Transcripts For CSPAN3 Small Business Assn. Administrator Testifies On COVID-19 Loan Program 20220923

The Small Business committee will come to order. Before i give my Opening Statement in regards to today subject, i do want to express all of our concerns about the devastation that is taken place in kentucky. The flooding has been just horrible to see. We know these Natural Disasters are very, very hard on the community. Our prayers are with those who have been victimized by the flooding. We recognize that there are many needs to how we respond as a nation to deal with this Natural Disaster. I know our country will do anything they can to see the resiliency of the people of kentucky. I say that particularly knowing that our Ranking Member, senator paul, represents the great state of kentucky. Our thoughts are with them. I also recognize the Small Business relief, only a quarter of that recovery. The announcing yesterday to provide relief to Small Businesses, nonprofits, homeowners, and ranchers in the regions. Small Business Committee will work with the s. P. A. To get this information to affected areas to help the people of southeastern kentucky get back on their feet. I want to thank senator paul for his cooperation in arranging for todays hearing. It is been a challenge for the schedule. Thank you for standing up and being willing to take on the responsibilities. We certainly understand it. He cooperated with us, i thank her for being able to take on this position today. Let me think patrick kelley, the associate administrator for Capital Access for being here today. And being willing to help us understand where we are in regards to the idol program. One of the most important functions of this committees oversight. Yes, we want to possess the right policies and make sure that they are adequately drafted, that you have the resources and the direction you need. But it is our responsibility to make sure these programs are being carried out as effectively as possible. We look at todays hearing, which is to oversee the Economic Injury loan program during covid. Recognizing that this is an incredible undertaking. In april 24th, 2020, 50 billion dollars of subsidies provided for the Economic Injury disaster long program under covid. On may the 7th, a Small Business administration announced that the program and imposed 150,000dollar cap, even though that Program Allows for those up to 2 million. The Trump Administration decided to limit that to 150,000 dollar cap. We were not happy with that. The members of this committee, as well as many members of the senate expressed our concern that 150,000 dollar cap was arbitrary. We wanted to see that implemented, the full amount that they authorized, 2 million. By july 20th, the spa had entered 3. 1 million loans 469 billion dollars. I repeat that again, 3. 1 million loans by july 20th. On april 21st, under the Biden Administration, april 21st of this year, they increased the cap from 100 50,000 to 500,000 and then in september, increased it to the full 2 million. We were all very priest about that. We are very pleased that they have been able to increase the total amounts available to the tune of 2 million. The Biden Administration deserves high marks for implementing the congressional intent to 2 million. The spa administered a program and now there is almost 4 million under the covid ill program. That is quite a record. Over the past two years, spa has brought this program following disasters. It is one of the federal governments primary tools for covid19 pandemic. The 3. 9 million idle loans, the spa has issued since april 2020, they are all the loans that have been issued during the entire history of the Disaster Loan Program. It just tells you how much additional responsibilities the spa took over and how they delivered in those programs. The idol loan program is a source of hope for Small Businesses, getting the critical capital they need during the pandemic. It provides a fixed rate, low interest, long term capital that is essential for Small Businesses. They dont have the resiliency, this gives them the hope of being able to stay in business. In december of last year, december 31st, no new applications were allowed. The spa basically closed the process for new applications. Here is where the confusion frustration comes down. Winding down the program. Here is where we are really baffled as to the way the information was received from the spa. On april 28th of this year, the spa said that funding was exhausted. On may 6th, they said the deadline for Loan Modifications, appeals, and denials for reconsideration. Yet, on april 11th, we were informed by the fda that it had 1. 3 billion dollars in transfer funds from the American Rescue plan. 1. 2 billion dollars available with regards to cancel loans. We didnt understand that they gave the explanation on april 28th that the spa, the funding had been exhausted. They said the date of april 16th for excuse me, they sent down another a notice on april 16th that all workable files have been processed. What im confused about, we have a large number of Small Business owners that are in the process, with their spa eyed alone, receiving information from the spa that they have exhausted funding and all workable files have been made. And yet, they have been notified in regards to their individual cases. On june 22nd, applications couldnt be processed because of a lack of funds. Another statement by made by the spa. Yet, in june on a staff call with administrators kelly, we were informed that 800 million were added to the program. There is frustration and anger out there. You have 41,000 applicants who have never received anything. You have 125 afghans who have been approved to have received their funds. I can tell you, i talk to my state workers all the time, fielding calls from the Small Business community, they all my frontline workers. They are Small Business owners that are really frustrated, they have gotten inconsistent information from the spa. They believe their applications have never been litigated, never been completed. They want to know why. They want a straight answer. As i said earlier, the Small Business community is the Growth Engine of our country. When renovation takes place, Small Business owners dont have the same deep pockets and resiliency they need to know what is going on with their applications. If they are ineligible, then declare them ineligible. Handle it, take an appeal, but dont leave them on the verge. I heard that this hearing will have an opportunity to get answers to those questions and that we can have the completion of that loan program done in a way that represents the values of our committee and a policy that we can develop for program that is so important to Small Businesses. With that, let me turn it over to senator burns. Thank you senator. I want to express my sympathies to those families and those communities that were impacted in kentucky, thank god all of us are watching and praying for the best, but understanding that this is a very difficult time for them. Thank you for mentioning that. Thank you as well chairman for holding this important hearing to discuss the spa assistance program. Before we move forward any further on this. I cant overstate how harmful inflation has been for Small Businesses in iowa and throughout the nation. As a part of my 99 county iowa, i spoke with Small Business owners who are continuing to tell me how record setting levels of inflation have created a significant financial burden across their value chains. The most recent Consumer Price index report shows that prices increased by 9. 1 over the last 12 months. The largest year over year increase in over 40 years. Over the same period, Producer Price index increased by 11. 3 . Indicating that most Small Businesses are experiencing increasingly diminished margins, impacting their ability to provide paychecks to working families, especially those that reside in my rural communities. Small businesses are the backbone of the american economy, despite being told otherwise. Small Business Owners know the impact of inflation on their businesses, it is not transitory, and it is proving not to be short term. This inflation crisis has created a hidden value tax that is deeply impacting their economic security. This is why it is deeply troubling to me that the democrats in Congress Plan to move forward with a reckless partisan tax and spending spree focused on raising taxes to pay for electric vehicles for the rich, hamstring our manufacturers, and all sorts of other pet projects of far left interest groups. The covid Economic Injury Disaster Loan Program provided support for Small Businesses facing Financial Hardship as a result of the covid 19 pandemic. As the rush of pandemic aid went out the door, bad actors took advantage of the american taxpayers generosity. We now know fraudsters built millions and millions from s. P. A. And fraudulent loans from this program. As it transitions from supporting Small Businesses to servicing loans, i am concerned about the spa slack of a tentative to making sure that Law Enforcement has everything it needs wrongfully awarded dollars must be returned to the program and returned to the american taxpayer. Timely action is needed in order to do so. In a similar vein, the spa hasnt lawfully approved nearly 100 million in forgivable ppp loans to planned parenthood affiliates. They forgave 40 of these loans, despite being a clear violation of the affiliation rule. Yet, today, the spa has not launched an investigation into this issue, or made any effort to recoup the ineligible funds. It is critically important to protect the integrity of the Capital Access programs that are intended to provide support to Small Businesses from fraud and in eligible distributions. Mr. Kelly, thank you for appearing before us today. I look forward to working together in the future to ensure that taxpayer money is protected from fraud and bad actors are held accountable, thank you. Thank you senator. Thank you very much for your input. Im going to consent to put into the record letters that were written on may 6th, 2022 from senator and myself. July 15th, 2022. From a group of senators, headed by senator cornyn himself. In regards to our concerns as to why certain information was given to our constituents when we were told there was money available. Administrator, thank you for being here. As i pointed out earlier, we appreciate you research on this program. The office is pretty important to Small Businesses. The role of that committee has quadrupled, making more than that since covid19. We know that you have stood up an agency that was meant for a certain purpose that was really tested to limit, we thank you very much for that, thank you for being here you may proceed. Great, thank you chairman, thank you senator. I do want to extend my sympathies to the commonwealth. Obviously, 35 families today no longer have a loved one. There are hundreds of others who have not been found. As the chairman mentioned in his Opening Statement, President Biden declared a disaster area for the five counties. We will work to expand that if necessary. Obviously, we will work to help everyone. On behalf of the administrator, im happy to be here with this committee today to answer any and all questions. My name is patrick kelly, im associate administrator of the office of Capital Access with the spa. I have been since march, 2021. I would echo the chairmans comments regarding the work at the spa. It truly is a privilege for me to have a Second Opportunity to work with people during a time when so much was asked of them for the last 24 months. These are some of the best people ive ever worked with across the private sector and Public Sector. I will continue to enjoy the opportunity to serve the American People. We oversee a bunch of different economic programs and covid idle survey today. That particular program, as mentioned by the chairman, serviced about 4 million Small Businesses and roughly 400 billion in finance. The program also, 72 of those loans went to Small Businesses with ten or fewer employers. 50 of the recipients were not able to access the ppp program. One of the Great Success stories about this, what i have characterized as an uber credit program, is the success getting to all corners of our society. In addition to the covid ivo program, i will provide an update for you and the other members. We are working on forgiveness with the ppp program. We are approaching 2. 4 million loans out of 11. 4 forgiven. We expect the remaining million will seek forgiveness this fall as the april may june 2021 ppp loans hit their ten month mark and begin to make payments. We have provided forgiveness to assist 1500 lenders, which has amounted to 2 million loans being service by the spa on behalf of lenders and borrowers to assist without forgiveness. That particular program is also coinciding with the Restaurant Revitalization Program. I do want to thank the chairmans leadership on the restaurant program, we work to rule that out. With members of this Committee Staff as well as the house, 100 and thousand businesses were supported. The last thing that i will add before we get to the questions, which im looking forward to hopefully helping folks understand what we are trying to accomplish. It is to provide some context to the breadth of what the sba was asked to do. They estimated that in 2021, the total for Small Business and Medium Sized Enterprises was receiving capital from any source, any private source was under 650 billion dollars. In the covid idle program, in 2021 we put out 200 billion on top of the hundred and 67 million in 2020. It is absolutely the case that the spa has played a large role as the administered has work of this committee. Thank you. Again, thank you. I agree with that last statement that the spa has played a large role, theres no question about it. Its definitely in the pandemic and i agree with you and Civil Servants. I give a real thanks to the incredible amount of work that they have been doing to get help quickly, both with the ppp program, the idol advance program, and later with the restaurant program. It was incredible, it saved Small Businesses. That they exist today but would not have for the ability to get themselves out. As you pointed out, the bills were developed by him. This hearing, in regards to how many idle programs have been wound down, there is interest to see done right. I want to get the numbers right because we have 2. 9 million loans that were given out that we think 41,000 people who are looking for determinations that have not yet been done. We have seen at times the spa say that these are unworkable. To our knowledge, those 41,000 Small Businesses have not been informed as to their stats. They are sitting out there, hoping that theyre going to get a positive response. But they want a response. They want to move on with their life. They want to know whether they can or cannot access the funds. They have to play with their businesses. We believe there is 41,000 that are in that status. We have 125,000 Small Businesses that thought they were going to get their funds. Thought they had been approved for the trans, they havent gone there funds. Then they get notice is that there is no funds available. But yet, weve been told that there is money there. The funds are there, so it seems like they are not getting accurate information, which is extremely frustrating. They call our office, they call your office, they call every senator in this country with legitimate concern. Can you clarify the numbers for us . How many applications are still pending . Are they workable or not workable . Why havent these Small Businesses been notified . Are their applications that have been approved but have not been acted upon . And for what reason would that be . Yes, i will get you all of that. First, i want to start off by talking about hundred 25, 000, we can address that. The 125, 000, folks have obligated funds to again. They can close them today with the assistance of a spa District Office, directly themselves with the call center for the specific covid idle program. That money is there, we will not cancel those funds. Obviously at some point, later this year, we will send out notice and start to see if folks want to seek this. Obviously, it is one product that has to be payback. Obviously, very favorable but nevertheless a loan product. At their discretion, each of those hundred 25,000 can close that loan. I welcome the opportunity to make sure that anybody, any of the offices are clear that those folks have money. Those ones are there, there is no problem with lack of funds. Correct. I start there to then move to the 41,000 because prior to my testimony in the house, that was the make week of the may 15th. In my testimony, it was timely because we were in a period of time where applications received honor before may 6th, i indicated in the house that there were roughly 51,000 of those. Two thirds of which were roughly loan increase requests. A third of those were reconsiderations. I said during that testimony that we would get to all of those files, prior to may 16th. We would decision those files so, 38 of two thirds, if we are keeping track, 30 of 40,000 files were decisions and were approved and obligated funds. They either sit in at 125,000 dollar bucket, or people have closed their learn loan and been dispersed. With respect to the final third, the reconsiderations, ive indicated at that time, and how true, that reconsiderations our decision successfully, meaning you ask for reconsideration, the s. P. A. Reconsiders it and says, you are right. Two out of ten times the s pa reverses it. It is important to understand that 92 of the 41,000 did receive a loan and got a decision in 2021 regarding their request, or in 2022, it had the indicated which documents would be missing, which is one third or two thirds of that number. I realize im throwing a lot of data here. Mr. Chairman asked to get into the numbers. Two third of that number have not file taxes from 2019. It is important to understand that you can file an extension and you will be told within the fall of 2020. These are 2019 acts with no filings. There was a filing once in 2021 when the program resumed a historic practice at the s. P. A. Program. To his comments about that, historically, the s. P. A. Has always evaluated taxpayer. The cares act required the s. P. A. To forego that provision and the economic aid act the place that. In addition to not filing or filing late. There is the third category of violence, who upon learning that their increase request was not validated by the filing that they put forward for 2019, they offered an amended fire return that coincided with the requests that they were seeking. It is really important to understand that yes, there was communication, challenges with trying to indicate first that we are seeking all commerce in the five months of filing the programs formal conclusion. 12 31, 2021, was the last day that in program by law anyone can submit a new application. As chairman mentioned, since 92 of the loans were 3. 6 million from 2020, they had from april of 2021 until may 6th of 2022 to seek the loan increase. The reason i use the april timeframe instead of the september 2 million threshold is because the average loan increase by 200 million. It is absolutely the case that these folks are rated, it should be mentioned that 75 of the 41,000 vials are full codes that congress indicated were not impaired by the pandemic. In the economic aid act, congress designated six specifically which was appropriate. Hospitality, restaurants, et cetera. 75 of the remaining requests are from industries that were not designated as significantly impaired by the pandemic. I went money for six years to Small Businesses for a Community Bank based in wilmington, north carolina. The ceo of that company lied to us. The only two questions that he cares about is mi approved . And when do i get my money . I understand that from a boroughs perspective. No is a sub optimal outcome. Given the abuse this committee has highlighted for the last year and reforms that the economic aid act, and the Biden Harris Administration extended to address fraud abuse, we cannot extend loans to folks who have not paid their taxes. I understand exactly. Not all the documentations there, its not always the Small Business owners fault. They may very well be entitled, it just happen in april because of the pandemic. I am interested in how many fouls today are there still open today with the Small Business owner, he has not been informed. If you reject, they can file an appeal. They have that right, but if you dont reject, they are in a open status. They dont know what the future has. How many idle applications are still pending where there hasnt been a finite answer given by the Small Business administration. Chairman, every single person, and i know this because we have worked with your staff, Committee Member staffs on of daily basis, and colleagues here from legislative affairs on a daily basis. We receive email accounts both, you are office and our office. In those email accounts, i read them daily. Believe it or not, i read each one each day because it is an easy way for me in Public Service to have an impact that they. It is directly tangible. I can either help somebody unlock something, or i can get to a solution. In each of those email correspondence, there is an indication by the borrower of multiple instances and several different times over the balance of however long they have been seeking that. Interaction and communication with spa employees, directly with the Loan Officers themselves. To say that they have not been notified of the challenges facing their files, i believe it understates the totality of the circumstances. Where in the most recent cases, since the program stopped reconsideration and requests in may. The emails that come in our either, as i said, obligated league funded category in which we work to assist them with how they can close that loan, if they want to go that low. Or, they are almost entirely in the category relegated to a tax issue. 41,000 is obviously a deafening amount of voices because if you took 50 states and divided by that, as roughly 800 calls. Your colleague on that staff call that you mentioned, he referenced 1200 calls, which at the time, if you divide 50 by 1200, that is roughly 61,000. It is totally understandable that your offices are frustrated that the borrower who, in 2020, the federal government allowed them to seek a loan product without any verification of whether they had filed taxes or demonstrated the growth sales receipts numbers, integral to the Economic Injury. They say to us collectively, you give me money therefore i am eligible. In the sense that there are business is small, the majority of these are ten or fewer employees, which by any definition or small. In the sense that we can make a reasonable reassurance of repayment from the cash flow of this business, and verify that they filed their taxes, we cannot do that. I understand what youre saying. We are two ships passing in the night. We are hearing from the borrowers that they requested additional information, they supply that additional information, they did hear back from the spa. Their application is still pending. Now they hear that the money is available, then they get a notification that they are unworkable, but they think their cases depending. That is where the frustration is occurring. We need to know the numbers. I will come back on a second round. Thank you mister chair. A quick, i hope is easy, question for you. Do taxpayers deserve a spa that is transparent and accountable to americans and how it spends their money . Yes. Thats great, thank you. I do agree with that as well. Your office has received recommendations from both the Inspector General and the g a o on both ppp and covid idle, many of which are pretty common sense, including continually assessing the covid idle program and developing portfolio level Data Analytics to help identify fraudulent loans and fraud risk factors. Yet, these recommendations and others have remained open for more than a year where watchdogs have identified fraud. Law enforcement prosecutes fraud case after fraud case. Ive heard from a lot of iowans who say that ppp and covid idle loans were helpful for them in the early days of the pandemic, but when we listen to Inspector General, he is right when he says that the ppp and covid idol have unprecedented levels of fraud. It has been helpful, but there is a lot of fraud ongoing in these programs. We have all seen this story about the bmw with the license plate, ppp loan. This is manhattan and new york. We have seen so many of these cases. I dont think the program was there for folks to buy brandnew be mers. As the program is winding down and theyre shifting to the fraud identification face, im concerned that since everyone cares about mitigation and prosecution except maybe the folks in your office. We really need the s. P. A. To step up on this. Will you commit to implementing each of the recommendations that they have made to your office so that we can actually limit the waste, the fraud, and the abuse of our taxpayer funds . Yes, and we have. What inspector has also mentioned is that under the Biden Harris Administration weve made great progress under the items you have identified. Specific to the covid idol program, there was, what im going to do is list the choices made in the Previous Administration during 2020 that were not in place when these changes were made in 2021 by the Biden Harris Administration. First, verifying business address. There is an easy, fast, speedy way to verify u. S. Postal address. They did not do that. I pieced out address, again, the theme that i will continue to come back to is false distinctions that you could not have speed without certainty. We restored speed and certainty. We made 6. 1 million ppp loans in the same amount of time, same amount of months. But we did that with a fraud framework ahead of authorization. In addition, we have talked about the 40 506 team, Congress Come connected. As it was mentioned in the fines in 2020, the rabid portal, borrowers were allowed to switch the bank accounts. That is a red flag for any Financial Service company. It is not something that is necessary for speed. We restored preventing that from happening. You see that actually in the comments regarding the disbursements going over to the treasury. And some of the challenges with the banks, suspicious activity. In addition, we restored the rule of two and manual refusal for all false flags related to individual files. This is important because the ig referenced the covid idle program where despite having fraud flags prior on those particular loan applications, they were waved through in 2020. With specific to the ppp program and the challenges that were highlighted there. Specifically the secretary of the treasury required s. P. A. To process authorizations in realtime for any bank or Financial Service company, for Payments Company that is near impossible. There is three core Accounting Systems on earth that bank systems used. Jack henry, if i asked, im sure there are other brands but those are the three. They cannot process in realtime reconciliation. By allowing authorizations to be rendered in realtime, which they never have had before and will not again, it lead to 50,000 loans. In addition, there was processing voices that were made in phase two that were provided to banks to move through, which the ig has correctly pointed out, it led to a host of issues with respect to duplicate loans as well as challenges with respect to forgiving loan calculations. I can keep going, but what i want to assure you senator is the under administrator guzman and under the Biden Harris Administration, we have worked with the ig every day. The reason that this committee does have the data that chairman has talked about on both programs, on all programs, is because unlike our predecessors, the access for the American People to the data, we have made it all available. It is absolutely the case that we will continue to prioritize use. It is something that you do not have to sacrifice speed. I want to assure the boroughs that to my point about am i approved, who do i get my money . You can go fast in 24 century, but you can go faster with sensible controls all through automated thinks. The last thing i will say on this particular point on ppp. We put in the beginning of january 2021, for 6. 1 million ppp loans, a Fraud Control framework which enabled us to validate all manners of eligibility for clients, as well as knowing your customer principles of business identity. Before you could get a ppp three second draw or first draw loan, whether or not the bank, non bank lender ran a fraud protocol, the agency banned that fraud political. Through the holes that we placed on them, the lenders needed to work with us, they need to work with us to overcome where we did manual reviews depending on the issue. Those things went through fast, and again there were 5. 1 million loans in 2020, no controls in six months. 6. 1 million loans in 2021 with controls. The thing that i have been looking for to talk to, i appreciate this opportunity today, is that speed can coexist. You can do emergency relief. The last thing i will say on behalf of the Civil Servants of the s. P. A. Is really important for them. You would be hardpressed to find an ig or g. A. O. Report ahead of 2020 that has fraud waste abuse featured prominently in it. There are improper payments for sure, the lender made a mistake on the eligibility or some type of rule, but you would be hardpressed to find that broad abuse. 2020, there were choices made to prioritize speed at all costs that in my opinion did not need to be made. They are the outlier event that caused the challenges that we all regret. I say that completely admiring the Prior Administrations, everyone has been involved. Ppp and covid idol were unbelievable programs to help main street Small Businesses. It is the case that fraud waste and abuse will continue to do that, thank you for indulging. I appreciate that. I do hope that once the fraud waste has been identified, then we go to the next step of prosecution or recruitment. Again, i will go back to my Opening Statements as well. We do know that there was an error made with planned parenthood and the affiliation rules. But we havent seen any attempt to recoup those dollars. It is one thing that we can identify, and then to actually go back and correct the problem, i think that is really important because whether it is ppp or the auto program, the loan program, obviously there are still those who have applied, who would like to see those dollars in their businesses. One way or another, we can come back to that certainly, i will have some followup questions because i do know that you have a fraud Risk Management report which is good. I want to know a little bit more about this as well. Thank you very much mister chairman. Thank you. Senator, thank you mister chairman. Whenever there is a Natural Disaster, s. P. A. Is among the first agencies to step forward. I want to thank you and the administrator koosmann, all the people who work at the s. P. A. For being there as they have been. It is clear that the Prior Administration did not set up adequate protections against fraud, waste, and abuse. I get that you are doing everything you can to ameliorate those deficiencies. The ppp an idol were massive, massive programs. In fact, you have about 4 million in loans that are coming to you. Did you not request Additional Resources for so s. P. A. You can process these loans that are coming to you . Yes, i believe the 2023 budget makes a request for servicing. What youre referencing is in october. Less than 60 days from now, we will begin to Service Payments as the committee knows, and as you know senator, there is three months of deferment. I am pleased to report that a third of covid idle recipients have already made payments during this time. That is encouraging. But yes, we will begin servicing that number. It is referencing in his opening remarks, it is a massive number. We will need resources. Mister chairman, i hope that we are going to be supporting the administrations request for Additional Resources. Otherwise, youre going to have, i would say, the word kiosk comes to mind. The s. P. A. Will do its best with its resources to administer all of these loans. You have heard a lot about people in our own states, weve all been getting phone calls. The issue for me is that there are people who applied for these loans who are told that things are going well, there were following up on all of the requested information, et cetera. And then finally, to be told by the s. P. A. That the program ran out of funds. The next thing they heard was, no, the issue for this particular applicant, an applicant called health corporation, which is a Nonprofit Organization that takes care of health care needs. The next time they hear this, they are actually in a situation where they had made exaggerated projections of 2021 expenses and did not file their nine 90 tax return, they are getting two different pieces of information. How what are they supposed to do . This sounds serious. When you are exaggerating your costs, that sounds like fraud. What are they supposed to do . Originally, they were not told that they were in a situation where they had to deal with fraud. First of, yes, not filing your taxes is fraud. It is a criminal offense. For this particular program, 2019 return is the return that we are leveraging. Those returns needed to be filed with extensions by the fall of 2020. The reason there is a disconnect, i believe, and i work on this every day, i just want to stay for the committee, it is important to say personally, i come from a town in manchester, connecticut were the medium income is 61,000. It is under the national average. In my community, behind us was a dentist, across from us was a steak corner, around the corner was a franchise for gary. Obviously, our favorite. I want people to get capital. As does the administrator. But the reason that they cannot get capital and believe that theyre eligible in the first place is because they did get capital in 2020, even with those issues. It is important to understand that that original choice, with respect to the tax filings, has a ripple through the process. Assuming that, is there any way for this nonprofit to remedy the situation . I think they can exaggerate a projection, that is probably in the speed, but whether or not they filed a nine 90, that is an objective criteria. Is that something they can remedy so that assuming they still need these funds and have funds, that they can pursue funds . First off, obviously it has been indicated, this is a welfare program, we take extraordinary lengths to get their. I think it is appropriate for the Public Sector to for example, originate loans with a five 70 credit score. Which of course, in the private sector would be difficult to get. On this particular issue though, on whether or not you file, and the fact that the increase request that you are seeking is not supported by the Tax Information or Financial Information provided, i believe we need to draw the line there. I have recommended to the administrator that that is what we do. I guess the last thing i would say is, there is no comparable process in the private sector for appeal or reconsideration. I will say, every time that i said yes when i was landing, when i land half a billion dollars to federal Government Contractors across the country, minority, women, veteran owned, every time i said yes i was the greatest banker in history of the world. The next day when i said no, i was the worst banker in history of the world. With regard to this particular nonprofit. The answer is, no because they didnt file. They either filed an i90, or they didnt. If they didnt file that, the laws there increase the request. That is my conclusion. We just need to know one way or the other i would say. Okay, so thats the situation. Thank you, i know mr. Chairman that with the millions of loans and everything that happened with the ppp and the idol program, there are people who came out of the woodwork to take advantage of this program. Am i one last question is, who is prosecuting the people who were engaged in fraud in these two programs . As you know, senator referenced this, the Biden Harris Administration designated a team at doj to focus on fraud, waste, and obese programs. Both the house and the senate are moving bills along to extend statutory limitations which obviously will support their efforts because as the license plate shows, folks do need to be held accountable for where it is appropriate. You have any idea how many people have already been indicted . I dont, i do want to clarify something, i know this committee knows. Youve been reaching out to the public. S. P. A. Its not an enforcement agency, unlike the sec, unlike the Bank Regulatory bodies, we administer programs, i know everyone knows this, we rely on the office of the Inspector General primarily. And of course, they work with secret service, the treasury, as well as doj, department of justice. We can assist the one of the primary ways to do that is by allowing Inspector General personnel on a daily basis to have access to any and all data related to anything across all these programs. Administrator guzman, being sworn in, actually proceeding her when i took my position on march 1st, we restore that. The ig has daily access to anything and everything they want. Obviously, as the senator referenced, the administrator has designated the Front Office Person to coordinate with those other bodies on this. She meets every two weeks with the Inspector General and her directive to us has been, it will continue to be to be completely open, completely cooperative. I want fraudsters put in jail because the 32 million Small Businesses are the people that employ two thirds of this nation. They were my neighbors and my friends, and my relatives going up. Thank you, thank you mister chairman. I will point out that senator paul and i were together when the legislation passed the senate this week. Extending the statute of limitations. Senator rosen. Thank you chair and Ranking Member hurst. Thank you for being here in testifying, the work youre doing. We are here today because a little over two and half years ago, the congress had to respond to a pandemic with the promise, a promise to a Small Business owner that we would not let them lose everything. As a result of the Global Health crisis, completely outside of control, completely out of control. We made this promise through programs like ppp, the Restaurant Revitalization Fund and of course idol. It has provided relief to nearly 40,000 businesses. We are grateful for that. It was particularly important for the smalls of businesses because it allowed them to get support directly from the s. P. A. Without going through a bank. This programs ability to help struggling Small Businesses is why i introduced the bipartisan idol Small Business act which aim to eliminate boring caps on idle loans to fulfill our promise of idle advanced grants and replenish, replenish the funding for this program, which i know the chairman supports. I am proud that my it resulted in raising idle on cap up to 2 million. Through all of this, Small Business owners, of course they face numerous challenges, over 90 of challenges in working with s. P. A. And idle programs, it was really important. After the Current Administration has corrected many errors of the Previous Administration, i applaud you for that. S. P. A. Seemingly were nagging on their promise by ignoring many of the qualified applicants who began their idol application process prior, prior to the may 6th deadline. I think that we have to restore trust. You aim to serve Small Businesses, you come from a small town, you know all the Business Owners there. Ice cream was your favorite, i think thats a favorite for everyone in the heat of the summer for sure. But how do we restore trust between the s. P. A. And Small Business owners who feel they have been unfairly boxed out of this process. I think that has to do with the communication, can you speak to the communication that we need to have between s. P. A. And the Small Business owners who applied . Yes, i can. First, they tell me that it is your birthday. It is. Happy birthday. Thank you. I will communicate that first. Ice cream, maybe. [laughs] ill tell you, dairy queen, pretty good. What i will say about communication, there is no question that for 24 months there were peaks and valleys in terms of the pluses and minuses with the way the programs that were communicating. We have talked about structural expectations set earlier in the hearing. You referenced this, which is to say that you tell someone in 2020 they can show for something, there will be documentation to validate the file. We give you 150,000 bucks. We did 2. 6 million in four months. The expectation said that this must be something that i am able to access because i want to the federal government and in 2021, when i come back and im asked to proffer evidence now of tax verification that goes to the Economic Injury. By definition, you can change the expectations. On the basis of communication in anything, what expectations do you set and if you change those expectations. And kind of opportunity or information from you about this . One of the Silver Linings to communication, i will call this one a pluses, has been the open reading of email correspondence with borrowers. In the private sector, if any email Marketing Campaign i was involved with got high single digits, we were very excited. During ppp it would climb into the double digits. And sba, for covid idle programs, we were getting each week 60 open rates. Thats really important. We see this evidence in the correspondence to your offices and our offices that they are understanding and processing the request in the communication. The other expectation about communication is that in a loan product situation, there is, yes, are you a Small Business . Thats a foundational principle. But then, there is, do you have reasonable reassurance of repayment . Its there in credit decision. It differentiates it from ppp, where we did not have a credit decision. We had a formula. And that the lenders executed. We did not make a credit score. Which is one of the reasons that, youll recall, lenders were concerned in phase one about lending to business borrowers who werent existing customers. I think one of the things we improved but was too late in terms of communication, certainly for a program that had been opened well over a year at that point, in august of 2021, we made reforms to the rapid portal to enable the District Office is to have direct access and transparency to see whatever the loan officer or any other processing employee in the cdc and dallasfort worth could see. That was really critical because it helped expedite casework from your offices. It empowered them. One of the mistakes prior to that was the fact that a person could pin ball from the call center to the District Office and back in an infinite loop. That is deeply frustrating. And its regrettable. In september, we switched to call center vendors. The vendor that had been selected, the contract staff augmentation in Call Center System that had been selected in 2020 had no Service Level agreements for kpix. What that translates to is we what was the call response time, how quickly did you pick up the phone . We dont know. How quickly did you disposition it in a favorable outcome. , we dont know. And so, again, choices made at the outset proved to be really devastating across the span of time. In addition, the portal itself had a twostep process which from a technology standpoint was inept, quite frankly. It requires you to come in, fill out the Application Form in an intake and then wait for a response. An emergency situation, as you guys have told me, and i totally agree with, silence is deafening. If im waiting to be invited back into the portal and i dont know, i logically start a new application. The system and then detected that you are applying for two instances at the same time so then, of course, you are now on the call center time. Again, there were choices made in 2020 from a speed standpoint and designed standpoint that created systemic issues that rippled forward. It leads to this day because the constituency interactions we receive are still trying to make heads or tails out of all these we disparate signals that we send. From administrator guzmans standpoint, its never again. The office of Capital Access is now charged with reforming all this in the core Natural Disaster programs. Thank you very much. Look forward to seeing more streamlined communications and processing. Mister chairman. Senator. I was so glad to yield to this, senator from nevada on her birthday. Make sure she didnt have to wait. We all wish you a very happy birthday. We try to do our best. Mr. Kelly and i, administrator guzman, i have so much respect for and i think you are acquitting yourself well today. Whatever im saying, whatever agitation i bring to my questions is not a reflection on you. I recognize i view you as the solution not the problem. Its hard to look at a system like this where a communication and the system has been so dysfunctional and not feel tremendous aggravation. Senator rich and i introduced a bill to require the eidl program to meet exact im lines. Im sure youve seen it to make sure its communicating in a timely matter. In march the sba started work on g. A. O. s july 2021 recognition to communicating with Disaster Loan Programs participants. The resilience in this country these wildfires, these flights are not, are going to continue. The sbas strategy does it include the timelines senator rich and i had in our bill . I apologize, im not able to recall exactly the timelines. I will endeavor to state some timelines. You can tell me to speed up, or as senator cantwell did last spring with respect to what we are doing in that disaster loans, 83 of disaster loans are under 50,000. Most of them, they are consumer and idle loans for business. There is Property Damage on the consumer side. Those are unsecured loans. We ought to be in the 21st century able to approve decision and disperse within 72 hours or less. Im sure right now there is somebody online saying, well, you know, kelly, i could do it in 24 hours. 72 hours sending the disbursement list over to treasury, we can get to that. There is, historically, a Natural Disaster, challenges between the way the fema systems and the sba systems they are not integrated as they could be. We are working with fema on a road map of Application Program interface to allow for those systems to integrate with one another. Thats important because we often talk about a single point eventually so that i dont have to go to multiple different places. In the modern Technology Architecture with you can have no wrong entry point but maximum reuse or optimal reuse of data you have put in. From our standpoint, i would look to the Restaurant Revitalization Program as an indicator of how administrator guzman in term in timeliness. That particular program, we had apis published for private sector tools, private sale vendors we enlisted other point of sale vendors for source of truth data that went to the Economic Injury calculation. We were able to process 60 of those applications, mobile, and we were able to at the discretion and election of the applicant. We were evil to process those in less than 20 minutes. If you think back to our f in particular, in terms of the totality of administrator guzmans vision and execution, in comparison to the shortcomings where discussing today, over the two years with respect to covid idle or some of the legacy issues, its quite remarkable and promising because we did not have that tax issues that we see. I agree. I think thats exactly correct and one of the reasons i admire her. And her work. Let me ask you another question a little bit connected to that. You mentioned square this is pie in the sky, future, a way that you guys work with a fintech. They claim that they now have so much information about their customers that they can give a more accurate loan, they can tell whose credit worthy, and that they are giving many, many loans but i turned on by the sba. Is there something some way to partner with that to kind of use that capacity in the increased accuracy and get a better performance . Yeah, so, yes. That is underway and for example under the hood, so to speak, in the back in for the restaurant revitalization portal, we integrated a fintech provider called plaid. Vlad and they will this at the election and discretion of the borrower to integrate through api with flat to validate their bank account. If you wanted to forego that, we did a manual review to validate the bank account. Going back to what was not done in covid idle where you could switch your bank account in 2020. We were able to offer speed with certainty. In addition, we integrated the 40 506 t process in line, in the application work flow leveraging electronic signature. What people will tell you when they design User Experience for product in Financial Technology is that you dont want to break the work flow. You dont want somebody to go out of that experience. You want to complete the task on hand. Those are two examples. But from the standpoint of fraud and abuse, we were those are very important Public Sector criteria. We will able to access thirdparty databases like texass public records, research, plaid, et cetera. There are enormous opportunity in Natural Disaster, which we are focused on right now and into our coor programs to do that. Yes. Great. Perfect. Made my day. Thank you. I yield back to the chair. Senator shaheen. Thank you mister chairman and thank you mr. Kelly for being here and all the work sba does. Its my understanding that sba has argued that no funding remains to continue to approve it Loan Modifications or previously denied applications. But, and drafting the bipartisan infrastructure bill, congress very clearly intended that sb8 use transfer authority granted by that law to reallocate funds from targeted idle Grant Programs to the ad loan program, so that businesses who were eligible for that assistance will be able to receive it. In the past, as we has used that authority. Why was a decision made, in this case, not to use that authority again . As we indicated, we did use that authority, for example, to process applications that we received on or before may 6th cut off deadline. We use both cancellations, which i think the chairman referenced, as well as funds that you moved and coordination with onb into that fund. There is no question that communication from senator individual basis about funding being exhausted was confusing. However, when we speak to that inventory that we are talking about today, the 41, 000, there arent any instances that would be approved in obligated funds. Those files have been looked at. There has been communication to those borrowers about what was missing, what was insufficient, and into thirds of the cases, it is a tax related issue. At this point, we would not move funds because we dont see the inventory of demand. Again, and the reason that that is the case, 92 of the population has had alone since 2020. As of april of 2021, with the average increase being 200, 000, they could seek a loan increase, and many did. But only 20 of those eligible for an increase ever responded over the course of 15, 16 months, roughly. I understand again, and i want to keep reiterating this, i understand why they are frustrated with outcome. In terms of the sbas responsibilities to their petition for an increase, we have given them multiple, and in some cases reconsiderations or appeals. We are not going to be able to get to yes on their individual file. I appreciate the effort but i beg to differ on a list of applications we have worked with, our District Office, on. While there are some i dont want to use the word questions but there are some disparities. There is at least one case as simple as an email address that was different but. So i guess you have not convinced me that and while i recognize there are some cases that, you know, for various reasons human error dont get reviewed in the same way we would all like, i am still concerned that we have businesses out there that qualify, that are not being acknowledged by as b. I dont know how to resolve some of those cases but i do think its a concern. Its an ongoing concern. As senator rosen talked about trust, i think that is a real issue that many of our Small Businesses still have at this point. I want to ask you about an issue that is not directly related to idle, but its one that concerns me a great deal because we i think that District Offices at sba has around the country are really important. I have lived through recession in New Hampshire where the only thing that kept our saw businesses afloat was the sba and the work of the District Offices. Particularly during the pandemic, they were really important. And im really concerned because i am hearing that there are summit sba who would prefer to see a smaller footprint in the more power consolidated to washington and that data that weve seen shows mark drop in operating budgets in District Offices, including New Hampshire. Even as some of the other programs that help our Small Businesses are being phased out to have a further reduction in the ability of our District Offices to help Small Businesses doesnt accomplish the goal that we all share. Can i ask if you support the one that is being done by sbas District Offices . Would you commit to resist efforts to resist staffing and operating budgets salaries and expenses overall . First, yes. I enjoy working with the District Offices. I had five years during the Obama Administration where i traveled quite a bit more to those District Offices. Understand their value at the point of sale. One of the things that we have done, for example, in the Restaurant Revitalization Program was we integrated 100 District Office employees directly into that decisioning process, as a response to some of the shortcomings that were identified in covid eidl previously at that moment. In addition, as i mentioned for covid eidl, one of the things we work with the field on was getting them access to the data regarding covid eidl so they could assist borrowers directly. There is absolutely a place for District Office folks to help us succeed on the mission. As to the second part of your statement i think it was yes and i think what you are saying it is a budget is about prioritizing choices. You are suggesting that the sba would have its funding to do this full suite of things. Quite obviously, then, the District Office should be you, know, funded as it needs to be. Those decisions, obviously, are above my pay grade. I think everyone, and certainly administrator guzman, to your question, in her hearing this spring, i think indicated support for the field office. She did. I have had a chance to raise that with her. Yet, we dont see a change in terms of the information that we have been getting with respect to how the money is being distributed and the fact is that those District Offices are still being told they have to reduce their operating budget significantly. I think that is a concern, as i said. My understanding of this particular issue is that and these guys are about the jump out of their seats i dont understand appropriations. But there is an Appropriations Committee. What has been related to the agency is that these things are going to be sorted out as the process moves forward. Thats not a very informed answer. But what i took that to mean, in relation to prioritization, is there is an understanding that there is a lot of opportunity, a lot of need across the sba footprint, given the balance of what we have to attack. Thank you. As an appropriator, i will be watching this very carefully. I dont appreciate having to budget submitted that is being done with the idea that we are going to cut this area because we know congress is gonna put that back, so that we can find something else. I would hope that in the budget process, we would all be as honest as we can about what the priorities are and what we should be finding. So, thank you. I appreciate your answers. Im gonna follow up on some of senator shaheens points. I want to acknowledge that we spent a lot of time together in developing these programs. With senator rubio and senator collins. We really did a lot to get money out quickly. We recognized the verification system would be lax because we had to go through all the verification systems, the businesses would be shuttered and closed for good. We knew that there was gonna be some challenges in doing this, when we created the program. Im also gonna follow up some of senator shaheens point about individuals that are not have followed the rules and havent caught in that clarity youve given us today. But first, let me just point out i agree. We want to get money out quickly, we dont want to see any waste, fraud, or abuse. But we want to get money out quickly. When you look at the size of the ppp program and the eidl programs, and the restaurant program, the independent program, the amount of fraud is very, very small. Lets be clear about that. We dont want to see it at 0 , but the percentages are very, very small. Under waste, fraud, and abuse mistake, a lot of this is not fraud, as you pointed out. We should recognize that Small Businesses do not have the same degree of capacity that Large Companies have. At times, mistakes are made. They are not intended. We have to correct that. Lets not call it fraud when its not fraud. I want to clarify those points. Also, compliment this administration for having much more transparency. We have gotten much more information. And you know senator ernst might get upset about this, it wasnt a high bar to meet under the Trump Administration, because they did make anything available to us. We appreciate the fact that its been a much more open process under this administration. In regards to planned parenthood, i didnt know we had to talk about that again. This is the affiliation rolls. Affiliation rules apply not just of planned parenthood but all the nonprofits. We clearly want nonprofits to be eligible. We made nonprofits eligible. The affiliation rules are the same for planned parenthood as it is for the boys and girls clubs, et cetera. There was never a determination made that money should not return. Ill hearlets be clear about th. I know we will hear about it again. I wanted to clarify that for the record. Let me get to the main device of todays hearing. It is clear that the sba did send out communications saying applications were being denied because of lack of resources. But as you have clarify today, thats not the case. Correct . Yes. In all those instances, both those messages, i believe, or communicated to the bar. Now we have 125,000 eligible Small Businesses that have been informed that they are entitled to receive additional loan money. Your testimony today is its up to those applicants to get the documentation in in order to complete the settlement of those loans. Its up to any borrowers to close a loan. They have to sign the note. They have to sign the insularity documents to the note. They are not providing any additional documents for any approval or anything. We are waiting. If you bought a house, remember the big closing table, the big stack, thats what theyve got to execute. They just have not done that yet. I really want to emphasize what senator shaheen has said. First, i think weve already given you these casework cases. We have several that have come to my attention where that is not the case. The burden is on the sba to complete the closing, not on the person. They have done that and are still waiting for their checks. So, there is yet another issue with what you just opened up. I agree that, but for the borrower agreeing to take the note, they have to sign to be the borrower we are responsible for closing the loans in association with them. For the hundred 25,000, including with a District Offices, we are executing the closing. Its at the discretion of the borrower to execute that. Yes, we have seen from your office and others that there was confusion for those folks who do have funding. I want to reiterate again their money is there, they can execute the closing. We will assist them with that closing. Once they have executed the documents, and money goes on a schedule over to treasury for the ac h into the designated bank account. There are issues with those bank account where the banks, where the account is located are bouncing back, our disbursements. I dont know the exact reasons from each institution. One of the reasons it is cited most often it is the opinion of the bank that commercial activity for this account is not recognized. Therefore, they are flagging it as suspicious. I understand exactly what you are saying. I recognize that. Thats one of the points, i think, some of our colleagues have mentioned. There are better systems out there that would have dealt with this. We are dealing with two agencies, treasury and as we. Thats a challenge as well. My plea to you is, provide the leadership and resources to get these resolved. These are people that are frustrated. They need their money. In one case, it was the bank account only accepted checks up to a certain amount. They had a higher check coming in so they set up a separate account. It took them forever. They still have not completed getting that routing into the system so the money actually could get there. These are Small Businesses. They need help please resolve these issues. Get the resources and get it done. They have been given inconsistent information overtime. At one point, they thought the money wasnt there. Many of them were giving up. Please provide the services they need so we can get that hundred 25,000. Those that want to take out the loan, that they can complete the loan process and stop calling our offices. That would be very helpful. I appreciate if you would follow up with that. 100 , i hear you. 100 , we will redouble our efforts. For all those bank account with bouncing, just like the closing, we will work those to completion. We will work with that particular borrower to get that money. That money remains there even if it bounced back. Now to the 41,000 potential we. Are informed, either directly or through communications, generally, that these works are unworkable. Not that they were denied, but that they were unworkable, as i understand. I understand why the that a lot of these could not get the verifications required. They had not filed their tax returns. All those issues that have to be done for them to be able to get their loans completed. I recognize the. But an workable is not tonight. Sure. And some of these, many of these, according to the casework notes we have, they think they have given adequate information, or that they can supply the adequate information. But they havent gotten and that ability to do that because of the way the system is set up. I would urge you, to those that do have claims that can be adjudicated in a positive way for consideration or an increased loan amount, whatever they have filed, lets try to get those resolved. The numbers are getting small enough that it seems to me we should be able to handle those with the type of service we would expect from that sba. Just urge us to try to resolve it. For those that are truly not eligible, youre gonna have to bite the bullet and give them a determination so they can move on or follow an appeal. It seems to me, you have to complete these. I dont want any i dont want you to deny an application that has merit because you want to get it off the books. Im happy to keep it open if there is a possibility for successful conclusion for this Small Business owner. But they need to know. There has to be a time. Understood. I understand the urgency. I understand what the objective and mission is. The one thing i do want to make the chairman aware of and members is that from the point of first disbursement, a borrower has 24 months to seek a loan increase. As of july, 80 of that universe told. Its august 2nd today. 80 of that universe can no longer seek a loan increase. By october, that number will be in excess of 90 . By the end of the year it will be zero. Whats important to understand to is that, again, the program did formally close, as you guys know, aunts december 31st from taking new applications. And so the combination of those things makes it such that from our perspective we are moving on to servicing for which that begins in october. There will be 27,000 folks that are required to make their first pace mid and then it spikes up a half million for multiple months thereafter. That is a huge lift. We will have to on board the staffing that we briefly scaled back when originations concluded, to come back on board with. Despite the fact that this committee and the Appropriations Committee made billions of dollars available for covid will eidl admin. The covid eidl portal does not handle servicing. And so we, have to stand up the servicing solution at scale which is a technology lift, as well as a people process lift. So we are facing that in the next 60 days. I understand the frustration that folks feel out there as a part of that 41,000 but, from the perspective of what i can assure you is that we did work with these borrowers to find a yes. It should be mentioned that, with your leadership in 2021, we did 200 billion dollars of support. We did those 40,000 loans checking ip static address. Checking business address. Validating Tax Information. We demonstrated that you can do 20 of the total address of the market replace of all ending in 2021 with 7000 employees. We did that together. Yes, there are definitely things that we do differently and have learned from, for sure. I would just want to point out that the 24 month period is not statutory. You can wave that 24 months if you wanted to. Sure. I understand the note. Senator ernst. Yes, thank you, chairman. I appreciate that discussion today. I want to make a clear i dont care what administration it is, we should always be transparent. I think thats just the best policy across the board. With that transparency, again, im gonna go back to the fraud Risk Management board. I am really excited i know that the sba announced in april that they were creating this fraud Risk Management board but. When it comes to transparency, sba has not really shared any details with congress or the public about its impact since it was created. Can you maybe just with visit with us a little bit, give us an overview of what type of programs that board is looking at. Have there been results from that . Maybe just share information with us on how that board is going. The primary responsibility of the board today, obviously, is to handle what amounts to somewhere north of 60 total audit reports across g. A. O. And oig, in addition to our annual audit with our auditor, kpmg, that is ordered by the ig. Within that, obviously, is demonstrating to those auditors and first and foremost to ourselves that weve addressed shortcomings highlighted. I mentioned in ppp, not making a core counting system reconcile in realtime loan requests, which is not done on planet earth. We can avoid 50,000 duplicates. There are issues with improper payments that have been conflated to fraud, which, as you guys have addressed, Small Businesses are not necessarily committing fraud. For example, in the covid eidl program, the 80 billion dollar number often referenced is in large part to sole proprietors who, in 2020, were required to demonstrate for each thousand dollars they were seeking up to 10,000 for the targeted eidl advance originally made available. They needed to demonstrate they had employees. In order to have employees as the sole proprietor, you had to have a registered ei and. There are a great many so proprietors that i no doubt believe in have employees, were certified correctly, that they deserve 5000 or 6000, or whatever but they did not have a registered ein on or before the date, i believe, is february 15th 2020, when the pandemic was officially start date. The fraud review board is focused on addressing those most immediate issues. From a standpoint of how we do that, we have to recognize and this is administrator guzmans view and others we have to recognize that we have to be timely. We have to be fast. We have to be relevant. So that means making Technology Choices that contemplate both that speed and certainty. Putting tools in the front and before you disperse the money to know your customer. Those types of things. And so across the board but, it has begun and is a daily event. There is not a day since i became the associate administrator on march 1st of 2021, literally, that i have not spent at least, minimally, a third and there were some long days focused on fraud waste and abuse. It is top of mind. Thats good. With all the lessons that we have taken away that came out of covid19, and some that have been identified by the chairman and others through their lines of questioning today, im so hopeful that we never, ever experience another covid19 type event in our history. But it could happen. So taking all these lessons learned, are we able to act on those in the future . Have those suggestions, solutions been identified . How can we put those into practice as we move forward . Yeah. So i too share the sentiment that im good for pandemics. I hope i dont have to have another one. I want to take a second to commit the office of Capital Access, the Civil Servants, because they were pressing and. They took the resources, the admin dollars, that this committee and appropriators made for and about technology, specifically for fraud, waste, and abuse, as well as call center support, we talked about communication, we were able to build successively off the initial portal launched in august 10th of 2020 to support, ostensibly, in the beginning, ppp forgiveness. From the private sector, watching that launch, august 10th, 2020, i was struck, as many were in the private sector, this works . This is good . Steve qatar ski and his team and his office of Capital Access deserve a lot of credit because it was that investment, again the ppp dollars, that led to a better experience for all applicants in restaurant revitalization to facilitate 1500 really small banks with forgiveness and its that foundation thats going right into the Natural Disaster platform to some of the challenges we see in the individual case files today. I hope we build upon that and just in closing i do want to say a well deserved thank you to all the folks that sba who really had a huge, pressing job ahead of them when covid19 hit. They performed admirably. As did, i know, a number of our own local banks and credit unions, that really helped push those dollars out to those Small Businesses that really did need that assistance. Thank you, mr. Kelly, for coming in front of the committee. Thank you mister chairman. Thank you, senator. What more clarification i need to get on the record so i understand. May 6th was the cut off date for the modifications, et cetera. It could have gone up to july, find your stand correctly. You could have waved that date and made it later than that. You put on your website may six is the day, quote, due to lack of available funding. We wont argue we were rejecting how much money would be available, you made that judgment. But the website today is still saying, as of may 6th, 2022, s. P. A. Is no longer processing covid19 idle loan increase request, reconsideration of previous loan applications, due to the lack of available funding. I would suggest that you might want to modify that, just take off that clause. You are not expecting them. Fine. We recognize you used that date. We may disagree with that. We can have that debate. But, clearly, funding is available now and its misleading to keep that on your website. Second point i would raise, you indicated during your questioning here that most of the 41,000 will not be able to get that yes. There is a concern that the funding could be repurposed. We want to make sure that funding is not a reason for a determination pending as a may six. I apologize if i left that impression. I either misspoke or was not aware. I am keenly aware that thats an appropriations decision. Its a decision for onb. My position, and i want to make this clear, is that these files were looked at. I have seen them personally. Ive been involved in the daytoday correspondence. We have been responsive. I apologize for that confusion. So no one will be denied who had their applications sent in prior to may 6th because of lack of funding . Correct. The denials, the decisions, beginning with their initial denial for most of these instances, beginning way back in 2021 and at the heart of the denials is a disagreement between that particular person about whether filing taxes is appropriate or not. That i understand the frustration here. I understand why that person because, again, they got a loan originally with no taxes. They didnt file and got a loan from the federal government in 2020. I understand why, when they speak to people, including me, i received emails where when i read the initial email, they acknowledged that back and forth with their particular loan officer. They acknowledge that there were some shortcomings at first. Then they say a wrong has been done to me. I came to back to serve to say yes. That appeals to me, as im sure it does you and all members who are here to surf. We then take action and we work with the Civil Servants in the process centers to determine whether an officer makes an action. I want to make clear that any of the pending applications, if they are meritorious, they will be funded. The money is there. The funds are there. We will say, for another debate at another time, whether you had to use that may six date because of lack of funding. But quite frankly, i dont agree with that. I think you couldve gone beyond may six of the funding was available, and you have the discretion to go beyond july of this year if you wanted to under the authority to waive the 24 months. We will leave that for another debate, for another time. It is clear that congress intended eidl to have adequate funds to deal with the covid pandemic. We were prepared to make funds available. It seems like a lot of the funds we specifically made available for specific purposes have been taken for other purposes. Not necessarily on the eidl program, but other programs. We could repurpose money to be able to take care of all the needs at their. We are not i want to make sure we take care of the 41, 000, the hundred 25,000. It seems to me we couldve had a longer off ramp on this, on the applications for increased funds. Senator ernst, anything further . We very much appreciate your time and explanations of your service to our country. You have a very challenging job. Thank you very much. And thank you for appearing before the committee. The committee record will be made open, i believe, in two weeks. I our normal process for friendly questions to the record, if you would answer those questions as quickly as possible. With that, the committee will stand adjourned. Thank you. Noises] [background noises] [background noises] now, a look at chinas growing role in the middle east with assistant secretary of states for international, fares barbara leave. She spoke to lawmakers about chinas relationship with iran and efforts to spread china made technology across the region. Miss leaf also discussed the Biden Administrations latest attempt to renegotiate a new nuclear deal with iran. This is just over an hour