The nominee to lead the Small Business Administration pledged Wednesday to do more outreach to underserved communities, and she deflected politically charged questions about the minimum wage and and whether Planned Parenthood centers should return COVID-19 business aid.
Isabel Guzman, director of California’s Office of the Small Business Advocate, described herself “as a lifelong advocate for small business” during her nomination hearing.
Guzman told the Senate Small Business and Entrepreneurship Committee that as the SBA administrator she would focus on making the agency’s programs more accessible to very small businesses and minority companies that have traditionally not had the banking relationships needed to access loans and grants. She cited her work in California with business and community groups on state COVID-19 programs.
Her efforts earned her the support of several organizations, including the U.S. Chamber of Commerce.
"Small businesses need a team behind them," she said in her written testimony. "SBA must be a part of that team — helping them access capital, and connecting them to marketplaces to build revenues and networks that can help them navigate resources to improve outcomes so that they can do what they do best: create our nation’s jobs and help spur our economy."
Sen. John Kennedy, R-La., alluded to the Biden administration’s proposal to phase in a federal minimum wage of $15 an hour when he asked Guzman if she thought a higher minimum wage or a larger earned income tax credit would aid low-income workers. He said jobs would be lost under a substantially higher minimum wage and argued that the tax credit would be less disruptive.
Guzman said she could not offer an opinion and would have to review the issue, particularly the earned income tax credit.
Sen. Tim Scott, R-S.C., also touched on the minimum wage, but said he hoped Guzman “would be the voice of reason” in the Biden administration on the $15 minimum wage proposal.
Guzman knows the SBA well, having been a deputy chief of staff and senior adviser at the agency during the Obama administration.
If confirmed, Guzman would take on the responsibility of overseeing the Paycheck Protection Program that Congress established to provide loans that are potentially forgivable to small businesses struggling under COVID-19 public health restrictions and an ensuing economic downturn. Congress replenished the program through legislation and is offering a second round of aid from $284 billion provided in a massive spending bill in December.
However, an Oct. 1 report by the Government Accountability Office found a high risk for fraud in the program because of few safeguards as the SBA hurried to get the funds disbursed. The GAO found similar risks in an existing program, the Economic Injury Disaster Loans, that Congress beefed up to provide another source of pandemic financing.
Congress addressed the shortcomings in the December funding package as well as complaints by businesses and communities that smaller companies had been left out in earlier rounds. Funds have been set aside for loans to businesses in low- and moderate-income communities.
Sen. Benjamin L. Cardin, the committee’s incoming chairman, said recent data indicates that the SBA is making more loans that are smaller in size, an indicator that the businesses receiving the funds are also smaller than those in earlier rounds.
Guzman said she would work to continue the trend and would focus on streamlining complicated application forms to other SBA programs to make them less daunting for small companies in general and particularly for businesses in areas where there are few financial institutions.
Both Cardin, D-Md., and Sen. Cory Booker, D-N.J., asked Guzman how the SBA would address eligibility for the Paycheck Protection Program for people who have been convicted of a nonfinancial felony crime. Scott added that it is important that once people finish their sentences that they are not cut off from business opportunities.
In initial rules for the program, the Trump administration barred owners with 20 percent or more equity in a business from applying if they had been convicted of a felony within the last five years. Guidance issued in June reduced it to within one year of applying. The five-year ineligibility remains for people convicted of fraud, bribery, embezzlement or a false statement on loan or federal applications for financial assistance.
Booker said white college students were less likely to be charged with marijuana possession than Blacks and other minorities. But he said Blacks and other minorities were disproportionately likely to be charged in similar situations with possession and to see their opportunities diminished.
Cardin and Booker asked Guzman if she would remove the penalty for nonfinancial crimes.
She told them she was aware of the obstacles “the reentry population’” faces but would only commit to reviewing the policy if confirmed.
Several senators weighed in on Planned Parenthood centers qualifying for Payroll Protection Program loans.
Sens. Joni Ernst, R-Iowa, and Josh Hawley, R-Mo., said that the affiliates did not qualify under the program's requirements that nonprofits and their affiliates not have more than 500 employees. Collectively, they said, Planned Parenthood employs 16,000 people and did not qualify. Ernst and Hawley asked if Guzman would apply the affiliate rule in determining that the loans should not have been made.
Sen. Mazie K. Hirono, D-Hawaii, also asked for fair enforcement of the rule, arguing that the chapters had legally sought the loans. Hirono said efforts to use the rule to disqualify the centers were ideologically driven.
Guzman told all three that she would review and follow rules as outlined.
"I would need to dive into the specifics around affiliation and control," Guzman told Hawley.