Process and wait times for receiving loans. From the house Small Business committee, this is about two hours. I want to thank everybody for joining us. I want to know important requirements. Let me begin by standing in that test by stating that house rules will continue to apply during the proceedings. All members are reminded that they are expected to adhere to these standing rules, including decorum. With that said, the technology we are utilizing today requires us to make some small thefications to ensure that members can fully participate in these proceedings. Asing the covid period, designated by the speaker, the committee will operate in accordance with House Resolution guidancer subsequence from the rules committee in a manner that respects the rights of all members to bridges bait. To participate. Regulations require members to be visible through a video connection throughout the proceedings, so keep your cameras on. Also, if you have to participate in another proceeding, please exit this one and log back in later. In the event a member encounters technical issues that prevent them from being recognized for their questioning, i will move to the next available member of the same party and will recognize that member at the next appropriate time slot, provided they have returned to the proceeding. Should a members time be interrupted by technical issues, i will recognize at that member at the next appropriate spot for the remainder of their time, once their issues have been resolved. In the event a witness loses connectivity during testimony or questioning, i will reserve their time as we address the technical issues. I may need to provide time for the witness to reconnect. And finally, remember to remain muted until you are recognized. In accordance with the rules established under House Resolution 965, staff have been advised to mute participants only in the event of background noise. Should a member wish to be decognized, they must unmute an seek recognition at the appropriate time. For those members in the room today, we will also be following the health and safety guidelines issued, including social distancing and especially the use of masks. I urge members and staff to wear masks at all times while in the room and i thank you in advance for your commitment to a safe environment for all here. Last night, on the eve of the date the Paycheck Protection Program expires, the Senate Passed a bill to extend the program. From the inception of the program, i have clearly stated that until we know where the money is going and how our Small Businesses, which include independent contractors and sole proprietors, and minority owned firms are faring, we cannot blindly extend the program. With that said, Congress Still does not have the data it was promised, nor does the public have any information. Congress passed the heroes act, which extended the program through the end of the and leveraging our mission andd lenders, like cdf is micro lenders. Moreover, this important bill included provisions to require the administration to provide regular disclosure to congress and the public. Yesterday, secretary Steven Mnuchin stated he was working with the senate on the next steps for ppp and spoke of secondary loans. As i have said all along, i invite the senate and at administration to sit down with us to discuss extending ppp loans, and the many improvements put forth by members of this committee. We are meeting today to conduct an important hearing on sba implementation of the Economic Disaster loan program, or as some call it the program, which was activated on march 12, making it the first Economic Relief program to assist Small Businesses adversely impacted by the coronavirus pandemic. I would like to thank the associate administrator for the office of Disaster Assistance for being here to discuss the issues surrounding the implementation of this program. Mr. Rivera, i value your commitment and the hard work of your staff. And i understand the extraordinary efforts put forth to respond to this unprecedented crisis. However, we are holding this hearing today because of some very concerning issues that have hindered relief for thousands of Small Businesses. As you know, we held a hearing last month in which we heard directly from applicants about their experiences with the program. One Small Business owner discussed the negative impact of sba unilateral reduction of the maximum loan size from 2 cut moreo 150,000, a than 90 . He, like thousands of Small Business owners across the country, were drawn to the program largely due to the ability to use a loan from more than just payroll. Ofgine being in the position thinking that this program has a max of 2 million for your business needs, only to learn that loan approval at loan approval that the loan was drastically reduced. This is precisely the kind of information that needs to be conveyed to borrowers ahead of time. It makes it a fundamentally different loan product, and for those who need an amount greater than 150,000, this program was rendered irrelevant. Throughout the process, there was a lack of understanding of the challenges raised related to covid19, especially by offering a one size fits all 150,000 loan without offering an opportunity to apply for a second loan, or seek additional funding. Small businesses looking for help were he told, take it or leave it, regardless of size, and then told to have a nice day. We also heard from a Community Pharmacist in south philadelphia that applied for the loan, but was denied due to unsatisfactory Credit History. This is a lifelong entrepreneur who has struggled and is now saddled with additional burdens due to covid19. Borrowers, like the Community Pharmacist, who were denied for allegedly unsatisfactory Credit History have reported that the credit threshold for the improving loan is not clear in borrowers do not know what the limits are, leaving them feeling like the decision was arbitrary. I am sure it will be helpful to all if sba can communicate the credit minimums to Small Businesses upfront. Small also heard from businesses at that were denied because of unverifiable information, meaning that they were items that were reviewed at that caused sba to question the validity of the items. But the denial letter never did tell the information that was missing, leaving applicants with little insight as to why they were denied. Though these decisions can be appealed, that only adds to delays and expenses of struggling Business Owners. These businesses need relief and they need it now. Even more troubling is the fact that the sba has not communicated well with applicants, nor has it provided checkith reliable ways to the status of their applications. Borrowers are told that the loan is processing. The only other updates they receive are whether the loan has been approved or denied. Applicants need to know where they stand in the line, so they know how much longer they must wait before receiving financing. And given the current economic climate, if they are going to be denied they deserve to know quickly, so that they can explore other options of her capital elsewhere. Finally, there was a long period applicationsthe were limited to only agricultural Small Businesses, which is at odds with the intent of the Small Business act and is to of the sba, which assist and protect the interests of all Small Businesses. It is particularly troubling to have heard allegations that these loans were being processed before other applications e and we hopee queu to get a clear answer today. As the committee coul continues oversight, i am looking forward to hearing about how many applications are currently pending, how much more funding is necessary to meet the loan demand, and what steps sba is planning to take to ensure Small Businesses across the country receive the Economic Relief they need to survive. Already you number of Large Companies have declared big trips he cleared bankruptcy and experts say it will not be long before this wave of bankruptcies hit Small Businesses. We need to do more to help avoid this outcome. I look forward to hearing from mr. Rivera on the performance of this program in response to need fromnd what they congress to fully implement this Program Consistent with our intent. I yield to the Ranking Member for opening statements. Thank you. Thank you for holding this meeting on the Small Business administrations Economic Disaster loan program, properly known as the idle program. At the beginning of the year, Small Businesses were reaching new heights. We were experiencing historic levels of unemployment and momentum was building. Amongample, unemployment african americans, asian americans, hispanic americans were at alltime lows, meaning more people were working. Unfortunately, covid19 made its way to our shores. As a result, huge number of americas Small Businesses were forced to close their doors. With the made for goods and Services Limited by the emergency, Small Businesses shifted to survival mode. It was clear from the beginning that the nations smallest firms would need access to capital to weather the storm. The sba was handed a task that was unequaled in our history. Congress commanded bipartisan fashion, and the federal agency that represents, assists and fights for americas businesses responded by setting up the payment of the Paycheck Protection Program, which works in partnership with private lenders to deliver funds to Small Businesses. This program has delivered 4. 8 million loans in the amount of nearly half or over half 1 trillion now. The sba also continued to administer the Economic Injury disaster loan program. Which had its roots as a postevent Recovery Program for businesses in communities hit by a Natural Disaster. Both of these programs, from the beginning of the crisis, experienced overwhelming and unprecedented demand. The program shifted from being a regional program, a Natural Disaster typically strikes atypical locale, to a fullfledged National Relief program. This far, the program has delivered just over 2 million loans for 127 billion. In my home state of ohio, the program has delivered 45,000 loans for 2. 6 billion. I would like to thank the sba for being a resource for Small Businesses come printers and startups. However, a number of months into the crisis now and the program has a lot of room for improvement. While the loans are being processed and the advanced rants dispersed, too many Small Businesses are left with questions, questions on communication, questions on the status of their loan, and questions surrounding the maximum amount under the program. When Business Owners are left with limited information, common Business Decisions become difficult. We must strive to provide a Small Businesses with as much information as possible, especially during uncertain times. I look forward to getting to the bottom of many of these questions, and determining how we can Work Together to provide solutions for our nations smallest firms. I want to thank the associate administrator, mr. James rivera, for joining us and i look forward to his testimony. And answering questions from members on both sides of the aisle. As was the case prior to the covid19 outbreak, i know that Small Businesses that will once again be our nations guiding light. With that, i yield back. Thank you. I want to take a moment to explain how this hearing will proceed. Each witness will have five mittenutes to provide a statement and each Committee Member will have five minutes for questions. Ensure that your microphone is on when you begin speaking and then returned to mute when finished. I want to introduce mr. James rivera, the associate administrator for sba office of Disaster Assistance. In his capacity, he directs the disaster loan program, including idol. He began his career in texas in 1989, serving as a disaster loan specialist. Over his 30 years in his sba career, he has also served as the associate administrator for the office of financial assistance, and prior to his Public Service he was a commercial loan officer in the private sector. We welcome you back to the committee and you are recognized for five minutes. Mr. Rivera good morning chairman velasquez, and members of the committee. Thank you for the opportunity to update you on our Economic Disaster loan program and our response to the coronavirus pandemic. With statesa worked and territories to facilitate the approval of disaster declarations for Small Businesses. At that time, the administrator made an important change it to ease the impact certification, this enabled the sba to provide disaster loans for Small Businesses in all 50 states and six u. S. Territories, and established a nationwide assistance program. As a result, the loan numbers in dollars we are experiencing are unprecedented so far. This agency has provided Economic Relief to over 6. 8 million Small Businesses for over 147 billion. This more than doubles the amount of disaster aid provided in the entire 67 year history of the agency. To help achieve that, they created and implemented a new online portal application and Distribution System for loans and grants. This system has handled over 8 million applications and has allowed us to distribute dollars to businesses in record time. We are currently processing grants in less than two days. Nationwidec and program has required the agency to scale up our disaster staff, now totaling over 7000 personnel. Meanwhile, our Program Office continues to service 180 175 other disaster declarations, which requests from governors have assisted in the areas of civil unrest. These are unparalleled for the agency and havent been without their challenges. However, let me mention a few. First between march and the end of april the agency had to stop processing applications three times. This was due to the Program Changes made through the act legislation, the lack of funds and the need to stand up to the grants. The agency received close to 4 million applications in the two week period and they set us back and weve been working hard to catch up since. Moving quickly to build a new system they were not able to provide the same visibility as exists in the disaster loan application portal, this is with the volume mentioned above resulted in uncertainty for many. Following the exhaustion of the funds, the agency learned how to maximize the dollars for the applications. Newly eligible businesses in future applicants in reopening the portal two weeks ago. We also need to keep in mind that the application period has defined runs through middecember. With regards to the grants, the agency consulted bill authors and through a per employee allocation we have been able to reach 2. 2 million more with financial aid. I mentioned the Significant Growth in the staffing but that comes with the need of educational training. We adjust to the demands in the callcenter and low Processing Centers and highlighting the success reflecting the challenges its also important to evaluate where we are today. We have been continually processing loans for two months. Applications have not been initially positioned, all advances have been distributed and processing times due to volume and stoppages averaged around 41 days. Since we reopened, the processing times for new applications are now five days. We are much stronger and in a operational staff level today and Small Businesses are getting the needed dollars disbursed to them in record time. At the sba, the mission is one service. We have a proud history of helping Small Business owners in their time of need. Every disaster is unique and there are always Lessons Learned. While facing a situation like unlike any in history copy had to do this while updating in a virtual environment ourselves. And we also had not been affected by the pandemic having lost one of our Staff Members to the virus. We will continue to work closely with you