge you to look at that very carefully as 
there are discussions about cutting that program.
    The other area that the Heritage Foundation blueprint talks 
about cutting is SBA's role in disaster assistance. And given 
your interest in that--you have expressed it at the hearing; 
you expressed it when we discussed it. It has been raised by a 
number of members. I would have severe reservations about 
cutting SBA's role in disaster assistance.
    And just finally, in support for international trade, 
which, again, for so many small businesses, having access to 
those international markets can make the difference between 
growing and succeeding and failing, especially when times are 
tough.
    So I would just urge you to take a hard look at some of 
those issues and advocate for what is in the best interests of 
our small businesses. Thank you.
    Mrs. McMahon. Thank you.
    Chairman Risch. Thank you very much, Senator Shaheen.
    And, finally, we are going to turn to Senator Rubio, and 
Senator Rubio will be the last, and this is a momentous 
occasion because, I will tell you, it is not very often you get 
questioned by every single member of the Committee. They have 
all shown up.
    [Laughter.]
    Mrs. McMahon. I am honored today then.
    Senator Rubio. Well, thank you, Mr. Chairman, and I 
appreciate it. Mrs. McMahon and I have known each other for a 
while. I know a lot about her background, had some opportunity 
to spend some time with her in our office talking through some 
of these issues. And in the interest of time, I will just focus 
my questions on one issue that is of particular importance to 
the State of Florida.
    As we had discussed, you know, the Zika virus had an impact 
on small business, and I know there has been a number of 
questions asked about disaster relief for communities impacted 
by storms and other events. But what I think has become a new 
disaster, something we had never quite seen before, is the 
impact of a pandemic or the designation of a community as being 
a place that people should avoid. This happened during the Zika 
outbreak this summer in South Florida, where the CDC was 
basically telling people do not visit if you are pregnant 
certain geographic areas in a community. I do not need to tell 
you that was not good for business.
    And while a lot of people think it impacts the big hotels 
and the big restaurants and the night clubs, it does, but it 
impacts all sorts of small businesses down the chain, from, 
quite frankly, the Uber drivers all the way to the florists at 
the wedding that got canceled.
    And so one of the things that we discussed was an effort I 
made last year that the previous administration was open to, to 
opening up or redefining the use of the disaster loan program 
to address hardships that small businesses face during a public 
health crisis.
    So I would just ask: Is that something that you would be 
open to exploring and looking at? I know you need to look at 
what the costs of that would be, and, obviously, there needs to 
be some predictability--although in disaster relief, it is hard 
to predict, right? But I hope that that is something that I can 
encourage you to be open-minded about because while I do not 
think we are going to have many of these, there is nothing to 
say it could not happen again. And our ability to help some of 
these small businesses who are impacted by the outbreak of a 
pandemic or what have you like Zika in the future is a new 
dynamic, particularly in communities that are involved in a lot 
of international travel.
    So I do not know if you have had a chance to explore that 
issue a little further, but I hope that you will be open-minded 
and work with us on achieving it, because I do think that 
moving forward we could unfortunately see that play out in a 
number of different places in the future.
    Mrs. McMahon. I have not had a chance to look at it more 
than our discussion, but certainly I will have an open mind and 
look forward to working with you on that.
    Senator Rubio. Thank you. And the last point I would make 
is I would encourage you, at the appropriate time I would love 
to have you come to Florida and visit some of our--I know 
everybody wants you to get everywhere, right? But Florida is a 
big----
    Mrs. McMahon. Could it be during the winter?
    [Laughter.]
    Senator Rubio. Yes. We would try to schedule it sometime 
between November and March. But there is some real dynamism in 
our small business community, and, in particular, I have always 
pointed people to how dynamic first-generation Americans are in 
terms of entrepreneurship. As I commented to you in our 
meeting, in some of the keys like where I live in South 
Florida, in Miami, the people know it as Calle Ocho. It is 
Eighth Street. It is kind of a traditional area where the Cuban 
exile communities congregate. Of course, there is a Walmart and 
all the other big chains, but literally eight out of ten of the 
storefronts and businesses are family owned and operated 
businesses. And for me, that--and people always say it all the 
time. That truly is the backbone of our country and of our 
business class, and they do not get the headlines. And a lot of 
these businesses face challenges. You could have the greatest 
product in the world, but when--and these things that we do not 
think about in terms of challenges to a small business, but one 
of the things that has happened, when they decide to expand the 
road in that area and go into construction, it is great for the 
future. But for the next year and a half, customers just think 
it is a hassle to get in and out, and it is devastating for 
some of these small businesses.
    And I think not just--the people focus on the loan programs 
and the other financial assistance that the SBA provides, but 
to be an advocate for the challenges of small businesses, 
whether it is regulations, taxes, or things of this nature, I 
believe small business in America needs advocates within the 
Federal Government who are constantly watchdogs for any public 
policy at any level of government that has a disproportionate 
impact on a smaller business.
    And so I hope that--I know you are going to be very busy 
getting around to everywhere, but at some point, particularly 
when it is cold and snowing everywhere else, I encourage you to 
come, and we will find the right place, whether it is in 
central Florida--we have got small business success everywhere 
in our State, and we are excited to host you there, and we 
would love to interact with you.
    Again, I thank you for your willingness to serve our 
country. I really am grateful for the opportunity that we have 
had to talk. And the nomination process is not always a 
pleasant experience, so I am glad that it sounds like this 
meeting has gone well, and I look forward to working with you, 
and I anticipate you will be confirmed here fairly soon.
    So thank you. Thank you for being here today.
    Mrs. McMahon. Thank you very, very much. I appreciate it.
    Chairman Risch. Senator Rubio, Senator Hirono had an 
equally attractive offer.
    Senator Rubio. Hawaii? Yeah, that is good one, too.
    [Laughter.]
    Mrs. McMahon. However, I was invited to Alaska and North 
Dakota, and I said, ``Could we do that in the warm months?''
    Chairman Risch. Alaska is great when the salmon are 
running.
    Senator Rubio. We have got great places everywhere.
    Chairman Risch. Thank you, Senator Rubio.
    Well, with that we are going to conclude the hearing, and, 
Mrs. McMahon, thank you so much for your willingness to serve. 
And Senator Shaheen had another meeting to go to and wanted me 
to express her appreciation for your willingness to serve and 
for your appearance at this hearing and for being as open as 
you are.
    This has really been a good hearing. As you can see, we 
have a very diverse group of Senators with different ideas 
about things, but that is what makes America great. Senator 
Shaheen and I have been talking about trying to move this as 
quickly as possible. We feel very good about being able to get 
you confirmed, but, obviously, it is not over until it is over. 
And so we are going to try to move this next week. We are 
booked up this week, but we are going to do our best to try to 
move it next week.
    We are going to leave the record open until close of 
business tomorrow, Wednesday, January 25th, and we will keep 
the record open for 2 weeks to edit statements and submit 
letters and any other relevant materials.
    So, with that, thank you.
    Mrs. McMahon. Thank you very much.
    Chairman Risch. Thank you to your family for being so 
supportive and being here with us today. With that our 
Committee is adjourned.
    [Whereupon, at 12:28 p.m., the Committee was adjourned.]

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