▶ 0:03:51Testing. One, two, three. Testing.
▶ 0:04:48Test. Test. Trying to see how close I want to be. Yep. Test one, two.
▶ 0:16:56Uh before we get started, I I want to uh uh ask everybody to stand up and for the pledge and the prayer.
▶ 0:17:55Good morning and uh welcome to today's hearing titled Oversight of SBA's Office of Entrepreneurial Development. I now call the Committee on Small Business to order and without objection, the chair is authorized to declare a recess of the committee at any time. I now recognize myself for my opening statement.
▶ 0:18:11First, I want to thank Associate Administrator uh for joining us today to discuss how SBA's Office of Entrepreneurial Development is serving America's entrepreneurs and how this committee can better ac uh ensure taxpayer dollars are spent effectively and responsible. Uh, as a small business owner myself, I know firsthand the rewards and challenges of entrepreneurship. Starting and scaling a business requires long hours, difficult decisions, and the resilience to overcome setbacks.
▶ 0:18:39Entrepreneurs rarely succeed alone, and along the along the way, they need and they need trusted guidance, practical tools, and partners who understand the challenges they face. That is why the office of entrepreneurial development and its nationwide network of resource partners are so important. Through counseling, training, and technical assistance, the OED helps entrepreneurs start, grow, and compete.
▶ 0:19:01In 2025, the SBA's resource partner network provided counseling assistance to hundreds of thousands of entrepreneurs, including womenowned uh businesses, rural entrepreneurs, and veterans. Uh this outreach supported businesses that contributed to more than 2 million jobs nationwide. The Women's Business Center Network is one part of the OED's entrepreneurial outreach. Through the WBC program, OED has been able to support uh 340,000 jobs and 16 billion in wages.
▶ 0:19:29That means every federal dollar invested in the program generates approximately $6 in business revenue and $7.50 in private capital. Under Administrator Leler's leadership, the SBA has embraced a new era of modernization so the SBA can meet Main Street where it is today. To advance this mission, the SBA has recently announced the reorganization designed to bring related further functions together, reduce duplication, and strengthen coordination across its programs.
▶ 0:19:59And we look forward to discussing what this organization means for the OED's operation, and more importantly for the small business and entrepreneurs who rely on these programs every single day. Now, together, those changes present an opportunity to serve with greater clarity, efficiency, and impact. OED has led to uh uh le efforts to modernize its great management team and during that process the committee heard from uh numerous grant recipients who payments were delayed creating real challenges for these organizations.
▶ 0:20:29So the committee understands SBA's efforts to modernize and approach that payments have since and payments have since resumed. So we look forward to discussing lessons learned and what safeguards are being put in place to prevent the problem from happening in the future. And throughout the 119th Congress, this committee has worked in a bipartisan manner to advance legislation that strengthens key entrepreneurial development initiatives and ensures that America's small businesses have access to the resources they need to succeed.
▶ 0:20:59So today's hearing is an opportunity to examine both the success and the challenges facing OED. And I look forward to discussing the administration's efforts to uh improve these programs and deliver better value for taxpayers and small businesses alike. I want to thank you again for being here today and I now yield to my friend and ranking member from New York, great state of New York, Miss Velasquez and a and a wet New York.
▶ 0:21:21Thank you, Mr. Chairman, and welcome to the committee, Mr. Fitzpatrick. America's 36 million small businesses are the foundation of our economy. They account for nearly twothirds of new jobs and are the driving force behind wealth creation, economic growth, and innovation in communities across the country. Launching a small business requires courage, determination, and resilience.
▶ 0:21:48While transforming a great idea into a successful thriving business can be incredibly rewarding, entrepreneurs often encounter obstacles that test their commitment and perseverance along the way. Their ability to overcome these challenges not only determines the success of their businesses but also the success of our economies, our country's economic growth.
▶ 0:22:16That is why Congress established SBA's entrepreneurial development programs. Through these programs, aspiring entrepreneurs and small business owners receive free or lowcost counseling, training, and technical assistance to help them overcome the challenges of starting and growing a small business. The services are delivered through the small business development centers, women business centers and SCORE.
▶ 0:22:45Together they council approximately 1 million small business owners every year. And this program has proven successful by consistently delivering a strong return on investment and improving outcomes for entrepreneurs and fostering long-term economic growth.
▶ 0:23:04Unfortunately, these services reach only a small fraction of our nation's small businesses, and too many entrepreneurs, particularly those in underserved communities, get left behind. Many minority owned businesses face significant barriers to growth because they lack access to experienced mentors.
▶ 0:23:26Without that guidance, entrepreneurs miss valuable networking opportunities, industry, insights, and advice on raising capital, making it harder to compete, grow, and create jobs in their communities.
▶ 0:23:40But rather than focusing on the immediate challenges facing small businesses today and leveraging the resource partners to unlock that on top potential, the Trump administration has proposed to eliminate funding for these programs altogether. They have also improperly withheld congressional congressionally approved funds for political reasons.
▶ 0:24:05These actions are disrupting the delivery of services that entrepreneurs all across the country rely on to launch and grow their businesses. Concerns has also been raised over SBA consolidation of the grant management specialists in the office of chief financial officer and the effect this will have on the issuance of timely reimbursement.
▶ 0:24:31And to make matters worse, small businesses have been navigating significant uncertainty with Trump's tariffs, persistent inflation, and rising energy causes. At a time when Main Street needs our support, this administration's action demonstrate a profound disconnect from the challenges they're facing.
▶ 0:24:54It is important to note that for years I have been imploring this committee to reauthorize the entrepreneurial development programs. Bipartisan legislation to reauthorize these bills easily pass the House of Representatives in one in the 116 117 congresses in which I was chair of the committee.
▶ 0:25:18Unfortunately, it is unlikely that legislation will pass with the time remaining in Congress in this Congress today. Today, I hope to get straight answers to my question and a strong commitment that you will implement these programs according to the law and congressional intent. I look forward to hearing your testimony. Thank you. Lady heels back. I now reintroduce our witness, Mr. Paul Fitzpatrick. Uh, Mr.
▶ 0:25:48Fitzpatrick serves as associate administrator for the US Small Business Administration's Office of Entrepreneurial Development. He oversees the SBA's nationwide network of resource partners, including small business development centers, women's business centers, and SCORE. Prior to his work at the SBA, Mr.
▶ 0:26:05Fitzpatrick uh served as CEO of the 1792 exchange and held senior roles in Capitol Hill where he served in the offices of Senator then office of then Senator Kelly Leler and Congressman Mark Meadows of North Carolina. Mr. Fitzpatrick named and earned a b a bachelor of arts and political science from Trinity College in Connecticut and a master of business administration from Marrymont University in Virginia. I want to thank you again for being here today. Look forward to our meaningful conversation.
▶ 0:26:35Now before recognizing the witness, I would like to remind everybody here that your oral testimony is restricted to five minutes. Uh if you see the light turn red in front of you, it means your five minutes is has included has concluded and you should wrap up your testimony and then if it gets so bad, we have to do this, you know. Okay. And then I now so with that in mind, I now recognize Associate Minister Fitzpatrick for his fiveminute opening remarks. Chairman Williams, Ranking Member of Alask, and distinguished members of the Committee on Small Business.
▶ 0:27:05Thank you for the opportunity to testify today on behalf of the US Small Business Administration. My name is Paul Fitzpatrick, and I serve as the associate administrator for the Office of Entrepreneural Development. America's entrepreneurs don't just create businesses, they create jobs, build communities, and drive our nation's economic growth.
▶ 0:27:25The office of entrepreneurial development exists to manage the public private partnerships providing aspiring and existing small business owners with access to counseling, training, technical assistance, capital and resource partners. Under the pres under the leadership of President Donald Trump and SBA administrator Kelly Leler, the Office of Entrepreneurial Development has delivered measurable results for taxpayers while equipping America's job creators with the tools to compete and grow.
▶ 0:27:53Across our nationwide network of resource partners, we are helping entrepreneurs start businesses, access capital, expand operations, create jobs, and strengthen local communities. At the same time, we are holding ourselves accountable for responsible stewardship of taxpayer resources and measurable program performance. In fiscal year 2025, the agency took significant steps to strengthen oversight of entrepreneurial development programs.
▶ 0:28:20We conducted comprehensive reviews to ensure taxpayer dollars are being used effectively, improved internal accountability across our grant programs, and rooted out waste, fraud, and abuse. Additionally, we inherited a grant management and payment system from the previous administration with significant record management and turn and internal control deficiencies.
▶ 0:28:44For that reason, we move quickly to implement a new grant management system ahead of schedule, which will lead to improved transparency and reliability in grant administration. We also delivered on our commitments to America's entrepreneurs by working to distribute approximately $340 million in grant funding that had been delayed by the prior administration, ensuring our resource partners could continue serving small businesses without interruption.
▶ 0:29:11These investments support counseling, mentoring, technical assistance, and business development services that help entrepreneurs launch, grow, and compete. At the same time, we are aligning entrepreneurial development efforts with clear, measurable outcomes for the small business owners we serve and the taxpayers bearing the costs.
▶ 0:29:32Resource partners across the country are moving beyond one-sizefits-all workshops and instead helping entrepreneurs line up capital, break into new markets, and improve their competitive position in global supply chains. Consistent with the Trump administration's broader focus on made in America and fair trade, these efforts complement SBA's record capital delivery in fiscal year 2025 and ensure that counseling and training are directly connected to growth, job creation, and long-term competitiveness.
▶ 0:30:03We're also proud of our new Manufacturing in America growth grant program designed to help develop the next generation of America's skilled workforce by expanding small business access to hands-on training, entrepreneurial education, technical assistance, and capacity building opportunities. combined with the SBA's broader efforts to expand access to capital, reduce unnecessary regulatory burdens, strengthen domestic manufacturing, and promote made in America.
▶ 0:30:33These investments are helping to build a stronger pipeline of entrepreneurs prepared to meet the demands of the modern and future economy alike. Entrepreneurial development efforts complement the SBA's broader accomplishments in fiscal 2025, including historic capital delivery, strengthen program integrity, record investment through the small business investment company program, rooting out waste, fraud, and abuse, efforts to eliminate unnecessary regulations that burden
▶ 0:31:03small businesses, and rapid disaster assistance. I can say with full confidence that these initiatives reflect a renewed commitment to SBA's core mission of helping America's entrepreneurs start, grow, and succeed. Thank you. And I look forward to your
▶ 0:31:21Thank you. And we will now move to the member questions under the five-minute rule. I now recognize myself for five minutes. Mr. Fitzpatrick, earlier this year, the SBA set out to modernize the grant management system, and during this time, payments to its resource partners were paused. Uh, can you tell us more about how the SBA's new grant management system improves accountability and transparency going forward?
▶ 0:31:47Mr. Chairman, thank you for the question. Uh, when we we arrived last year, we realized that our grant management system needed to be upgrade uh upgraded. But when we dug deeper, we were frankly shocked. We found a system that was not auditable with inconsistent processes that were not accountable to the taxpayers. And when we dug deeper, we realized that the prior administration had a system that relied upon a series of emails and disconnected spreadsheets with inconsistent processes.
▶ 0:32:18And so it's it's not a surprise that they had trouble dispersing funds. Um and so what we did is we rolled up our sleeves and we worked with the grant uh solutions team and developed an integrated system. So the grant system is now connected to our finance system and we simplified and harmonize the processes and the codes so that now we will be able going forward be able to disperse funds and have proper controls but also we actually will be able to do it faster.
▶ 0:32:47So that we believe the pause was necessary for the sake of the taxpayers.
▶ 0:32:51So follow up on that, what what safeguards are going to be put in place to make sure Congress is notified about any potential pause of appropriated funds before they go into effect?
▶ 0:33:02Well, Congressman, uh, Mr. Chairman, thank you for the question. Uh, SBA will always appropriately notify Congress. Um, and what we also have done is we have proper in internal controls now so that if we see a problem happening, we're going to know it sooner rather than years later. And so we will be in the position to notify Congress.
▶ 0:33:21That's good. Uh, my last question is part of the OED's program oversight efforts. SBA identified a service center operating under the Illinois Small Business Development Center, the B National Institute of Human Development that maintained an office in Guatemala and reportedly directing services toward individuals who were not eligible recipients of SBA assistance while receiving approximately 100,000 annually in SBA funding.
▶ 0:33:43So the question is how was this issue identified and what steps has OED taken to strengthen oversight and ensure entrepreneurial development funds are being care uh used solely to support eligible Americans small businesses and entrepreneurs.
▶ 0:33:56Mr. Chairman, thank you for the question and that's really our obligations to make sure that America that taxpayers go to serve the folks paying the taxes and the American citizens. Um, and what we have done is reviewed many states and in the normal course of reviewing Illinois because we had concerns about fraud, we came across the website of the B National Institute of Human Development. As you said, uh, this organization had an office in Guatemala, was receiving $100,000 in taxpayer funds.
▶ 0:34:24Um, its resources on its website appeared to be solely focused on immigrants and illegal immigrants. Um, and these are and they also said that they would serve anybody regardless of immigration status. And these are in clear violation of the terms of their agreement that they signed, this cooperative agreement with SBA. And so we we let we alerted the state of Illinois and that organization was disconnected from the program.
▶ 0:34:47Uh, one of this committee's priorities ensuring that SBA programs deliver results for entrepreneurs, well-being, responsible stewards of taxpayer dollars. We've talked about that. And as you look ahead, what are your top priorities for OED to improve program performance, reduce unnecessary administrative burdens, eliminate inefficiencies, and ensure that federal resources are directed where they can have the greatest impact for America's small business owners?
▶ 0:35:11Uh, Mr. Chairman, thank you for the question. Under Administrator Leler, we we have some major overarching priorities at SBA when it comes to specific industries. We're talking about manufacturing. We're talking about uh food supply. Um and we're talking about actually areas, rural communities which have really been devastated over the recent decades. And so what we're we've been working to do is align the resource partners efforts with those priorities. Uh but we're also encouraging other those organizations the resource partners to raise funds from other sources.
▶ 0:35:41These are public private partnerships and the ones we find that are most effective actually have raised other source funds from other sources and not solely depend upon the federal government. The other thing that we're doing is we see the most effective help for small businesses when there's an ecosystem of resource partners that are collaborating. These are fedally funded organizations, state funded organizations, county, municipal, chambers of commerce and so we're encouraging that collaboration.
▶ 0:36:05So not reliance well not relying just on federal dollars and in these private public private partnerships but multiple organizations. And the other finally what I'd say uh Mr. chairman is that we are working with underperforming centers to help them get up to speed and if not then we'll move them out of the program.
▶ 0:36:23All right. Thank you. Gentleman yields back. I now recognize the ranking member for five minutes of questions.
▶ 0:36:29Thank you [clears throat] Mr. Chairman and thank you Mr. Fitzpatrick. Uh the administration's budget proposes to eliminate funding for 15 of the 16 counseling and training programs. What evidence do you have to justify cutting these programs that assist nearly a million small businesses each year and generate billions in GDP? Uh madame ranking member, thank you for the question.
▶ 0:36:58Uh we fully support the president's budget and the president's willing to make the hard decisions uh when we have $40 trillion in debt and we have challenges economically and globally. that that wasn't a a that wasn't a a a problem or a concern when we you pass and Republican pass the big ugly bill.
▶ 0:37:24Was that an issue about not uh tell us what is the rational for the administration to cut all those programs? Um, madame ranking member, the the administration has to make uh priorities. We can't fund everything and uh by our estimates the resource partners are funding cutting taxes for the billionaires in this country. The resource partners have experienced significant delays in re reimbursement.
▶ 0:37:55For example, SCORE did not receive full funding for more than a year, resulting in a 70% reduction in staff and significant cutbacks to services provided to small businesses. Why did you withhold the phone? And what specific legal, administrative, administrative, or policy reasons do you claim to support your decision of withholding those funds?
▶ 0:38:24Uh, ranking member, thank you for the question. Uh, first, we're in communication, regular communication with the resource partners. We have not heard of any that have laid off staff, so I'm not sure where you're getting that statistic. I'd love to have you send that to our
▶ 0:38:37What about,
▶ 0:38:38excuse me,
▶ 0:38:39did you withhold funding for SCORE? uh uh ranking member Velasquez, what we did is when we came to Washington and we saw that the score had a bloated program and what they had done is they had two staffers making $300,000 between their two organizations. And yes, that organization had 66 staff members uh and it was bloated. So we we didn't cut their budget. They actually made decisions. They had new leadership that came in and realized it was bloated. And so they brought efficiency, which we support that.
▶ 0:39:08But what they also realized and what we've heard around the country is that yes there are many fine score mentors who are really helping a lot of entrepreneurs tremendously but there also many who are are frankly wasting the time of some entrepreneurs.
▶ 0:39:21Did you withhold money for other programs for other counseling programs? Did you
▶ 0:39:27ranking member Velasquez? We paused payments as we were upgrading the system that was broken
▶ 0:39:33and you paused.
▶ 0:39:34We paused all payments
▶ 0:39:35with total disrements. all total disregard as to the impact that pausing those fundings will will have on those uh partners, resource partners. That is how much you care about assisting small businesses. Did OM ask you to delay the dispersement of those funds?
▶ 0:39:59Uh ranking member Velasquez, I would say our team did tirelessly serve small
▶ 0:40:04Did OM rank member? No, OM does not tell us what funds to dispose.
▶ 0:40:08OM released the remainder of FY25 funds in March 2026. At about the same time, the SBA closed grant solution for nearly three months given the backlog in reimbursement. Why didn't OED process some of the payments before shutting down funding? Was that a coincidence?
▶ 0:40:33Uh, ranking member, we've been working diligently for a year and a half to upgrade systems and frankly what we were doing is flying the plane while rebuilding it and ultimately we were getting payments out, but ultimately working with the grant solutions team and our finance team.
▶ 0:40:46You're not going to answer my question. On July 6, SBDC directors received an email which stated, and I quote, "SBA will post the notice of funding opportunity, no foe, for FY27 funds after Congress passes legislation that includes appropriation for the program. Will SBA post the no if there is continuing resolution, yes or no?" uh ranking member Velasquez.
▶ 0:41:16Um that that would be up to if the funds are appropriated and then a portion to us. So if we have the funds, we will of course if the funds
▶ 0:41:24Well, I'm I'm glad to hear that.
▶ 0:41:30Gentle lady yields back. Uh and now recognize uh Mr. Elie from the great state of Texas for five minutes.
▶ 0:41:36Thank you, Mr. Chairman. Uh thank you, Mr. Fitzpatrick, for being here today. Uh, as part of the Small Business Administration's reorganization announced this past June, the Office of Entrepreneurial Development will now be administering the Office of Native American Affairs, Center for Faith, and the State Trade Expansion Program, or STEPP. I was proud to be a Republican co-lead on Representative David's bill, the Native American Entrepreneurial Opportunity Act, which would codify into federal law a small business administration, Office of Native American Affairs.
▶ 0:42:07I was also proud to support funding for the Office of Native American Affairs and FY27 Financial Services uh and General Government Appropriations Bill. Uh as a member of the Appropriations Interior Subcommittee, I've had the opportunity to learn about tribal issues firsthand from leaders of the American Indian and Alaskan Native Communities. I appreciate the work this committee has done to support tribes for bills such as the Native American Entrepreneurial Opportunity Act.
▶ 0:42:33So ensuring that tribes have opportunities to start businesses is very important to me and I know it is to you too. So can you walk us through how integrating the step grants under your office will reduce duplication improve service delivery to
▶ 0:42:48Congressman, thank you for the question. uh really what what we've been doing since remember administrator Leler is a business person and when when we came in we had offices we had functions that were spread out such as HR IT within different offices and and no company would operate that way by the same token we had some some programs and some grants programs dispersed throughout the agency and so what we're doing is is frankly bringing groups together like groups that have similar functions um and so while our
▶ 0:43:18the step program is has critical connection to our office of capital access for example um and our our trade office of manufacturing and trade. Really what we're doing is we're putting together the program staff that are actually doing the hard work day in day out of processing grants. Um and part of that is to drive efficiency. Um what we had before is we had staff spread out and they were sometimes they're busy, sometimes they're not.
▶ 0:43:45Now they're being cross-trained and so they can surge where there's a demand and so that'll happen with STEP and other
▶ 0:43:51And what do you think the metrics measures of effectiveness will be
▶ 0:43:54for STEPPP in particular?
▶ 0:43:56Uh we're really looked like we look at the dollars of exports for businesses and then businesses that are new to exporting. Those are really for that program that's really the heart and
▶ 0:44:06And so under the current budget framework, do you have enough money? Do you have enough staffing that where you can pull this off?
▶ 0:44:12Uh thank you for the question, Congressman. Yes, we believe we do.
▶ 0:44:15Okay. And so what reforms would you recommend for us today to improve the efficiency, reduce administrative costs, and maximize the impact of the taxpayer
▶ 0:44:25I I would thank you for the question, Congressman. I I would say um for Congress to give us the freedom to uh to make decisions to direct the resources to where most needed and uh guided. But we are we're happy to work with Congress on legislation all the time to improve these programs to help small businesses and our office of letter legislative affairs will be happy to work with you.
▶ 0:44:46Great. Thanks a lot, Mr. Chairman. Yield
▶ 0:44:49Gentleman yields back. I now recognize Mr. McGarvey from the great state of Kentucky for five minutes.
▶ 0:44:55Thank you, Mr. Chairman. Uh thank you, Mr. Fpatrick, for being here today. I'd like to follow up a little bit on the SBA score program because SCORE is one of those things. It provides mentoring. It provides personalized one-on-one opportunities for entrepreneurs, people who are putting themselves out there. They are risking it all. It is tricky. It is difficult. It is hard. Something that, you know, we know you're not as successful if you're truly trying to do it alone. Um, scores work is provided basically free or at low cost, right?
▶ 0:45:21It's staffed with tons and tons and tons of volunteers, people who who want to help us succeed, who know the importance of starting a business, of growing a business, of the importance that small businesses have to our overall economy. Um nearly 10,000 business adviserss serve in this program across all 50 states and it's the federal support from the SBA to the SCORE program that enables it to keep running. Right?
▶ 0:45:46So you've got all of these volunteers, tens of I mean literally 10,000 volunteers who are mentoring uh 300,000 individual people. uh this is what we're talking about the backbone of the American economy and they're they're doing it and they're providing you know access to expertise in everything from AI and digital commerce to financial management to emerging technologies to just the stuff you have to deal with when you're trying to open up your own business.
▶ 0:46:13Um I've always said there's a difference between government spending and government investment. And when we invest in growing our small businesses, that is not only something we should be doing, but for every dollar we're putting into the score program, it is returning $45 to the US economy.
▶ 0:46:32And so I really am curious as to why when you have this program, over 10,000 volunteers, over 300,000 individual participants, $1 we put into it yields $45 to the American economy. And for all of these people who are doing it, tens and hundreds of thousands of people, it has a 94% satisfaction score. Um, that's kind of unheard of when we talk about the SBA and the size and scope of this program.
▶ 0:46:58So why is the administration concluding that the program should no longer receive federal support?
▶ 0:47:06Congressman, thank you for the question. Um, we, as I've said, we support the administration's budget of making hard decisions with limited discretionary budget. And
▶ 0:47:15you said a minute ago, and I I wrote it down. You said, "We've poe, we've paused all payments for a system that was broken." Those are your words, not the administration's words. Why? for a program, tens of thousands of volunteers, hundreds of thousands of people utilizing a 94% satisfaction score and $1 that we put into it from the SBA, $45 back to our economy. Why do you think why did you stop I pause speak so we don't have to do government speak in here. You stopped all payments.
▶ 0:47:44You stopped giving money this program and you said it was broken. Congressman, thank you for the question. Yeah, our system, our grant system was broken. I also alluded to challenges within SCORE, but our grant system is broken and we we're accountable first to the taxpayers. And on the numbers,
▶ 0:47:58but you said it was bloated. I mean, there's you've gone from 70 employees to 20 employees across all 50 states with 300,000 people trying to participate in this. You've stopped all payments. Why?
▶ 0:48:09Congressman, thank you for the question. No, we again, like I said, we we as Secretary Bessant said in recent days, it is easier to prevent waste, fraud, and abuse than to claw funds back. And so that's what we're doing across all programs. That's why we're upgrading our systems and moving forward we can now get the funds out to the organization and we have gotten funding to score. They are they're in good shape working. We're very working closely. And the other thing on the numbers.
▶ 0:48:34So you could tell me I mean where has the inspector general identified waste or fraud in look I mean one thing you you're in front of a committee where we want small business to succeed. Nobody wants waste or fraud in government. No party owns that issue. Where is the waste or fraud in a program with a 94% satisfaction rate?
▶ 0:48:52Congressman, thank you for the question. We've talked to every time like where is we've talked to small businesses, [clears throat] excuse me, um and we've talked to other resource partners. We've talked to our field staff and as I said, some of the SCORE mentors are tremendous and they've gotten great credit, but some of them are not they're not great and the organization is working to move them out.
▶ 0:49:11Right. But is that fraud?
▶ 0:49:12No, that's not fraud. Waste waste is different than fraud and abuse. So, so how are you determining which I mean, so you're cutting the staff, you're stopping all the payments, right? You didn't say you were stopping the fraudulent payments. You said you're stopping all the payments.
▶ 0:49:25I let it go a little.
▶ 0:49:26Why? That's not fraud. That's stopping a program that's successful.
▶ 0:49:30No, actually, since we've turned the the the uh started restarted the payments, we have $125 million out the door. But again, SCORE is a separate nonprofit organization. We're a public private partnership. They are free to raise funds from other organizations. I would say the actual most effective women's business centers and SBDC's are the ones that raise more money than we actually require them to do in the match. So that's that's one.
▶ 0:49:52We want organizations to be independent of the federal government, but they are actually they're the score management is doing a good job of improving and we're work we're happy to work with them.
▶ 0:50:01You you thanked me for my questions, but I'm not sure I got good answers. Mr. Chairman, I yield back.
▶ 0:50:05Gentleman yields back. I now recognize Mr. Finstead from the great state of Minnesota for 5 minutes.
▶ 0:50:10Thank you, Chairman Williams, for holding this important hearing. uh today and thank you to our witness, Mr. Fitzpatrick, uh for being here. In my district, we're lucky to have two uh great small business development center uh regional offices, one in Rochester and one in Mano. These centers provide counseling, technical assistance, and guidance to entrepreneurs and business owners who are looking to start, grow, and expand their businesses and are necessary to connect federal resources with local business owners. Mr. Fit Fitzpatrick.
▶ 0:50:38On December 23rd, 2025, the SBA announced it was pausing grant dispersements to SBA resource partners in Minnesota, citing fundamental breakdown in the public trust of Governor Walls and the broad concern stemming from fraud schemes taking place uh in Minnesota. My staff met with SBA on January 6, 2026 after hearing from affected organizations that they had been not given a clear explanation of the funding pause.
▶ 0:51:05Once the decision was made to pause the dispersements, what process did SBA follow uh to communicate with the affected organizations?
▶ 0:51:13Congressman, thank you for the question. Uh yes, I I think we all saw what was going on in Minnesota, learing centers, etc. rampant waste, fraud, and abuse, and it was prudent of administrator Leler to pause all payments until we found out what was going on in the state. And and uh the SPDC in Minnesota is one of the seven that is actually statehosted. Uh so other state you know the most others are at universities.
▶ 0:51:37Um so the same state that would be administering the uh some of the other programs where there was fraud would be administering the SBDC program. So what we did is we followed up with that organization. Um but we actually took our had our program team go back five years and review just to make sure the documents were clear. We looked at annual reviews, semianual reviews. We looked at their accreditation reviews, our financial exam reviews, their quarterly, literally every quarterly report. Um, and we reviewed their websites.
▶ 0:52:06And so that's the process. And and we communicated with them. We had several meetings with them. Uh, we also had uh meetings with their the SBDC's, I would call it management at the host within the state. Uh, including going up to I spoke with a gentleman, I think it's Judge Omali, who was appointed by the governor uh to oversee. Um and uh so that was our process sir.
▶ 0:52:29So were were these organizations uh you know after that thorough review provided any corrective actions uh that they could that they had to satisfy before the funding would uh resume?
▶ 0:52:38Congressman, thank you. We we told them that that they actually were clear. I don't remember. There may be each state had one or two small records within within their filings, but um we did not find thankfully fraud and abuse at the Minnesota SBDC and their team was uh very good to work with and we appreciate
▶ 0:52:56Good. Well, I'm happy to hear that. Uh they have been a a huge uh asset to southern Minnesota. Uh I've seen them in action in communities all over the state and uh it's good to hear that they they passed the test. So, uh, making sure that these centers and programs are funded. It's important to me and the communities that I represent. I'm thankful that the SBA has worked trying to combat waste, fraud, and abuse. What steps can be pre uh can be taken to prevent another funding pause, and how can we here in Congress be helpful?
▶ 0:53:25Congressman, thank you. I I think what we're doing now of of building this new system and and I would add that like any new systems is a major systems upgrade and expansion. The team is learning how to use it. We're going to get better. we're going to add features and functions in the future. Um, so we will get better and faster with better controls and accountability. Um, so I I think that's the key.
▶ 0:53:47I think certainly at the individual level program just as long as they comply with the terms uh and communicate with us, I don't see any reason for any delays or pauses. Sir,
▶ 0:53:57sir, I have about a minute left and I I would just maybe just uh shoot from the hip here a little bit, but you've talked about upgrading the systems and we've seen this governmentwide where we're still operating systems that uh are on 1980 platforms. I mean, you can play Oregon Trail on some of these things.
▶ 0:54:14What have you seen uh in in your uh tenure at SBA that you know should really wake us up to say listen there is a need for internal controls and systems within government to uh to meet the the the state of the times that we live in right now. What are some of the archaic systems that you've uncovered and what steps have you you all been taking? So I you know you've talked about the uh the different uh grant dispersement systems and some were relying on emails. I mean are we using spreadsheets?
▶ 0:54:42Are we using Excel or are we using like modern-day drop-own box easy to use software
▶ 0:54:48Congressman Hackey, no, that's exactly the the the grant system. We had a grant system. That's a system of record. Uh but but no, the rest of it was emails and spreadsheets with with different tools with different uh nomenclature and etc. But yes, we we have 5-year-old laptops. Our operating system when we got here was probably eight years old. Uh so is and our technology on the lending side different office than mine is being upgraded very archaic as well.
▶ 0:55:14Thank you. I yield back.
▶ 0:55:16Gentleman yields back. I now recognize Mr. Cisneros from the great state of California for 5 minutes.
▶ 0:55:24Thank you Mr. Chairman and ranking member for convening us today for this important hearing. Uh Mr. Fitzpatrick, after over a year and a half, thank you for finally making appearance before this committee. I hope we can take this rare opportunity in direct engagement with you to get some real clarity on and solutions for our entrepreneurs nationwide that look to programs under your purview of resources, counseling and training to launch and grow their small businesses.
▶ 0:55:50There is a wonderful small business and uh small business and development center at the University of Leern in my district that plays a critical role in fostering growth for small businesses and the broader local economy. I strongly support SBDC's, but I also support the other resource partners that work with them. I need to stress that small businesses are are hurting and that this is not the time for the administration to recklessly eliminate programs that are critical to the success of our small businesses.
▶ 0:56:21The president's tariffs have cost Americans over $317 billion. I [snorts] keep hearing from small businesses about rising cost and uncertainty. A recent survey by small business majority saw 74 74% of business report an impact from rising fuel and transportation cost. 88% said cost of raw goods and materials have increased this year. 89% said healthc care premiums are up. 72% said commercial rent costs are up.
▶ 0:56:50Bankruptcy filings for small business during the first half of 2026 now res represent a 50% increase over the same period a year ago. It is important that more important than ever to support our small businesses through the counseling, training, and mentoring that entrepreneur development programs offer that help entrepreneurs successfully launch and grow their businesses. We shouldn't eliminate programs. We shouldn't withhold funds for programs. We shouldn't subject them to meaningless audits.
▶ 0:57:20And we shouldn't blindly shuffle and and reorganize who oversees them. I also think that it's unfortunate that my Republican colleagues have refused to work with us on entrepreneurials bills that have been bipartisan in the past on this committee and I encourage them to come to the table and let's start working on some of these bills that will benefit our entrepreneurs. So, Mr.
▶ 0:57:45Fitzpatrick, you say in your testimony that you hold yourself accountable for responsible stewardship of taxpayer resources. Have you found any evidence of fraud in any of the programs you oversee? And if so, which ones? How much? And how do we legislatively fix it?
▶ 0:58:01Congressman, thank you for the question. I I've [clears throat] excuse me. First and foremost, I want to say uh you you alluded to tariffs and challenges. Uh we we are thankful that we have a president who has the courage to fight for the safe streets, lower taxes, reduced regulations, fair trade, capital markets.
▶ 0:58:18Mr. Fitzpatrick, that wasn't my
▶ 0:58:21Okay. I need to repeat it because the tariffs I keep hearing from my from my
▶ 0:58:27the tariffs are killing them and right now that the tariffs that the the president just said the 50% is going to have an even more impact the ones that he just put on Canada where a lot of our paper goods come from. So coffee shops in my district uh ice cream shops anybody use any paper product they're now going to have to pay higher costs. But back to my question have you found evidence of fraud in any of your programs you oversee? How much? which ones and how do we fix it?
▶ 0:58:53Congressman, I mentioned the B National Institute of Human Development as an example. Uh we have uh women's business centers that we have put uh a sus on a suspension and we have other programs that are just not complying. But we don't have I would I'm glad to say we have not found massive fraud and abuse in these programs in part because we are looking at quarterly reports and finances with them. And so that's good.
▶ 0:59:20Uh and I will say that the strength of the organizations are when they have other partners uh not just relying on the federal government but they have other funders in part the match requirement. uh that does also help to bring accountability and so we're thankful for that and we are as I I said earlier we are always happy to work with uh Congress to provide technical assistance and our legis office legislative affairs happy to work with you on program on ways of improving the programs to help small more small
▶ 0:59:48well I'm glad to see that this uh overall fraud investigation that you say has really kind of shown no fraud um I will say you know California has an outstanding reimbursement of 144,000 um that needs to be resolved and this is with the state trade expansion program um you know a program that is 30 to1 and we're still looking for those resources to come back to our state uh but right now um I will submit my other questions for
▶ 1:00:18the record and I thank you for your time and I yield back
▶ 1:00:22gentleman yields back now recognize Mr. Schmidt from the great state of Kansas for five minutes.
▶ 1:00:28Thank you Mr. chairman and thank you Mr. Fitzpatrick. I just wanted to talk about a Kansas particular matter. Uh it's on my mind. So our small business development center for the state is out of Fort Hayes University now in Northwest Kansas. The university's decided they don't want to remain the host. Uh we have other at least one other location in Kansas would like to host. Pittsburgh State in my district's interested. There might be others. I don't know that.
▶ 1:00:52My understanding is that the state of play uh is that there is an an application process by which a new host could proceed, but they tell me they're not able to do that until the appropriate notice uh funding opportunity has gone out. That that hasn't happened yet and that it may be over at OM. Can you tell me the status on the NOFO going out?
▶ 1:01:15Congressman, thank you for the question. just I'm very familiar with the situation in Fort Hayes and we're excited to find a new partner in uh in Kansas. Um no, the what it is is is we don't have the funds. We we need the funds, the fiscal 27 funds, so when Congress passes a budget, appropriates the funds, then we can issue the notice of funding opportunity.
▶ 1:01:34Well, that's going to create a little bit of an issue, right? because uh unless I'm mistaken and and tell me if I am, the end of the calendar year is when uh the shop closes at Fort Hayes. The new applicant or applicants depending on how it is have to have sufficient time to put their application together, get it submitted and get a bow put on it uh prior to the end of the year so that things don't shut down, people leave, get employed otherwise.
▶ 1:02:01Um, and you know, with all respect to my own institution, I'm not anticipating uh the appropriations process concluding before the August recess. And who knows what'll happen in September. So, what options do we have? The biders can't bid. The applicants can't apply until they know the conditions in the NOFO, and they can't know the conditions in the NOFO till they see it. uh what options do we have to at least enable that process to start moving?
▶ 1:02:30Congressman, thank you. Yeah, [clears throat] excuse me. One, I would say the Fort Hayes team has been really good about this during this transition and and serving small businesses. So, I I give credit to them. Um the uh we are happy to work with anybody who is is interested in applying um because it is not going to be a dramatic change of any application that the the terms in this notice of funding opportunity. So, an organization could be getting ready in advance.
▶ 1:02:56Uh, and and we will move very quickly because it's a we're not going to have hundreds of applicants. So, we'll be able to make a decision very quickly. But, we do appreciate that it's it's going to be tight. Uh, we understand that. Um, and we're hopeful that maybe even Ford Hayes could could bleed over into the if there's a couple of weeks into the new year. Uh, but we're we're confident that we'll be able to move quickly.
▶ 1:03:17Okay. Well, I appreciate that. So would the appropriate advice for me to give to the folks that are interested at Pittsburgh State or otherwise in Kansas if they want to talk to me uh to connect them with your team uh timely so that those discussions can commence and they can do whatever preparatory work may be necessary to move quickly when things break loose.
▶ 1:03:35Yes, Congressman,
▶ 1:03:36we will follow up with your team and I thank you very much and Mr. Chairman, I yield back.
▶ 1:03:40Gentleman yields back. I now recognize Mr. Tran from the great state of California for five minutes.
▶ 1:03:46Thank you, Mr. chairman and ranking member for holding this important oversight hearing. Mr. Fitzpatrick, thank you for being here today. In my district, I've seen firsthand the impact of Orange County Small Business Development Center and the Orange County Women's Business Center. That's what hosted in my district. Uh take Miss Jessica Gutierrez, the owner of Stampin' Ship in Orange County.
▶ 1:04:08She had a simple dream to start a small business, but like so many first-time entrepreneurs, she ran into obstac obstacles securing a commercial lease and finding startup financing. With guidance from the Orange County SBDC, she turned an idea into a successful neighborhood business. Or look at the Orange County Women's Business Center, which recently graduated dozens of entrepreneurs from its in-home licensed child care program.
▶ 1:04:35These graduates are starting businesses that provide desperately needed child care options for working parents. So, I struggle to understand why the administration claims that these programs are wasteful and fraudulent, especially when I've seen how they contribute to the local economy. As the administration tries to eliminate SBDC's, they have also delayed funding that Congress already approved.
▶ 1:04:59My office spent months working with the Small Business Administration to recover nearly $3 million that was owed to the Orange County Inland Empire Small Business Development Center. It should never have taken congressional intervention to release funding that Congress had already appropriated. I was happy to hear that you reported that your office has improved that grant uh improve grant management, but I know there is still lots more we can do to strengthen accountability.
▶ 1:05:27SBA's resource partners collectively serve nearly 1 million entrepreneurs each year. They provide business counselors, technical assistance, and support for local local entrepreneurs. For entrepreneurs in my district and across the country, SBA's entrepreneur development programs are often the difference between a dream that never leaves the kitchen table and a small business that creates jobs and grows our economy. I hope today's hearing helps us separate rhetoric from reality as we continue to serve the small businesses across this nation.
▶ 1:05:58As mentioned in my opening, my office successfully fought to release nearly 3 million in SBDC funding to my to the community after the ad administration withheld it. You mentioned safeguards that are in place with the new system to inform Congress of pauses, but I want to know what safeguard is the SBA providing to ensure that grant payments to resource partners are delivered on time and without unnecessary political or administrative delays.
▶ 1:06:26Congressman, thank you for the question. Um um I I can assure you there's never been a political delay. um our obligation is to first it was to fix the broken system that we inherited and then that will then help us to get funds out faster. Uh and we're doing that but I I would say on in certain situations when a resource partner submits for a reimbursement for example uh that's not the end of the story. Typically about a third of them have errors so our team has to follow up with them. So I don't know that that's particular payment that you're speaking of.
▶ 1:06:56I'm glad it was rectified but that's that's not uncommon. Uh but but what we're doing is making our teams uh nimble just like any business would do. So we're cross as I mentioned we're crossraining staff so they can surge to where the demand is. So if there's more activity payments things such as that in the SPDC program pro folks in the WBC program could go over and help on that. Um and and what we're doing is trying to make sure we get the funds as quickly as possible but in the to the right folks.
▶ 1:07:26And I I didn't say by the way that there was rampant fraud and the administration hadn't said that. Uh and we we've done reviews and we're thankful that we haven't found
▶ 1:07:33I didn't even talk about that in my statement or my question administrator. But you know a consistent theme that we're hearing is uh these safeguards that are not being provided to ensure notice to our grantees. Like I I want to know specifically what you're working on to provide those safeguards. We heard it from Mr. Finstad. We heard it from the chairman. I want to know what these safeguards are.
▶ 1:07:54Um, by safeguards you mean we just we are in communication with the resource partners and if they submit and we review we can we can pay as quickly as possible and that but there's several steps. Remember we have obligations and we have payments. So there's those are two separate steps and we're we're happy I'm happy to talk more but we are committed to moving as quickly as possible and reimbursing and and obligating etc.
▶ 1:08:20Yeah. I I hope you would commit to making sure that um these programs are healthily healthfully funded and as we continue down this path uh we continue to give notice to grantees and to members of Congress when there's impacts um that's happening in our district. Mr. Chairman, with that I yield back.
▶ 1:08:38Gentleman yields back. I now recognize Mr. Petronis from the great state of Florida for 5 minutes.
▶ 1:08:46Thank you, Mr. Chairman. Paul, great to see you. Thank you for coming and spending some time with us. Uh members, Paul has been such a a fantastic public servant. So many different capacities. I got the opportunity to serve with him years ago when I was in the state of Florida and um it's just great to see folks that care about the future of our nation come back to be a servant in this process. So um thank you for your sacrifice and leadership.
▶ 1:09:13Um, I want to focus on um taxpayer dollars and crack cracking down on fraud, waste, and abuse. Um, um, I think I pretty much already know the answer to this, but I think it's important to all of my colleagues to to hear you uh expand upon your your successes.
▶ 1:09:31Um, so can you highlight some of the actions the SBA has done to uh improve oversight to ensure the taxpayer dollars are reaching only eligible Americans who are needing to use these systems, especially when it comes to the creation of small
▶ 1:09:48Congressman, thank you. Congratulations on entering the body and thank you for your service here, too. He's a he's quite a restaurant tour. Um, we are we're really trying to do pull every lever we can when it comes to accountability. We've got our field teams. We're improving the way they're doing their reviews of the resource partners. We're training our program teams and our grant teams.
▶ 1:10:11What we have done is we've actually simplified the documents and the terms, making sure we're dialing up the oversight side and the compliance with executive orders again to make sure only those who are eligible receive and to make sure uh dollars uh millions of dollars went like in the last administration to DEI programs and other divisive programs.
▶ 1:10:31Um and so we we are also then working to improve the accreditation process for example with the SPDC's and we are making sure that our teams are thorough and reviewing and and I would say the other piece is uh it was alluded to on the um part of our reorganization having our grant pro grant staff the grant managers move to the CFO's office. That's actually a good thing. They were distributed uh and now they're integrated.
▶ 1:11:00Those are the people with the warrants who actually their name is on the line when they sign it for 100,000 or 5 million. They are integrated with the CFO's team where they should be. Uh so those are the kinds of things that we're doing. We're really trying to run more like a business. Uh but thankfully as I've said we we you know we waste, fraud, abuse are different things. Um we want to drive efficiency to eliminate waste. Um and we're we're making sure there's not fraud. Uh and we haven't seen rampant fraud thankfully. Um, so that if that answers the question
▶ 1:11:30and if um give me do you have a a specific example of something that you I mean you you've touched on the efficiencies um but a a specific example that you're you're most proud of.
▶ 1:11:42Congressman, I I think the the the simplifying and harmonizing the documents and the process. every grant program was run with different rules, different documents and even within pro there were silos. Um but with even within the women's business center program, there were two program managers sitting next to each other who had different processes. That's what we inherited. And so we have to we have we're building the foundation. And so we're really proud that we're harmonizing the documents and the processes so then our team can work more efficiently.
▶ 1:12:12But frankly, we'd rather not spend a lot of time talking about documents and processes. We'd rather work with resource partners to help them be more efficient and productive to help more small businesses because it's really it's about the small businesses, not the resource partners. Though we we appreciate the hardworking staff at the resource partners. Absolutely.
▶ 1:12:30Well, again, thank you for taking time out of your day to be here with us. Um, thank you, Mr. Chairman. He's a great witness to bring before us, and I yield.
▶ 1:12:40Gentleman yields back. I now recognize Miss Goodlander from the great state of New Hampshire for five minutes. Thank you, Mr. Chairman, and thank you, Mr. Fitzpatrick, for being here today. 99% of our businesses in New Hampshire are small businesses, and they employ about half of everyone who works in my state. So, when New Hampshire small businesses are hurting, our whole state is hurting.
▶ 1:13:06Your office has one important job that I want to focus on in my questions this morning and that is helping small businesses to start, grow, and compete, including in markets beyond our borders. So, I want to start with a program that we've talked about a bit today that your office runs, the state trade expansion program or the STEP program. So, STEPPEP helps small businesses sell their goods abroad, and I want the record to reflect the numbers because they're pretty remarkable.
▶ 1:13:35Since the year 2010, STEPPP has helped more than 15,000 small businesses break into international markets and the return on investment from this program is more than 30 to1. In a single year, in 2024 alone, STEPP supported nearly 22,000 jobs. So, this is a program that works and I've seen it firsthand all across my state.
▶ 1:14:01So, the entire pro purpose of the STEP program is to help small businesses trade. Is that right,
▶ 1:14:08Congressman? Thank you. Yes. It it's to to expand exports or get or begin
▶ 1:14:14So, here here's a question I want to ask you. Um, can you tell this committee plainly what tariffs the Trump administration has imposed that a New Hampshire small business has to navigate
▶ 1:14:28Congresswoman, thank you for the question. Uh, we fully support the administration's policies to fight for fair trade.
▶ 1:14:34This is a factual question. I I get this question from my small businesses every day. So, can you can you please answer the question? What tariffs that have been imposed by President Trump does a New Hampshire small business have to navigate today?
▶ 1:14:49Congressman, when it comes to the minutiae of tariffs, you you probably have the wrong witness when it comes to fighting for
▶ 1:14:54this question. Thank you, Mr. Fitzpatrick. This is obviously not a minutia question, but I'm asking it because I'm not sure that anyone can answer this question cleanly cleanly anymore. And that is the core part of the problem. We've got AIPA tariffs. We have liberation day tariffs. We have section 232 tariffs. Section 122 tariffs. Section 301 tariffs. It changes by the week. This week alone, here's what we're seeing. The section 122 tariffs expires this Friday.
▶ 1:15:22A new 25% tariff on Brazil took effect today. Earlier this week, President Trump announced a fresh set of tariffs against Canada under authority that's never been tested before. So my point is that if the associate administrator for the very office that is charged with helping small businesses trade cannot keep it all straight or offer a clear answer, how on earth is a small business in New Hampshire supposed to do that? And the answer is they can't right now. And that is a core part of the problem.
▶ 1:15:53Small businesses shouldn't be asked to hire an army of attorneys to navigate a constantly shifting set of tariffs and barriers, taxes on their own bottom line just to try to get by. But that is the situation that you have put small businesses all across New Hampshire in. Now, I want to ask you, I've been very focused on the AIPA tariffs and in February, we fought those tariffs at every level in every court. The Supreme Court declared them on unconstitutional in February.
▶ 1:16:23How ho how many ho how many t how many dollars have been returned to small businesses who were unconstitutionally taxed by President Trump?
▶ 1:16:32Congresswoman, thank you for the question. Uh the office of entrepreneurial development does not is not responsible for that. What we are responsible for is helping the small businesses that want to grow. And I would say 98% of small business are manufacturers. they we're going around the country and they're telling us they're having opportunities to compete now finally because there's not cheating going on from other countries and our competitors. So, those are the ones that we're talking to. We understand we're in a transition as we try to re-industrialize America, but we support the president's policies because he's fighting for that.
▶ 1:17:01It's it's time that we fight for the small businesses in New Hampshire and every other state.
▶ 1:17:05Well, we are fighting for those small businesses. And one of the things I'm I spend a lot of my time doing is trying to get those small businesses who are unconstitutionally taxed. Do do you do you acknowledge that these were tariffs declared unconstitutional by the United States Supreme Court?
▶ 1:17:20Congresswoman, thank you for the question. I I know what the Supreme Court decided, but we are fighting for fair trade
▶ 1:17:26and and right now I hope you will join me and everybody in this body who is fighting to make sure that unconstitutional taxes are reimbursed to the small businesses who are hurting because of the decisions made by this president which are chaotic and have been extremely costly to my state and to our small businesses. Thank you and I yield back.
▶ 1:17:50Gentle lady yields back. I now uh recognize Miss King Hines from the Northern Mariana Islands for 5 minutes.
▶ 1:17:56Thank you very much uh Mr. Chairman and and thank you so much Mr. Fitzpatrick for being here today.
▶ 1:18:02I really appreciate the SBA support for the Cinema SBDC. The team uh the Cinema SBDC team has been phenomenal. They're rockstar. So there's a lot of military contracting that's happening in the CNMI right now with just uh military expansion in the region and unfortunately we we still don't have an apex accelerator but what the what SBDC has been doing is is filling in the gap and so I just wanted to say thank you for that.
▶ 1:18:31Um several months ago I met Elizabeth Hhabib. I think she's the administrator of SBA's office of women's business ownership. Is that you right there? Yeah. Hi. Um, when I met Miss Habib, she was incredibly enthusiastic about uh potentially finding, you know, creating an opportunity to have a a WBC in the CNMI.
▶ 1:18:56Um, so I was kind of surprised when a couple of weeks ago we learned that the competition was limited to applicants from Florida, Louisiana, Pennsylvania, Tennessee, Texas, West Virginia, Wyoming, and the US Virgin Islands. Um, can you explain how the SBA decided to limit applications to just these states and one territory? Because for Guam and the CNI, our closest WBC is a 7-hour flight away in Honolulu.
▶ 1:19:22Um, which, you know, makes it kind of difficult to to access that opportunity. Congresswoman, thank you for the question and thank you for recognizing the uh the incredible talent that administrator Leler has attracted to SBA uh including uh assoc assistant administrator Habib.
▶ 1:19:39Um, we have limited resources and we are really excited about the women's business center modernization initiative and what that is about is building a wraparound services um really modeled on the the the population-based funding formula of the SBDC's uh and with a statewide focus. So that's just uh for everybody's benefit on that this initiative we're excited about, but it is limited resources.
▶ 1:20:06And so we we had to go through and the team went through and and identified several that did not have services. Uh several states that is these are these are four states that were underfunded and four states that had no WBC's. Uh but the the good news is we have a lead center and two service centers in the SBDC network for CNMI and and that's they are doing good work as you said and so we're excited that they can serve male and female entrepreneurs and CNMI.
▶ 1:20:37I guess I just wanted to kind of understand the criteria so that you know the that opportunity is provided to the CNMI as well in terms of just selection the selection process but I think that's something that a conversation that we can we can have offline and and we'll flag for you.
▶ 1:20:55So one you know um the the step grant has been the step program has been mentioned and so um you know as I've stated the SBDC has has done a a great job with the uh innovation incubator and you know you have all these young entrepreneurs um creating products and you know one of our biggest challenges in the cinema is just you you don't have access to the customers right and so people are looking to to export
▶ 1:21:25um like you know coconut oil for the body uh hot pepper noni um so um one of the challenges that we are hearing is that, you know, they're having to navigate these very complex uh requirements in these foreign countries like in Japan or or or South Korea for example.
▶ 1:21:48And so I just kind of wanted to kind of get a better understanding from you, you know, if these compliant costs are already allowable use under the the STEP grant funds and and how can we work together to be able to open up these markets to these small businesses who are looking to export.
▶ 1:22:07Congresswoman, thank you for the question. No, those kind of, for example, health type regulations, that's not the kind of compliance costs that the STEP program is currently designed could cover. It's for uh trade missions, trade shows, marketing, translation, those kinds of things. Uh but we're happy to our our team is happy to anytime work with you uh provide technical assistance uh to help improve uh we have to see when it comes to the the do think of the impact financially on the program. It is limited.
▶ 1:22:37It's it's $20 million a year uh in current appropriations. So there are limited dollars. Um I I would say the team just let me know we had $8 million just got uh obligated in the step program uh just recently. Um so we but we're we're happy to work with our office of legislative affairs with your team and get together and and talk about the options.
▶ 1:22:56All right. Thank you. I'm out of time. I yield back, Mr. Chairman.
▶ 1:22:58Gentle lady yields back. I now recognize Miss Sculton from the great state of Michigan for five minutes.
▶ 1:23:03Thank you, Mr. Chairman. And uh thanks to my my teammate, Miss Kim Hines, uh for uh tossing over a great uh toss to me. We play softball together. And uh that te's up perfectly a lot of the questions that I had um for you about uh a bill that I just introduced yesterday, the Women's uh Business Center Improvement Act of 2026, along with my colleague Shereice Davids.
▶ 1:23:27This is a bipartisan bill that would address so many of the issues uh that that we were just discussing in the last question line. A bipartisan bill in the last several Congresses. You know, we don't have to work on this alone. Invite you to to take a look at the bill, get on board, and would love the administration's help in in championing this bill and getting it across the finish line. We can address so many of these issues.
▶ 1:23:51This bill would increase the authorization level for women's business centers, add program integrity provisions, and increase the grant amount a W that WBC's can receive from 150,000 to 350,000. Is that something you could support,
▶ 1:24:06Congressman? Thank you. [clears throat] Excuse me. We're always happy to provide technical assistance and and work with you with through Office of Legislative Affairs. Really, one of the challenges, frankly, is is program design when it comes to women's business center program. And so you're addressing some of that, but it's also we have duplication and and ultimately where these centers are located and and how they're dispersed. For example, right now California has 21, Texas has three.
▶ 1:24:30Uh and so you know what that's that's an issue uh that we have to address but it also comes down to efficiency and is this an efficient use of funds with smaller groups and should should congress talk about uh combining all these resource partners into one have one grant per state and that what that would do is it would have lower costs for for SBA and actually lower administrative costs for the resource partners for example WBC's one of them told me their compliance cost is $60,000 a year.
▶ 1:25:00We give them 150, they raise 150. The average has a couple of employees, $60,000 going to compliance costs. That's not efficient. So, we have a program design issues
▶ 1:25:10and and I I would agree with you there. And our office is very happy to to work with you to see the ways in which we might be able to improve this bill. Teammate, uh we we want to get you on board uh as well. She's like, I'm out of here. [laughter] No, I'm kidding. Yeah. Uh but uh truly, you know, this is not something that, you know, we're we're doing just for messaging bills. This is this is a great bill that has been bipartisan in past congresses. We would love for you know your office to take a look, get on board, see where we may be able to improve some of those efficiencies.
▶ 1:25:39But I am going to circle back to my question. Would you support lifting the cap from 150,000 to to to 300,000? You know, the the economic uh advantages are are so significant.
▶ 1:25:51Congressman, we we support the president's budget that's making the hard decisions when it comes to these discretionary programs. I I I want to move on to talk a little bit more about some of these uh outstanding payments uh to the women's business centers. Uh our our ranking member has has touched on this before and I would like uh to introduce for the record uh a letter from the Association of Women Business Centers uh dated July 21st, 2026.
▶ 1:26:17Um and the data collection results uh that they have here which which goes to something specifically that you had said $12 $12.6 million to be specific. This figure reflects an in outstanding payments. Do you think that's
▶ 1:26:33Congresswoman? As you've heard testified, we we inherited a broken system and actually Women's Business Center program had had some of the worst records and processes. Um, and so we had to pause this clear and we and we've actually in the last year dispersed $15 million to BBC's. Yes. So we we we respect that this was maybe not something that initiated with this administration, but you guys are in control. So I mean, do you find this acceptable? Do women not deserve to get
▶ 1:27:01Well, Congressman, thank you. But that's a ridiculously a ridiculous assertion. We we pay everybody. Uh the resource partners answer the question. There's $12.6 million in outstanding payments. You guys are in charge.
▶ 1:27:15We've dispersed $15 million this fiscal year to Women's Business Center. So that's not nothing. And payments have resumed and we are working very quickly. But but frankly, if you think about it, we've had we've lost 25% of the time in this administration between the the
▶ 1:27:28In my remaining 30 seconds, I want to ask, you said there have been no layoffs as a result of delayed payments uh or uh you know, grants not getting out these notice of funding opportunities. How do you know that,
▶ 1:27:40Congressman? Now, now frankly, I misspoke when I did not I was not thinking about score and so I I misspoke on that. score. What the score new leadership team about? Yes. Yes. I Yes, that was my mistake. But um but SCORE's leadership team admitted that they were it was bloated. So and their board admitted that it was bloated. So that that is clear.
▶ 1:28:02Can we have your commitment to get these women paid?
▶ 1:28:05We're not paying women. We're paying the organizations some of which are run by men. I
▶ 1:28:09it's it's the women's business center. So let's not be pedantic about it. All right. Thank you.
▶ 1:28:14Yield back.
▶ 1:28:14Gentle lady yields back. can now recognize Mr. Fuller from Georgia for five minutes.
▶ 1:28:20Thank you, sir. One of the things that drives me insane as a career prosecutor is when questions are asked about of a witness and they're not allowed to give an answer. So, pardon the pun here, but I'd like to give you the opportunity to give some fuller answers here. Um I know that uh one of the things that you talked about you President Trump administrator Leler and you inherited an absolute mess from the prior administration. You've talked about the bloated agencies.
▶ 1:28:48You've talked about salaries that people had in your organization that would shock the conscience of Americans. You've talked about outdated systems. And despite all of that that the Biden administration had in place, uh, you put in your testimony that there were $340 million in grant funding that was delayed by the prior administration, delayed by the Biden administration.
▶ 1:29:11Can you tell us a little bit about how you overcame those delays and those issues that you inherited from the Biden administration and what those fixes were?
▶ 1:29:20Congressman, thank you for the question. I appreciate the opportunity. Um, yes, our our team inherited about 1,500 payments, about $340 million that that they hadn't processed in partners. We don't know exactly. We I I I think they had some staff that were well-meaning, but they didn't have good leadership. They didn't have good technology. They have good processes. And so, what we've had to do is roll up our sleeves and get it out. So, as I mentioned, we've lost 25% of our time in processing obligations and payments because they're shut down and because the pause that was necessary.
▶ 1:29:50So, we have to work through their 340 million and our 330 million and and the team is working very very hard. All of the team at all levels. Um, and so we're we are committed to doing it as quickly as possible, but as as I said, Secretary Besson said the other day, it's easier to prevent waste, fraud, and abuse than to claw the funds back. And so, we are working day in and day out. Um, and we're we're very thankful that our resource partners have been patient.
▶ 1:30:16Then the other thing is the important point is that we don't want to see these organizations solely relying on the federal government. That we want to see them raise additional funds above and beyond what we require them to. Uh and by the way, those are the organizations that are that we find are the most innovative and they're also going to be the most resilient. So that should in the future be a reason why we have to make a pause, I don't anticipate that, they will be able to continue providing their services. And and one point that I I do want to make one point of order.
▶ 1:30:45Uh when it comes to these these programs, because of the handcuffs that we put on the resource partners, we do not get back the names and contact information that we can use to verify who the clients are. And so we don't know what the numbers are. People have said a million people are served. Well, if you look at the resource partners on our data, it's 733,000. But we know that many actually go to multiple resource partners. So we estimate we're actually about a half a million.
▶ 1:31:13So about a percent are clients of the resource partners, but actually less than a percent are actually getting counseledled. So it's a very small percentage. So we love and admire our small businesses. They they present the grit, the determination, the doer, their builders and risktakers as administrator says. Uh but we actually these resource partners are actually not serving that many. We're thankful for those that they're serving, but it's a very very small percentage of all entrepreneurs.
▶ 1:31:40No. and and thank you to um you for the work that you've done in fixing all those problems that you inherited and to administrator Leler as well. One of the problems that you inherited there were uh communities like mine in Appalachia that were completely ignored. Small businesses that were completely destroyed by the Biden administration in their policies and one of the things that you've done with your leadership of OED is ensuring that small businesses particularly in Appalachia and underserved areas like like mine have access to counseling training and technical assistance.
▶ 1:32:09Uh can you tell us a little bit about that work and how you've overcome those problems that you
▶ 1:32:15Congressman, thank you. Yes, I I would say the prior administration had a had a did not equally treat rural America. If you look at where dispersion of where the the resource partners are that they located, um you get certain, you know, in Los Angeles, you you you go a couple blocks and you hit a women's business center. Um there's clearly not equal dispersion. And so this under this administration, President Trump, administrator Leler are committed to small businesses and entrepreneurs and every American in in rural communities.
▶ 1:32:43And and you're right, the Biden administration energy policies really were energy suicide and have decimated uh Appalachia. And so we are committed and we know you have a service center uh small business development center service center in your district. And uh we have every every confidence that that the Georgia network is doing a good job, but we're happy to work with you uh should you need any help with that service center up there.
▶ 1:33:06No. And thank you so much for that. Uh we we love our service center in Rome and I see Miss Habib in the audience. I think the last time I saw you was in Rome. So thank you so much for your work and Mr. Chairman, I I yield back my
▶ 1:33:17Gentleman yields back. I now recognize Dr. Morrison from the great state of Minnesota for five minutes.
▶ 1:33:23Thank you, Chairman Williams and Ranking Member Velasquez for holding this hearing. Thank you, Associate Administrator Fitzpatrick, for being here today. Uh, not to beat a dead horse, but this is um an issue that the small business community is really struggling with. The number one thing that I'm hearing about from small business owners in my district is the difficulty of navigating the uncertainty created by the president's tariffs.
▶ 1:33:45Many small business owners are facing shrinking profit margins, disrupted supply chains, and severe planning uncertainty because of these tariffs jeopardizing the future of their businesses. The president's fiscal year 2027 budget proposing eliminating 15 of the 16 entrepreneurial development programs, including the STEP program, uh, which we've discussed some this morning, which assist small businesses in entering or expanding into international markets.
▶ 1:34:12One of the consequences of the president's tariffs has have been retaliatory tariffs against the United States from other countries, causing even more uncertainty for small businesses interested in participating in foreign trade. Throughout last year, the president's placed tariffs on Canadian cars, aluminum, steel, and lumber. Canada responded with retaliatory tariffs against the United States, restricting exports to our neighbors to the north for motan small businesses.
▶ 1:34:39Now, we wait to see how Canada will respond following the president's new 50% tariff on Canadian goods. Given the administration's interest in increasing US exports and supposedly balancing trade deficits, I have to question the decision to eliminate the STEP program at a time when small businesses need more assistance navigating trade uncertainty, not less.
▶ 1:35:03So, how is the Office of Entrepreneurial Development helping small businesses in the international marketplace navigate retaliatory tariffs?
▶ 1:35:13Congresswoman, thank you for the question. As I've said, we support the administration's policies fighting for fair trade, which is fighting for small businesses. We have seen as we go around the country businesses that are adding shifts. They're getting contracts and they have before. I I met with a business in Wisconsin that normally
▶ 1:35:31Patrick, I'm sorry to interrupt you, but how does your office plan to continue to help small businesses increase their exports? How are you planning to help small businesses increase their exports amidst retaliatory tariffs if the STEP program goes away?
▶ 1:35:48Congressman, thank you for the question. We have limited resources and and we support we will follow the law. We'll disperse the funds as Congress appropriates them to us and so if they go to the step program, we will certainly manage that program.
▶ 1:36:04Gonna move on. Um I was honored to co-lead the Native American Entrepreneurial Opportunity Act legislation that codifies the Office of Native American Affairs into federal law and establishes an assistant administrator role that reports directly to the Small Business Administrator to oversee its operations.
▶ 1:36:21This bipartisan bill, we've also touched on it this morning, unanimously passed the House in June, indicating cross-party support for ensuring Native American entrepreneurs have access to the SBA's entrepreneurial development, lending, and contracting programs. I thought it was interesting to see that under the SBA's recently announced reorganization plan, the Office of Native American Affairs was relocated to the Office of Entrepreneurial Development.
▶ 1:36:47Will the Office of Native American Affairs have the same level of authority, staffing, and access to senior leadership at the SBA under this reorganization?
▶ 1:36:57Congressman, thank you for the question. Really, you have two things going on here. When when you look at the Office of Native American Affairs, and we're certainly committed to those programs um and that office, what what we do is two pieces. One, it has a grant function, and as we've said, what we're trying to do is pull the grant functions together. So those staff can share and serve and other programs.
▶ 1:37:20So you're not going to have dedicated staff just doing programs for the Office of Native American Affairs or STEAP or others so that so that we have greater efficiency, just fewer taxpayer dollars on just frankly paperwork um and we can surge and crossrain staff. But two, we're a small I'm going to reclaim my time here. Native Americanowned small businesses create jobs in tribal communities and strengthen local economies, often in rural areas.
▶ 1:37:46Just like my house colleagues from both sides of the aisle, I want to make sure that SBA is fully committed to helping Native American entrepreneurs succeed. So, who is leading the office? I have just a couple of just very straightforward questions. Who is leading the office?
▶ 1:37:59Congressman, thank you for the question. We we're currently recruiting for leadership of that and it is it's fully integrated. How many SBA employees are dedicated to the office before and after the reorganization?
▶ 1:38:12Congressman, thank you for the question. There there are no headcount impacts on uh from this reorganization.
▶ 1:38:18Okay, so we don't have a number. How is your office helping Native American entrepreneurs overcome barriers to accessing capital counseling and contracting? Congressman, we're actually about to uh release a a new grant opportunity for workforce development in general type of colleges.
▶ 1:38:36Thank you, Mr. Chair. I yield back.
▶ 1:38:38Gentle lady yields back. And now recognize Mr. Alford from the great state of Missouri for 5 minutes.
▶ 1:38:44Well, thank you, chair, and thank you, ranking member of Velasquez. Uh thank you, administrator, associate administrator Fitzpatrick. Good to see you again. Just a couple of weeks ago, I was sitting where the chairman is and we had a special round table uh with the Coffin Foundation of Kansas City and you were on the panel. I appreciate uh your hard work at the SBA.
▶ 1:39:03Uh as chair of the oversight subcommittee, I was really disturbed with the SBI's recent discovery of roughly $340 million in unpaid grant obligations that you basically inherited from the previous Uh this discovery demonstrates why strong oversight, modern financial systems, and accountability are just as important uh as funding these programs.
▶ 1:39:30Sir, how far back does this backlog go?
▶ 1:39:35Commissioner, thank you for the question and that that was great to be here on that panel. Um when we arrived just for example just in the women's business center program we I got with their team and I said okay what are the payments and how far do they go back that program they went back five years and that was a you know we had just been here a couple weeks um and that was at least $12 million and so that was just that one program so uh there were about 1,500 payments in that $340 million so I don't know the details but I have to assume
▶ 1:40:06four or five years
▶ 1:40:07is more being discovered as you dig through this uh balance sheet basically.
▶ 1:40:13Yes, sir. Yes.
▶ 1:40:15What What's the timeline for for getting these funds out the door? [snorts]
▶ 1:40:19Well, we're we're committed to getting them out the door once we make sure we can verify that this is a qualifying program, that we have all the paperwork, the obligation was appropriate, that we can verify that this organization is doing what they're supposed to do. But I would say some of the delay payments, some of the old payments um are the program has not submitted. They have not complied with what we've asked them to do.
▶ 1:40:44Maybe if they're missing a quarterly report or maybe their submission, the request for reimbursement is lacking either minor information or maybe substantial and and every time what happens is you have to then follow up with them. So that's 1,500 in many cases follow-ups with organizations. Not every one of them requires that, but but we're finding uh some some are perfectly fine and appropriate, but but some are not. We're having to dig to make sure they
▶ 1:41:10I'm really encouraged by u the operation there now. Uh especially justosition of the previous administration, what administrator Leler and yourself have done to uh uh number one to get people back to work. uh number two to to try to rightsize uh the organization and and number three I think to get more uh the SBA out in the heartland of America including uh our district.
▶ 1:41:34I [snorts] also appreciate that this committee has continued advancing bipartisan reforms including my AI for Main Street Act which would allow small business development centers to help Main Street businesses responsibly evaluate and adopt artificial intelligence tools. Um Mr. Mr. Fitzpatrick, how important is it that the SBA's counseling network is equipped to help small businesses understand these tools and implement them so that they can grow their and compete with the big guys?
▶ 1:42:04Congressman, thank you for the question. I we do think it's it's very important. Uh that's one of the reasons why, for example, SCORE is uh is working to make sure their mentors are up up to speed because some of them are not. But I would say the the uh it's very good that the SBDC network is committed. They received a a grant from corporation from Google in fact to develop uh pro a curriculum to train. It's a train the trainer curriculum to train their counselors. They've got thous uh a couple of thousand counselors.
▶ 1:42:34I believe 2,000 have been trained if I'm not mistaken to to a base level. About 500 are fully certified. They've been through all five classes. Um, and what that means is you're going to start seeing thousands of small business owners trained on AI. Now, again, this is going to be base level, help me understand it, but but we're it's just very early, sir, in the program, but we're starting to hear some success stories of companies applying and using AI.
▶ 1:43:00So, we do think that's going to be a critical service that resources provide, resource partners provide, and others out there in the community.
▶ 1:43:07There's a lot of fear out there that AI is going to take jobs away. Is it your uh estimation that that's actually going to help businesses grow and therefore really uh increase workforce in some small businesses?
▶ 1:43:20Congressman, thank you for the for the question. I don't claim to be an AI expert but what we are seeing is small businesses driving efficiency which so that then then they're putting their time into others maybe it's developing it's R&D it's serve it's sales it's it's fixing their operations in other ways or supply chains and so in many ways especially in marketing for example it's dramatically increasing their reach in marketing that's usually where small businesses first start so we see it as a a positive
▶ 1:43:46all right we're out of time I yield back thank you
▶ 1:43:49gentleman yields back I now recognize Mr. Osheski for the from the great state of Maryland for five minutes.
▶ 1:43:56Thank you, Chairman Williams, and to ranking member of Velasquez, Associate Administrator Fitzpatrick. Uh, thank you all for being here today. I appreciate your willingness to represent the Small Business Administration and the Office of Entrepreneurial Development before Congress. America's more than 36 million small businesses are the backbone of our economy. They create jobs. They strengthen our community. They drive innovation.
▶ 1:44:17Programs like the small business development centers, women's business centers, SCORE, and [snorts] the state trade expansion program ensure entrepreneurs have access to the counseling, mentorship, and the export assistance that they need to succeed. That's why I'm deeply concerned about this administration's handling of these programs. Specifically, SCORE and STEP recipients have reached out to my office to discuss how they have faced significant delays in receiving the resources Congress already approved.
▶ 1:44:47These delays are not just administrative. They have realworld Score chapters have been forced to reduce staffing and limit the free mentoring and counseling services that thousands of of thousands of entrepreneurs have come to depend on each year.
▶ 1:45:02At a time when small businesses are already navigating higher operating costs, inflation, rising energy prices, and uncertainty created by this administration's new tariffs, reducing access to one of the nation's most successful small business mentoring networks is exactly the wrong approach. The delays to STEP are equally troubling for export-driven states like Maryland. Step funding helps small businesses reach new international markets, diversify their customer base, and compete globally.
▶ 1:45:32Maryland's economy is built not only on federal contracting and technology, but also on advanced manufacturing, life sciences, a and our ports. Small businesses across my state rely on export assistance and to participate in trade missions, attend international trade shows, and connect with overseas buyers. When step grants are delayed, businesses don't simply postpone these opportunities. they lose them altogether.
▶ 1:45:55Trade missions are canceled, international contracts are missed, and small businesses are left at a competitive disadvantage while their foreign competitors continue to move forward. All of this is especially frustrating because Congress has already made the determination on a bipartisan and biccameal basis that these programs should exist and be funded. Which leaves the headscratching question, why has it taken so long for these grant recipients to receive their payments?
▶ 1:46:23Congress appropriated these funds, yet resource partners report monthsl long delays in reimbursement for work already completed. They deserve better than canceled trade shows, trade missions, training, and other services for small businesses. So, um I guess I'll start um with asking the question, why were these grants delayed to states? Congressman, thank you for the question.
▶ 1:46:49Uh we inherited a system that was broken and there were no controls. It was inconsistent between programs and so we owed to the taxpayers to to build. We had to build a system that was integrated, the grant system to the finance system. Um, and as we've said before, as Secretary Besson said, it's it's better to prevent fraud, waste waste fraud and abuse than try to claw funds back. But we and we are working very fast to get the funds out.
▶ 1:47:15And I would say we just just in the last weeks we actually obligated about $8 million to uh step. And so these programs are coming back on. We didn't want to make a pause. This was necessary and we we appreciate there's impact. We we know there's impact, but we're working very hard and very fast to resume obligations and payments.
▶ 1:47:35Well, if if fraud was such a concern, do you have documentation of where that was eligible, what those system changes were? Is there is there public reporting of that? Because in this role, I've yet to see anything shared with this committee or with me about why, what systems were of concern, what fraud concerns might be out there. the
▶ 1:47:52and in fact I I think just sort of on the communication point um I think part of the challenge too is that there was really a lack of communication with your partners about the delays and even why you were doing it. So I I think as people are trying to plan and work can you speak to why this these delays and these these changes weren't communicated to partner organizations and businesses?
▶ 1:48:12Congressman, thank you for the question. Different programs have different communication levels. We have for example every two weeks we've got or every month actually the SPDC program has a call with the network directors every other week they have a co we have a call with the association the board uh women's business centers have women have uh office hours weekly so we're communicating with these organizations uh the step we work very closely with actually their association um but what when I say when you
▶ 1:48:42look at fraud if you look at what SBA has had to do systemwide we we sent 562,000 loans to Treasury and DOJ worth $22.2 billion that that the B administration had flagged for fraud but didn't do anything about. So, it's understandable that we and these are smaller dollars we're talking about in in our office, but we have to make sure there's not fraud. I didn't say there was fraud. I just want to make sure there we have a system that would prevent fraud.
▶ 1:49:08Well, as we head in the the new year, I hope that you can provide more flexibility to grantees. Um, but I'll follow with additional questions as my time is expired. I yield back. Gentlemen, uh now recognize Mr. President for uh from Pennsylvania, the great state of Pennsylvania for five minutes.
▶ 1:49:25Well, thank you, Mr. Chairman, ranking member, and to Mr. Fitzpatrick for being here today through the uh arduous small commit, small business committee hearing. Uh the Office of Entrepreneurial Development is the SBA's front door for entrepreneurs and small businesses across the country.
▶ 1:49:41Whether it's providing safety training resources for manufacturing businesses in Carbondale, uh, or technical assistance for a restaurant in Pittsson to strengthen its online presence, OED programs give small businesses the tools they need to succeed. Uh, I've met with many business owners in northeastern Pennsylvania who rely on the small business development centers at Wils University and my alma mater, the University of Scranton.
▶ 1:50:06So my first question is where do you see OED's highest priorities in the next few years and where could Congress be helpful to ensure your office has the tools and resources to make that happen.
▶ 1:50:23Congressman, thank you for the question. [clears throat] Actually, it's it's uh it's appropriate that within the last I think it was about six weeks um I did a a visit in Eastern Pennsylvania, roughly the eastern half um and visited many many women's business, SBDC's, all through those networks. Um and and what was exciting is is we had resource partners that are working hard but but the great part about it is what we saw as ecosystems.
▶ 1:50:50um as e this if you look at the EDP budget $3330 million we're we're serving under under as far as counseling under 1% of all entrepreneurs um so we have a role but what I saw in Eastern Pennsylvania were it was this ecosystem of state funded local municipally funded you had universities you had fed you had our our role with the public private partnerships you had chambers of commerce you had private equity um these these ecosystems
▶ 1:51:20were really really strong and we were only one partner at the table and so one of my objectives would be to try to figure out how did that happen? How can we help replicate it because it's not the federal government's dollars making all the difference. There were great people providing great services and advice and counseling to these heroic small businesses. So that would be one priority I would say to help the nation re-industrialize.
▶ 1:51:45I I think manufacturing, food supply, as I've mentioned, these are core uh priorities of the administration. So that those would be priorities to the extent we can encourage the resource partners to provide those kind of services.
▶ 1:51:58Well, I appreciate that and something that uh we really prioritize in northeastern Pennsylvania, Pennsylvania, Eastern Northeast with a little little sliver up there, Paradise. Uh but we had heard a lot of concerns um relevant to the state trade expansion program or the step program which moved under OED following the June 2026 reorganization.
▶ 1:52:19Can you provide an update on the step following that transition and do you believe OED has a personnel and resources needed to administer the step alongside its existing responsibilities?
▶ 1:52:31Congressman, thank you for the question. Yes. Yes, we do. Um and yes, as as I've said, what we're trying to do is have like functions work together so our program managers who are making working on SBDC program for example can bring their insights and their tools and techniques and their ideas to the STEP team who are sitting right next door and we're in similar meetings and we've already seen that. For example, the SC score program benefited from that. It was really not uh up to the same standard.
▶ 1:53:01It wasn't our team. the prior Biden administration didn't team didn't hold them to the same standard, but our SBDC team helped them get up to the standard and so we'll do the same with the STEP program.
▶ 1:53:11I know there was a period of of backlog or where the program was uh essentially on a a small hiatus. Is there anything that Congress or this committee could be doing to prevent future backlogs or log jams in the administration of those programs? I mean, these are programs that our small business community and entrepreneurs really depend on. So, I want to make sure that we're doing every single thing within our power uh to provide you the resources to make sure those kinds of frustrations don't happen
▶ 1:53:39Congressman, thank thank you for the question. We I think um added complexity or added mandates would would actually hinder our efforts to drive efficiency. So, uh we we've got a professional team and administrator Leler has brought in a great professional team of of frankly I would say mostly business people.
▶ 1:53:59uh my colleagues are remarkably successful business people and and they are help helping to bring efficiency and productivity improved outcomes and so I I think we're in good good place but we are always happy to work with Congress provide technical assistance on any ideas and develop ideas
▶ 1:54:16well help us help you help us so with that Mr. Chairman, I yield.
▶ 1:54:20Uh, gentleman yields back. I now recognize Miss McCyver from the great state of New Jersey for 5 minutes.
▶ 1:54:25Thank you uh so much, Chairman, and thank you to the ranking member for convening today's hearing, and thank you to Administrator Fitzpatrick for appearing before this committee. Uh, America's entrepreneurs battle against odds that would break most people, and they do it for their families, their communities, and the promise of a fair shot. For decades, the SBA's entrepreneurial development programs have been a major help to them. One of the few tools that actually help level the playing field for entrepreneurs.
▶ 1:54:54Let's be clear, administrator, this administration is not just neglecting entrepreneurs. It is actively trying to destroy the very programs that give working people a shot at building something that's their own. That is why this week I introduced the Small Business Development C Center's improvement act of 2026 to defend and strengthen one of the last remaining tools for equal economic opportunity.
▶ 1:55:18In New Jerseys 10th, our New Jersey Small Business Development Center at Ruckers University has helped countless entrepreneurs. These are real people, real jobs, and real communities on the line. small business owners are being squeezed from every direction right now. Congress should be fighting to expand resources to them and not gut them. And also the president and your department, your agency should be doing the same.
▶ 1:55:48Administrator Fitzpatrick, do you support the administration's proposal to eliminate funding for the Small Business Development Center program?
▶ 1:55:56Congresswoman, thank you for the question. And we support the president's budget that's making the hard decisions
▶ 1:56:02once again. Do you support cuz I I know you're going to like do this whole thing and I don't really have that much time to play around like this. Do you support the elimination specifically about the small business development center
▶ 1:56:15Congressman, we will administer the funds that Congress appropriates follow.
▶ 1:56:19If I'm going to take that, that's a yes. um because you keep telling me what you support of the president and I'm specifically asking you about programs within your agency. Um what do you have to say to the more than 307,000 entrepreneurs that launched over 17,000 new businesses and helped small businesses access more than six billion in capital last year because of this program?
▶ 1:56:45What do you say to them when you're supporting the president's budget that includes eliminating this program? What do you say to them?
▶ 1:56:55Congressman, I would say that they are heroic. And we both agree that there's very few people are as heroic as small business owners. And I would say when they wake up, they have a challenge. Very few of them say, "I hope the federal government comes and helps me." They are heroes and they're fighting overcoming challenges every day.
▶ 1:57:13Thank you, Mr. Minister. I'm going to reclaim my time. Being heroic is not enough. Heroic doesn't pay the bills necessarily. It doesn't keep businesses open. It doesn't create new business owners. That's not enough at all. Um I think as your role, can you publicly support reauthorizing? Do you do you publicly support reauthorizing and fully funding the SBD DC program?
▶ 1:57:37Congresswoman, thank you. We support the president's budget. So, you don't have the audacity as the administrator to say to the president, "This is a great program. We should support this." Can you not do that as a administrator, as a
▶ 1:57:50Uh, thank you, Congresswoman. We support the president's budget.
▶ 1:57:53Once again, that means you can't, which means that you're more interested in serving the president's agenda than really helping the American people. So, thank you for clearing that up. With that, I am going to go ahead and yield back because I I've heard very clearly from the administrator. He supports whatever the president wants to do despite what is good and right for American businesses. Thank you.
▶ 1:58:15Gentle lady yields back. I now recognize Mr. Reid, Mr. Weed from the great state of Wisconsin for five minutes.
▶ 1:58:21Thank you, Mr. Chairman. Thank you, Associate Administrator Fitzpatrick, for being here today. It is refreshing to hear that you are focused on driving efficiency and you are uh putting business people in this agency. It it is refreshing and appreciate uh the better outcomes that you're getting for small business owners.
▶ 1:58:40As you mentioned, SBA conducted a reconciliation of grant payments and found the the backlog of approximately $340 million in unpaid grants that were inherited from the Biden administration. We've observed similar issue at the Department of Transportation where there was over 3,200 unobligated grants announced by the uh Biden administration. uh we've been able to chip away at that. The Department of Transportation has been able to chip away at that backlog over the last year and a half.
▶ 1:59:11Administrator Leeler even pointed to a $4 million grant during the Biden administration um that was given to the Chinese Mutual Aid Association. How does this happen? And sir, what are you doing to ensure that this doesn't happen in the future?
▶ 1:59:31Congressman, thank you for the the question and [clears throat] that these are the kind when we have massive programs uh these are the kinds of things that can happen and we're we're trying to root it out and what that is that was actually $4 million going to the Illinois SPDC and and Illinois like Minnesota is one of the statehosted uh SBDC's and as we were evaluating Illinois which had we had concerns about the state obviously we had found the bational institute of human development we we came across this Chinese mutual
▶ 2:00:01aid association which was clearly violating the terms. Uh I I don't have with me the exact amount that they were getting of the 4 million. Uh but for example, they were saying they could serve anybody in all 50 states. That's a violation of their agreement. They were saying that they were the only Asian-led SBDC. That's a violation. That's violation of the the executive orders. Um and so this is a part of the challenge with these programs.
▶ 2:00:27Um, we do have a lead center service center model within the SBDC program and so we do approve the overall budget that the service center excuse me that the host the puts in the lead center um and we see the budgets uh but frankly some of them like Illinois were trying to hide in the service centers um really DEI programs and so we're having to go our team is going through all their websites all their documents and so it's very complicated,
▶ 2:00:57but we're doing it. We're on it.
▶ 2:00:59Well, thank you for that great work. It's obviously easier to prevent these types of issues than it is to go in and and try to fix uh the bad policies of the Biden administration. And so, thank you again for your efforts. Um why was it determined and and maybe this is part of of what you're doing to correct all of these uh problems from the Biden administration um that grant managers should move from the OED to the office of chief financial chair. Is that is that going to be helpful? Uh yes, Congressman, thank you for the question. Yes.
▶ 2:01:27Um the the grants managers are the people with the warrants. They actually they they sign on the line for how much money that that is approved. Um it's clearly a financial function. Uh and my understanding is many years ago there was there and there still is an office of grants management. They all used to be off uh housed in the CFO's office, but because that was not efficiently run, individual program offices were allowed to hire their own grant managers. So really all we're doing is bringing it back to where it was.
▶ 2:01:53But that is an inherently financial function and you want them sitting under the uh our the leadership of Nathan Davis our CFO who is a three decade executive. Um but they work very very closely with our program managers. The other thing is is we actually drive efficiency as opposed to having a a grant manager that's assigned to only one program. They can mo they can serve multiple programs. So again they're crossrained so we can surge staff to where the need is.
▶ 2:02:20Unlike the Biden administration, we are focused now on being good stewards of the taxpayer dollar. Uh sir, what can we do as a committee to um to maximize the impact of every taxpayer dollar given to the OED?
▶ 2:02:35Congressman, thank you. Um when it comes to we we're happy to provide uh technical assistance. Um, I think what we don't want is is lots of new ideas that Congress and Congress thinks up to meet uh to serve a very small population. Um, and I think we need to keep it broad and serve all Americans equally. But our team, again, like I said, we're happy to develop and work with you on legislation you're developing, and our office of legislative affair is happy to work with
▶ 2:03:05All right. Thank you. Keep up the good work. With that, I yield back.
▶ 2:03:08Gentleman yields back. I now recognize Mr. Jack from the great state of Georgia for 5 minutes.
▶ 2:03:12Thank you, Mr. Chairman, and uh Mr. Fitzpatrick, thank you for testifying. As you may know, I represent Georgia's third congressional district and was very proud to bring administrator Leler to my district twice uh within the last year and looking forward for her uh potentially coming to visit again in 2026. Um, a question I have with respect to OED and the oversight therein, what changes have you made to strengthen internal oversight within OED?
▶ 2:03:37Congressman, thank you for the question. Um we have actually made major system upgrades and built a whole really an integrated system for our grant solution system. We've connected it now it's connected to our financial system. We have simplified the documents. We have common labels and our teams using similar processes so that we have greater transparency and greater integration between the grants and the our financial system.
▶ 2:04:04So that now we have oversight, we have proper controls, um, and we can see when problems happen sooner. We don't we're not going to wait years before finding it out and having to rectify the problem.
▶ 2:04:16One of the priorities our chairman laid before us um last year is let's do our best to cut regulations and reduce duplic uh duplicative behavior within government to make it easier for small businesses to thrive. So, I'm curious, um, could you share with this committee what you have done to eliminate duplicative programs and what steps have are you continuing to take to identify those that could be eliminated?
▶ 2:04:38Congressman, thank you. Um, what we've been doing at at on the the excuse me, [clears throat] regulatory and oversight level, for example, is simplifying the burdens on our resource partners. So, so more dollars can actually go to counseling and training. For example, we inherited a system where our field team, again, uh the office of entrepreneural development, we don't have staff in the field. SBA has staff in the field. The field team does what we call field reviews annually.
▶ 2:05:06Um and when we got here, we found that the field team was asking the resource partners to produce documents to them that the resource partners had already produced and supplied to our program managers. So, those are the kinds of things. Is that going to make or break the organization? No. But we're making small decisions, process decisions like that to free up funds.
▶ 2:05:28Um we're also what we're doing is we've created a new um empower to grow manufacturing in America um workforce development program and that's probably the most significant new program we've rolled out under administrator Leler supporting the president's priorities in re-industrializing America. So that's where we're taking funds and reprogramming funds that were going to inefficient programs to put it into something that's actually going to make a difference for small businesses.
▶ 2:05:55One of our proudest accomplishments this Congress was passing and enacting the uh working families tax credit HR1. Could you share with us, I mean, you're the closest to this and obviously your administration is working with small businesses every day, just how impactful the working families tax cut has been for small businesses and the the benefits it's given to American citizens across the country.
▶ 2:06:15Yes, Congressman, thank you. We we have been as you know, uh, Administrator Leler from Georgia, um, she's traveling tirelessly and meeting with small businesses, and she went around the country finding out what were their needs, what were their problems. It it's capital, it's skilled labor. Um, and they were so excited to see what was what was going on, what we could do. And and they are diving in. They're making a difference.
▶ 2:06:40And what they said is, "Leave more money in our pockets." And so she's now hearing after the working family tax cuts, I I built this building. She actually was in uh a plant where they they they put sticker big posters on the CNC machine saying this machine was paid for by the working family tax cuts.
▶ 2:06:59um and they have buildings named after it and and so she's seeing tangible results of making the uh of immediate expensing and the 20% uh for small businesses permanent. And so we're seeing that every day when when we're traveling the country
▶ 2:07:14and with the remainder of this Congress, are there any other priorities you have for us to uh to do what we can to best help small businesses or anything else coming up that you think would be helpful for us to do?
▶ 2:07:24Um we again support the president's policies. We we want safe communities. is we want lower taxes, lower regulations, we want fair trade, and we want healthy capital markets. So, anything the Congress can do to support that, we would support. Well, I appreciate your testimony, and as you noted, um one of the things we're going to be talking about a lot this late July, August, and September as we uh we soon leave to go back to our districts is just how impactful these tax cuts have been.
▶ 2:07:49I worked in President Trump's first administration and helped pass the Tax Cuts and Jobs Act of 2017 as a staffer and I saw the resultant impact just a year later. Uh the economy was absolutely roaring as it is uh continuing to do today. So I'm excited to do what we can to um accentuate exactly what we've done and accomplish and I appreciate and applaud your work uh to serve the Small Business Administration and I appreciate the chairman's efforts to convene um this hearing. So with that, I yield back.
▶ 2:08:15Gentleman yields back. I'd like to thank Associate Administrator Fitzpatrick for his testimony for appearing before us today. Uh without objection, members have five legislative days to submit additional materials and written questions for the witnesses to the chair which will be forwarded to the witnesses and I ask the witness to please respond promptly.
▶ 2:08:32If there's no further business without objection, the committee is now Thank you so much, by the way.
▶ 2:08:47Of course. No problem.
▶ 2:08:50Thank you.
▶ 2:08:51Hopefully it didn't