Congress can improve the program to help Small Businesses survive the economic downturn. Good afternoon. I am calling this hearing to order. Thank everyone for joining our second official remote hearing. Saying that standing house and Committee Rules are in practice and will continue to apply during remote hearings. Members will be expected to continue to adhere to the rules of the committee and the house. All members are reminded that they are expected to observe standing rules of committee decorum when they are participating in any remote event. The technology we are utilizing to make someres us small modifications to ensure that members can fully participate in the proceedings. Designated by the speaker, the committee will operate according to congressional resolution 965, with particular guidance from the rules Committee Regarding the respective rights of all members participating. House regulations require members to be visible through a video connection throughout the precedent, so please keep your cameras on. Also, if you have to participate in another proceeding, please exit this one, and log back in later. Member experiences technical issues that prevent them from being recognized for their students for their questions, i will go to the next available member of the same party and will recognize that member at the next appropriate time, provided they have returned from their proceeding. Should a members time be interrupted by technical issues, i will recognize that member in the next spot for the remainder of their time once their issues have been resolved. Connectivity,oses i will preserve their time as staff address the technical issue. They provide time for witness to reconnect. Finally, remember to remain muted until you are recognized, to minimize background noise. In accordance with the rules inhouse resolution to, staff have been advised mute participants only in the event there is inadvertent background noise. Should a member wish to be recognized, they must unmute themselves and seek recognition at the appropriate time. And before we get started, i wanted to offer a warm welcome to our newest member, from maryland. Husbandsents presented marylands Congressional District for five from 1997 to 1996, when he took on the Critical Role of [indiscernible] being a member of the Small Business committee is nothing new, as he previously sat on the committee and served as the chair of the subcommittee on minority enterprise, finance, and urban development. I look forward to his work to elevate the needs of Small Businesses. We are all pleased to have you join us. The outbreak of covid19 has led to an unprecedented Public Health crisis. Steps totook swift address both, but today, we are focusing on the Paycheck Protection Program created by the cares act. The Paycheck Protection Program is a subprogram of the Loan Guarantee program, and began 50 billion of guaranteed loans designed to meet payroll costs and other business expenses. The goal of the program is to save Small Business jobs as quickly as possible. The program has guaranteed over 50 times as many loans as it did in the entire 2019 fiscal year. All of this in just a few short weeks. We appreciate all the hard work by everyone at the fda, and are equally grateful to the Lending Partners who participated in ppp, for helping Small Businesses stay afloat during this uncertain time. However, given the size and , this was bound to be lessthanperfect. As movers of the Small Business committee, we are tasked with programs and the first round of Paycheck Protection Programs exposed some areas. Too many mom and pop shops were forced to sit on the sidelines as the programs were first rolled out as larger businesses received those loans. All they were left with was a hope that congress would add more money to the program. On april 24, the paycheck protection enhancement act was signed into law come up with more Protection Program funding. Importantly, the additional funding included a set of 60 million for small banks and other unions, as well as micro loan intermediaries. We intend a greater portion of dpp funds to go to the underserved is this community who struggle to access funding. This second round of funding has not drawn down as fast as the cares, in part i suspect because inthe lack of clear guidance the first several weeks of the program. Forced us to act yet again. On june 5, the Paycheck Protection Program expansion act was signed into law. The act extended the covered areas to use the loan from eight untilto 24 weeks, up december 31. Toalso permitted borrowers spend a greater portion of their loans on nonpayroll costs and remain eligible for forgiveness. Aat makes todays forum timely one, as we will be able to hear from stakeholders about what worked with the program, what has not worked, and how congress can keep optimizing the local economies slowly begin to reopen. There were also a number of regulatory decisions made by the treasury in the early weeks of the program may have limited loans to some perspective or worse. Prospective borrowers. The agencies added a test of the program and established a move that read the bar work to spend 35 on payroll costs in order to be eligible for full forgiveness. This rule greatly restricted the abilities of many different kinds of Small Businesses to spend their loan funds as needed, and made the ppp product much less appealing for borrowers. Program enters the forgiveness phase, we must analyze the issues borrowers and lenders are currently facing. The primary concern we have is for the complex forgiveness application, which according to experts reads more like a text document than a loan application. Feature of the program applying for it should be as easy as possible. We have also heard that minorityowned Small Businesses, micro businesses, and sole proprietors continue to struggle with accessing ppp loans, despite about 130 billion remaining in the program amount. And just last week, secretary mnuchin testified before our Senate Counterparts that treasury will not be publishing details on information for ppp, rubbing congress of the data we need to evaluate the program. Hearingk forward to from our distinguished panelists today about how congress can keep improving the Paycheck Protection Program, and whether congress should consider further fixes before the second round of ppp funding expires or the program closes on june 30. Again, i want to thank the panelists were joining us here today, and i now yield to the king member, mr. Sherman, mr. Schneider, for his opening statements. Thank you for holding the hearing today. I was elected in 1994. He left in 1996. I had the honor and pleasure of serving one term with them. As you indicated, he is former chair, and i believe his portrait is on our wall in the committee room, so we want to welcome him back to the committee. Im sure he will make a great contribution to Small Businesses again all over the country. On a different note, i must once again register my concern on behalf of our side of the aisle about the continuing conducting of Committee Meetings by virtual format. The house has important work that needs to be completed, yet we are forced to have these hearings virtually, with states and localities opening up. It is a concern that the house of representatives remains a virtual entity. But i certainly do not hold the chair responsible for this. It is obviously above her paygrade. I do believe the speaker in the democratic leadership should make sure that congress sits in session, because we have a lot of work to do. Im actually in washington right center,the visitor because that is where we are holding a hearing relative to , andeorge floyd killing congresss response to that there is obviously a number of legislations. The senate has legislation. Theirministration offered suggestions as to how we move forward. An executive order yesterday. So we are all discussing this. So i am here in washington. But unfortunately, other than that, the other committees are not in session, and we ought to be. Relative to todays hearing, the Paycheck Protection Program application portal opened up on april 3, so it has not been that long. In just two months, the sba approved and dispersed more than 4. 5 million loans, totaling over half 1 trillion. It has been a truly herculean effort by the sba, which is a relatively small government agency, which is really working extremely hard, and it is really incredible how much they have done and been able to do. According to the may employment report released by the bureau of labor statistics, nonfarm Payroll Employment rose by 2. 5 million, so that is good news. And the Unemployment Rate declined to 13. 3 . It is good news that it went down. It is unfortunate that it is still that high. Obviously have a lot of work to do to get that Unemployment Rate down and get the American Economy moving again. There is a long way to go in this recovery. It appears that the ppp is having major impact and saving Many American jobs. I have seen the enormous impact of these loans in my district back in southwestern ohio, where i visited nearly two dozen businesses now that have utilized the ppp loans. Restaurants and learning centers and manufacturers and medical practices, and many others. For example, on may 8, i had the honor and pleasure of visiting an Animal Hospital in lebanon, ohio, and i astley the owner and head veterinarian if he would share his experience with the program with us, and he is going to be one of our witnesses here today. We certainly welcome him. I will be introducing him shortly. We know the program has not been perfect, especially early on. Congress made adjustments, including the Paycheck Program enhancement act and the flex ability act. These adjustments include expanded loan forgiveness from , at theeks to 24 weeks option of the Small Business and what they determine is in their best interest. They now have the option of picking one or the other. That is going to help a lot of people. Modifying the loan amount that must be spent on payroll costs to 6040. From 7525 i heard from a lot of folks that is going to help a lot, and other things we did. The ppp program is a result of tireless work between congress and the administration. We hope to achieve a delicate balance between flexibility for lenders and loan recipients, protecting the integrity of the programs mission, and conducting needed oversight. Transparency continues to be a hallmark of all government programs. We must ensure transparency without compromising confidential information and personal information. I think that is very important. Additionally, as Small Businesses move closer to the end of their covered period, it will be important for congress to examine how forgiveness is treated. Todays discussion will add value to this element of ppp. We are all committed to making sure this program has a maximum impact for Small Businesses across the country. I want to thank all the Witnesses Today, and those who have provided feedback to me and other members of congress, especially those on this committee, about how the ppp program has worked with them. Their impact will have an Immediate Impact on the program and the nations economic recovery. Again, madam chair, i want to thank you for holding the hearing, and i yield. You, mr. Zquez thank chabot. Each witness will have five minutes to provide a statement, and it many member will have five minutes for students. Please ensure that your microphone is on and you begin speaking, and that you return to mute when finished. With that, i would like to thank our businesses for taking time out of our big of their busy schedules to join us. Our first witness is the chef and proprietor of a farm to table restaurant in portland, maine. After spending years in kitchens across the world, she opened this restaurant in 2000 with the help of an sba loan. Has partnered to open to additional locations, and has been recognized for excellence by numerous industry publications. However, the outbreak of covid19 has left her restaurant in jeopardy, and she took out a ppp loan with the hope that it will save her business. Chef, thank you for joining us today. This is mr. Edward sosa. He is the Senior Vice President of sba lending at an independent Community Bank in the austin, texas area with about 5 billion in assets. Preferredis a seven a lender, due to years of experience with the program. His insight will therefore be quick committee as we evaluate implementation of the ppp. Mr. Sosa, thank you for joining us today. Is ashleywitness curry, director of advocacy and senior counsel at the center for responsible lending. It is a research and Advocacy Organization dedicated to a few Financial Services market that provides meaningful opportunities for Community Asset building and economic security. Thank you for joining us today. Finally, i would like to turn it over to the Ranking Member, mr. Introduce our, to next witness. Chabot this is rich coleman, the owner of four pars the owner of an Animal Hospital. He graduated from the Ohio State University college of veterinary medicine in 2002. In december 2006, he took over a veterinary clement, change the name to forepaws the hospital, built a new facility in 2012, and began a remodel in march of 2019, so just last year, to allow for more growth and opportunities for his clientele. Obviously, none of us anticipated at that time what was coming down the pike, so im sure it will be interesting to hear how that has affected him. Dr. Rich is a dedicated Community Servant and response to many programs in his county. His wife is a teacher at lebanon city schools, and when i visited, i had an opportunity to speak with her about what was going on in the School System at that time. Also, it was delightful to meet his daughters, and their two cats and black labs, although i dont think i met all of those that day. My staff and i visited forepaws Animal Hospital last month to see how they have benefited from the ppp, as have many other businesses in our Community Area i want to thank you, dr. , for showing us your great Animal Care Facility and i look forward to your testimony as i do all the other witnesses. I yield back rep. Velazquez thank you, and thank you over being here. I would now like to begin by recognizing ms. Kelly for five minutes. Thank you. Good afternoon. I would like to thank the Ranking Member and all the members of this committee for the opportunity to represent the concerns of the hospitality industry. Im chef melissa kelly, the owner of a restaurant in maine. Im in my kitchen, alone. In normal times, this kitchen would be prepared with my staff and we would be preparing for dinner service. The pandemic has changed all of that. Today, i would like to share my thoughts and concerns. For people i work with, the industry at large, and the active mess of the ppp loans. I am a chef. I consider that my calling. The reason i do what i do is to help people eat delicious, healthy food, they can nourish and enjoy. I also believe the health of this planet is a possibility. I own and operate a small farm and a restaurant, and this is where i bring my hope to life. We operate on a seasonal calendar, open for nine months, most for three. This april was the beginning of my 21st season. Through hard work and dedication, the business has grown steadily over the years. I employ a team of 50 farmers, managers, cooks, dishwashers, servers, and other staff. When the governor of maine wisely put our state on lock was myy first word people. I had enough money in reserve to see them through a couple of s, but i did not know how long it would be before we got to work. I did not want to lay them off. The team is the reason we do what we do. I had won an award as the best chef in maine twice, and my team is a big part of the reason why. My restaurant feeds 165 people inside. Meanwhile, we serve over 32,000 meals a season. My staff of 50 seven average earning of 26 on our. Our revenue is earned mostly between july and october. Im here today not only representing myself, but also as a spokesperson for the Restaurant Industry in general. I operate in maine, a state that is dependent on revenue from seasonal tourists. I and my fellow restauranteurs are not going to make it through this. They are not going to survive operations due to covid19. Regardless of openings in the industry, patients may still have hesitance or face financial stresses in their homes which will take us time to recover. It worries us all. When the ppp was first offered, i thought long and hard about applying. Period meantbility iwas forced to use up period was not not in operation. My allowed count wa