S. HRG. 115–322 THE STATE OF SMALL BUSINESS IN AMERICA: AN UPDATE FROM THE U.S. SMALL BUSINESS ADMINISTRATION HEARING BEFORE THE COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP UNITED STATES SENATE ONE HUNDRED FIFTEENTH CONGRESS SECOND SESSION MAY 15, 2018 Printed for the Committee on Small Business and Entrepreneurship ( Available via the World Wide Web: http://www.govinfo.gov U.S. GOVERNMENT PUBLISHING OFFICE 30–925 PDF WASHINGTON : 2018 VerDate Sep 11 2014 14:46 Sep 12, 2018 Jkt 030925 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 C:\DOCS\30925.TXT SHAUN LAP51NQ082 with DISTILLER COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP ONE HUNDRED FIFTEENTH CONGRESS JAMES E. RISCH, Idaho, Chairman BENJAMIN L. CARDIN, Maryland, Ranking Member MARCO RUBIO, Florida MARIA CANTWELL, Washington RAND PAUL, Kentucky JEANNE SHAHEEN, NEW HAMPSHIRE TIM SCOTT, South Carolina HEIDI HEITKAMP, North Dakota JONI ERNST, Iowa EDWARD J. MARKEY, Massachusetts JAMES M. INHOFE, Oklahoma CORY A. BOOKER, New Jersey TODD YOUNG, Indiana CHRISTOPHER A. COONS, Delaware MICHAEL B. ENZI, Wyoming MAZIE K. HIRONO, Hawaii MIKE ROUNDS, South Dakota TAMMY DUCKWORTH, Illinois JOHN KENNEDY, Louisiana SKIFFINGTON E. HOLDERNESS, Republican Staff Director SEAN MOORE, Democratic Staff Director (II) VerDate Sep 11 2014 14:46 Sep 12, 2018 Jkt 030925 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 C:\DOCS\30925.TXT SHAUN LAP51NQ082 with DISTILLER CONTENTS OPENING STATEMENTS Page Risch, Hon. James E., Chairman, and a U.S. Senator from Idaho ..................... 1 Cardin, Hon. Benjamin L., Ranking Member, and a U.S. Senator from Mary- land ........................................................................................................................ 2 WITNESS McMahon, Hon. Linda E., Administrator, U.S. Small Business Administra- tion, Washington, DC ........................................................................................... 4 ALPHABETICAL LISTING Businesses for Net Neutrality Letter submitted ............................................................................................... 34 Cardin, Hon. Benjamin L. Opening statement ........................................................................................... 2 McMahon, Hon. Linda E. Testimony .......................................................................................................... 4 Prepared statement .......................................................................................... 6 Responses to questions submitted by Senators Risch, Cardin, Cantwell, Shaheen, Scott, Heitkamp, Booker, Enzi, Hirono, and Duckworth .......... 142 Risch, Hon. James E. Opening statement ........................................................................................... 1 Warnick, Kathleen, National Association of Women Business Owners Board Statement dated May 15, 2018 ....................................................................... 140 (III) VerDate Sep 11 2014 14:46 Sep 12, 2018 Jkt 030925 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 C:\DOCS\30925.TXT SHAUN LAP51NQ082 with DISTILLER VerDate Sep 11 2014 14:46 Sep 12, 2018 Jkt 030925 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 C:\DOCS\30925.TXT SHAUN LAP51NQ082 with DISTILLER THE STATE OF SMALL BUSINESS IN AMERICA: AN UPDATE FROM THE U.S. SMALL BUSINESS ADMINISTRATION TUESDAY, MAY 15, 2018 UNITED STATES SENATE, COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP, Washington, DC. The Committee met, pursuant to notice, at 3:31 p.m., in Room 428A, Russell Senate Office Building, Hon. James Risch, Chairman of the Committee, presiding. Present: Senators Risch, Scott, Ernst, Inhofe, Young, Cardin, Cantwell, Shaheen, Markey, Coons, and Hirono. OPENING STATEMENT OF HON. JAMES E. RISCH, CHAIRMAN, AND A U.S. SENATOR FROM IDAHO Chairman RISCH. The meeting will come to order. Good morning. Today we are going to hear from the Adminis- trator. Linda, it’s so good to see you back here again. You know, it’s been over a year now—gosh, where does time fly?—since you’ve been sworn in as the SBA Administrator, and we’re happy to have you here again today. This hearing will focus on the state of small business in America, and the Small Business Administration’s efforts to support entre- preneurs. By many measures, small business owners today are op- timistic and forward looking. The National Federation of Inde- pendent Business’ Small Business Trends Survey for April reached a near-record reading of 104.8, and also saw 61 percent of small businesses say they are increasing their capital expenditures. The payroll provider Paychex has recorded a nearly 3 percent increase over the past 12 months in wages paid by small businesses. The MetLife and U.S. Chamber of Commerce Small Business Index for the first quarter of 2018 found that 61 percent of small business owners are expecting increased revenues, and nearly a third are expecting increased hiring. This is all great news for America and for the American economy. The Tax Cuts and Jobs Act, which was passed last year, has al- ready been a big win for small businesses and, more importantly, their employees. As I just noted, many small business owners have already begun hiring more workers and making new capital invest- ments in their businesses. For the first time since 1982, the NFIB (1) VerDate Sep 11 2014 14:46 Sep 12, 2018 Jkt 030925 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 C:\DOCS\30925.TXT SHAUN LAP51NQ082 with DISTILLER 2 reported the fewest number of small businesses citing taxes as their number-one problem. While small business owners are doing better than they have in over a decade, small businesses in Idaho continue to talk to me about difficulties and challenges accessing capital and complying with and understanding a seemingly never-ending number of regu- lations, all of which Administrator McMahon has been working on. The SBA is at the forefront of all these issues, assisting small business owners across the Nation with its various loan guarantee programs, its excellent technical assistance and resource partners, and its contracting and set-aside offerings. In her time at the SBA, Administrator McMahon has traveled around the country as part of her Ignite Tour to better evaluate the small business environ- ment and to hear directly from small business owners and SBA em- ployees. Impressively, she has completed over half of her tour, vis- iting 44 out of the 68 SBA district offices, and many, many small businesses in each of those districts. I’m delighted to say that Idaho was on the tour, and we were happy to meet with the office there and with a number of small businesses. The Administrator visited Boise last September, and she and I had the opportunity to visit with several small businesses in the Treasure Valley, including Cravin’s Candy Emporium and Winspear Construction. We were all pleased to show her just a part of what makes Idaho such a great State for small business. Administrator McMahon, I welcome you, and I look forward to hearing about your perspective on the sensational small business environment in this country today, your experiences thus far at the SBA, and your ideas on how the SBA continues to improve for the good of America’s small businesses. With that, Ranking Member Cardin. OPENING STATEMENT OF HON. BENJAMIN L. CARDIN, RANKING MEMBER, AND A U.S. SENATOR FROM MARYLAND Senator CARDIN. Well, thank you, Mr. Chairman. Thank you very much for convening this hearing. Administrator McMahon, it’s a pleasure to have you back before our committee. I applaud your leadership on behalf of small busi- nesses in America. I join the Chairman in acknowledging your com- mitment to visit each of the 68 district offices across the country. That’s an incredible commitment. But I do think there’s no sub- stitute for meeting one-on-one with the people that are in the field carrying out the important responsibility of the Small Business Ad- ministration. So I thank you for that commitment. Two weeks ago I had the opportunity to attend the ribbon cutting of the Baltimore Small Business Administration’s office. Now, I want to tell you, it was not a difficult task for me to do this since it’s located in the same building as my Baltimore office is located in. I just had to go down seven flights of stairs, so it wasn’t that difficult. But it’s very impressive to see the operations we have in our Baltimore office, for most of Maryland is done out of the Balti- more office. We also have a Washington office that handles Prince Georges County and Montgomery County, and they do just great, great work. I thank you for the attention that you’ve paid. VerDate Sep 11 2014 14:46 Sep 12, 2018 Jkt 030925 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 C:\DOCS\30925.TXT SHAUN LAP51NQ082 with DISTILLER 3 Like you, Administrator McMahon, I celebrated National Small Business Week last week and highlighted the outstanding entre- preneurs and small business owners in Maryland who are creating jobs, driving innovation, and increasing America’s competitiveness, and that is my focus on the committee, helping small business ac- cess the tools and resources to better compete in the 21st-century global economy. SBA has helped countless businesses start and succeed, so I’ll just brag about one of those loans that took place in 1996, where the Small Business Administration took a chance and lent money to a University of Maryland student on an apparel idea, and that business grew from $17,000 in sales in 1996 to a multi-billion-dol- lar global performance brand company, Under Armour, that today employs thousands in Baltimore. There are success stories