▶ 0:14:33Good morning everyone. And I now call the committee on small business to order. Without objection, the chair is authorized to declare a recess of the committee at any time. I now recognize myself for my opening statement. Welcome to today's hearing, american resilience examining the sba disaster assistance program. I want to thank our witness, associate administrator chris stallings, for joining our hearing today to explain the sba disaster assistance programs.
▶ 0:14:58One of the sba's core missions is supporting america's small businesses and the men and women who keep them up and running. The sba disaster loan program is a vital part of that mission. It's one of the few sba resources available to business owners and business owners alike. In the aftermath of a disaster. The sba is activated to provide low interest loans to homeowners, renters, and businesses of all sizes to help them rebuild after devastation strikes.
▶ 0:15:23Following a presidential disaster declaration, the sba coordinates through fema to provide disaster loans to survivors. The sba administrator also has the authority to provide disaster relief through sba. Declared disaster after a formal request by a governor. These efforts by the sba help families rebuild after immense loss. Whether it's repairing a small business or a home, the sba is a critical component of recovering after disaster.
▶ 0:15:53Unfortunately, under the biden-harris administration, this program failed when americans needed it the most. The previous administration was caught asleep at the wheel in the wake of hurricane helene and hurricane milton. In october 15th, 2024, the sba announced that it had exhausted funds for the disaster loan program for the first time in its over 70 year history. Congress was blindsided by this lapse, having little more than one day's notice before the birth of disaster loans was suspended. By that time, it was too late.
▶ 0:16:22The funding lapsed, lasted 68 days and caused an unnecessary delay in disbursing disaster loans. We must ensure that this never happens again and that transparency is returned to the sba. Disaster relief. This failure followed years of mismanagement during the pandemic, when the sba covid zero lending program was riddled with fraud, costing taxpayers an estimated $200 billion in losses.
▶ 0:16:44We are still uncovering new fraud schemes to this day, including a seemingly coordinated fraud ring in minnesota, which the sba is investigating and whether through legislation or investigations, we will protect and recover taxpayer dollars from fraudsters, as we've done through multiple bipartisan bills already. This congress, my bill, h.r. 825, the assisting small business, not fraudsters act, is a critical step in the hole in holding fraudsters accountable.
▶ 0:17:12And I urge the senate to quickly pass a bill which passed the house 405 to 0. It's a breath of fresh air to have someone with associate administrator stallings expertise and background heading sba disaster assistance office. His experience as a police officer, and perspective from lending state level disaster response are invaluable as we have faced multiple disasters across the country.
▶ 0:17:38With that said, I now recognize my friend, the distinguished ranking member, uh, from new york, for her opening remarks. >> thank you, Mr. chairman, and welcome to the committee, Mr. stallings. This past year has brought tragedy after devastating tragedy to communities across the country, from hurricanes and floods across the south last fall to raging fires in california in january, to deadly floods in the chairman's home state of the over the summer.
▶ 0:18:06I want to extend my deepest gratitude to those volunteers, public servants and first responders on the ground that deploy to help their neighbors through arduous emotional recoveries and clean up efforts. And my condolences to the communities affected.
▶ 0:18:25Alongside fema, the sba is one of the first federal agencies that deploys to disaster recovery area to help communities rebuild through direct, affordable loans to homeowners, renters, nonprofits, and businesses of all sizes. The office of disaster recovery and resilience is a crucial component of the federal government's response efforts.
▶ 0:18:51These low interest loans are the largest source of federal disaster recovery funds for survivors, and they are critical for small businesses who find themselves unable to operate in the wake of a natural disaster. When small firms find themselves suddenly in dire need of timely funding to complete repairs and working capital to stay afloat, the sba provides a lifeline.
▶ 0:19:16This hearing comes at a crucial moment whether you believe in climate change or not, the data is clear extreme weather events are becoming more frequent and more costly. This is not a hoax. It is reality. And while the continental us avoided any major hurricane landfalls this year, we may not be so lucky in the future.
▶ 0:19:42In fact, this year we saw some of the strongest storms yet, with steering humberto and melissa all reaching category five but locally veering out into the atlantic.
▶ 0:19:56Furthermore, with the backdrop of increasingly intense storm system, the trump administration is currently planning to gut fema and redirect resources into a dhs that is prioritizing draconian immigration crackdowns that spread fear and division in our country. Let's be clear fema disaster response is cut significantly.
▶ 0:20:23It will put even more strain on the sba disaster lending program in clean up efforts. Finally, this comes a year after year we saw severe back to back hurricanes, pushed the disaster loan program past its limit, delaying recovery funds for communities across the south. I think I speak for everyone here today when I say we never want to see this happen again. That is why today's hearing is so important.
▶ 0:20:55We must continue our oversight of this program and ensure that the policies and procedures in place prevent future lapses from happening. Mr. stallings, I look forward to hearing from you about how the sba has prepared to meet its disaster assistance mission for the next year, likely while managing multiple major disaster recovery efforts at once.
▶ 0:21:19I hope to work together to ensure the sba is able to maintain its loan processing timeframes and continue funding new disaster loans to help communities affected by disaster quickly back on their feet. Thank you. Mr. Mr. chairman, I yield back. >> gentlelady yields back. I now recognize the chairman of the subcommittee on oversight, investigations and regulations, Mr. alford, from the great state of missouri, for an opening statement.
▶ 0:21:50>> well, thank you, Mr. chair. And thank you, ranking member velazquez, for holding this important hearing today. I do appreciate that you have made this a full committee hearing, rather than limiting it to the oversight subcommittee, which we chair. I'm very grateful because the sba's disaster assistance program is one of the most important programs that we have for helping everyday americans and every district represented here.
▶ 0:22:15And it's important that we recognize the fantastic work that administrator leffler and the great public servants at the sba have done to stabilize this program. This hearing is especially important for districts like missouri's fourth congressional district, where natural disasters are not abstract events. Floods, tornadoes, severe storms routinely damage homes and farms and small businesses across our rural district.
▶ 0:22:40When disasters strike in districts like mine across the country, sba disaster loans are often the difference between reopening and permanent closure. Many small businesses in rural areas are underinsured. They lack the access to private credit and have nowhere else to turn for recovery. Capital sba disaster loan program is unique because it provides direct, low interest loans not just to small businesses, but also to homeowners and renters.
▶ 0:23:09That makes it a cornerstone of the federal disaster response, particularly in rural america. Under the biden-harris administration, mismanagement of this program created uncertainty, delays, and even an historic funding lapse that left disaster victims waiting when they needed help the most. That failure undermined trust and put communities at risk.
▶ 0:23:34I saw this personally, firsthand more than a year ago while visiting representative chuck edwards 11th congressional district in north carolina after hurricane helene devastated that region. We met with small business owners who were not getting the help that they needed, and representative edwards did a great job in trying to facilitate that help. The trump administration has taken meaningful steps to restore accountability and improve disaster response.
▶ 0:24:05Administrator loeffler has prioritized faster loan processing, better communication with us here in congress, and reforms to make sure disaster funding is available when americans need it. This hearing is about making sure those reforms continue. It is about cutting the blue tape, strengthening oversight, and ensuring the sba delivers timely and effective disaster assistance to all americans.
▶ 0:24:31A lot of times, mister chair, I, I'm I'm looking for meaningful ways that we can truly make a difference in our role here on the small business committee. And this is one of those times where this hearing will make a difference. Thank you. And I yield back. >> gentleman yields back. I now recognize the ranking member of the subcommittee on oversight and investigations and regulations, Mr. tran, from the great state of california, for an opening statement.
▶ 0:25:00>> thank you, chairman rogers and ranking member velasquez, for today's committee hearing to discuss the structures of sba's disaster assistance program and ways we can strengthen federal disaster response. I look forward to working with everyone on this committee, especially my subcommittee chairman, Mr. alford, to ensure that all small businesses can access federal support during times of emergencies.
▶ 0:25:26Today's hearing comes at a somber moment almost one year ago today, the january 2025 los angeles wildfires wreaked havoc across many parts of southern california. These wildfires tore through neighborhoods, destroyed small businesses, displaced families, and left entire communities struggling to rebuild. For many southern californians, they are still rebuilding their lives and homes.
▶ 0:25:52But this is not the first disaster the great state of california has faced, and it will not be the last thanks to strong local and state leadership, including from my governor and the resilience of our communities. We are rebuilding and moving forward. I am incredibly proud of how california's came together during this crisis.
▶ 0:26:12I want to especially recognize our local firefighters, emergency responders and disaster response officials who work day in and day out to help families in the darkest moments. Their courage and dedication saved many lives. For many of my constituents and my colleagues constituents, the sba's disaster assistance program is not an abstract policy debate. It is the difference between reopening their doors or shutting them forever.
▶ 0:26:41When wildfires, floods or hurricanes hit, small businesses and families need fast, fair and reliable help. They need to know that disaster assistance will show up based on need, not based on politics, not based on what state they live in, and not based on who they voted for.
▶ 0:27:04I'm thankful that the sba's office of disaster recovery and resilience has approved over $3.2 billion in relief for california wildfire victims and disbursed nearly 640 million to over 8000 victims. That assistance has helped families stay afloat and given small businesses a fighting chance to rebuild. But despite this, I am deeply concerned about the growing politicization of disaster aid under the trump administration.
▶ 0:27:33The president has repeatedly suggested that disaster assistance for california could be delayed, conditioned or withheld altogether. He has publicly questioned whether california's californians deserve help after disasters, and has implied that age should depend on political loyalty rather rather than human need. And this is not just rhetoric aimed at california.
▶ 0:27:58Just last week, republican indiana lieutenant governor mike beckwith sounded the alarm that the trump administration threatened to withhold federal funding if state lawmakers did not comply with political demands over mid-decade redistricting. Those statements are reckless, harmful and cruel, especially to communities already facing trauma and loss.
▶ 0:28:20Let me remind my colleagues that disasters do not ask if you are a democrat or a republican or an independent. Wildfires do not stop at county lines or at voter registration rolls. When disaster occurs, the federal government has a responsibility to respond quickly and fairly. Federal disaster assistance should never be used as political leverage or punishment when aid is delayed or threatened.
▶ 0:28:48Real people suffer, small businesses fail, and public trust erodes. At the same time we are seeing, we are seeing warning signs across the federal disaster response system. The sba works hand in hand with fema. Yet fema is facing staffing cuts and repeated calls from president trump and secretary noem to eliminate the agency altogether. In fact, the president's budget for fiscal year 2026 proposes more than 60 million in funding cuts to fema.
▶ 0:29:17It's also requested $0 to supplement fema's disaster relief fund that americans rely on to recover from major disasters, and fails to acknowledge its $8 billion deficit. That would be a devastating mistake. Weakening fema only puts more pressure on sba programs and leaves disaster survivors with fewer resources and longer wait time for help.
▶ 0:29:42So far this year alone, we have seen more than 35 major disaster declaration costs across the country, from wildfires in the west to floods in the south and midwest. The need for disaster assistance is growing, not shrinking. And with another hurricane season next year, we know the demands on sba's disaster programs will only increase. Mr. stallings, today I want to hear clearly from you.
▶ 0:30:05I want to know how the sba is ensuring that disaster assistance is delivered based on need and urgency, not politics. I want to understand how your office is preparing to meet the rising demand with limited resources, and I want to I want reassurance that the small business owners in places like los angeles can trust that they have the help that they were promised.
▶ 0:30:28That will arrive because restaurant owners who lost everything in a wildfire, or the family businesses trying to reopen after historical flood, and the community still rebuilding months later. Delays are not just frustrating, they're devastating. Disaster recovery must never be partizan. The federal government must be fair, transparent and focused on helping people rebuild their lives. I look forward to your testimony. Thank you so much. And I yield back. >> gentleman yields back.
▶ 0:30:58I now will introduce our witness. Our witness today is Mr. chris stallings. Mr. stallings is the associate administrator of the office of disaster recovery and resilience at the U.S. small business administration in washington, D.C. Mr. stallings leads the agency's effort to assist small businesses, homeowners, renters and communities in recovering from disasters. Prior to his work at the sba, Mr. sterling served as director of the georgia emergency management and homeland security agency, as well as director of the georgia department of public safety's uh dignitary protection unit.
▶ 0:31:29Mr. stallings has also served as vice chairman of the georgia board of homeland security. As a graduate of lagrange college, I want to thank you for being with us today. We look forward to your meaningful conversation. And, uh, before recognizing Mr. stallings, I'd like to remind you that your oral testimony is restricted to five minutes in length. Uh, if you see the light turn red in front of you, it means your five minutes have concluded, and you should wrap it up. If you keep talking, I'll hit you with the gavel. Okay? And you really got to stop.
▶ 0:31:57Okay, so I now recognize you, sir, for your five minute opening remarks. Thank you for being here. >> chairman williams, ranking member velazquez, members of the committee, thank you for the opportunity to testify today on behalf of the us small business administration. My name is chris stallings, and I serve as the associate administrator of sba's office of disaster recovery and resilience. I bring nearly two decades of emergency management and public safety experience to this role.
▶ 0:32:23Before joining sba, I served as the director of the georgia emergency management homeland security agency, where I helped lead statewide responses to disasters including the covid 19 pandemic and hurricane helene. I've stood on the front lines of some of our nation's most challenging events where communities were destroyed, small businesses devastated, and families left wondering how they would rebuild.
▶ 0:32:44These experiences shaped my understanding of how essential a responsive, coordinated and well resourced federal disaster system is to long term recovery. Under the leadership of administrator kelly loeffler and at the direction of president donald j.
▶ 0:32:59Trump, the us small business administration has improved its readiness, accountability and transparency to ensure sba is always ready to provide reliable and robust disaster support, making our nation more economically resilient in the process.
▶ 0:33:15Since assuming office, I have been committed to restoring our recovery mission to begin and end with the survivor in mind, we have improved funding forecasting to prevent disruptions like we saw under the biden administration, which left thousands of americans stranded without vital relief. This effort also included an intentional focus on the disaster declaration process.
▶ 0:33:37We work with our state and federal partners to ensure disasters are declared quickly and efficiently so that small businesses, homeowners, renters and private nonprofits have access to disaster assistance when they need it most. Driven by a focus on transparency and funding readiness, sba has significantly enhanced our monthly report to congress.
▶ 0:33:56Per the farm bill, resulting in an updated report that provides specific data and forecasting, allowing congress to clearly see program performance, trends, and financial activity. More importantly, sba has elevated the role and responsibilities of our regional recovery coordinators, establishing them as key points of contact in their regions before, during, and after disasters.
▶ 0:34:21Furthermore, our offices working closely with the office of field operations to deputize additional sba personnel to assist with the recovery efforts. Leveraging our steady state programs, where appropriate, to provide comprehensive support.
▶ 0:34:33Sba has also expanded ground support to guarantee help as visible and accessible to everyone through listening sessions with state emergency management leaders and sba's office of rural affairs, sba has bolstered our recovery efforts to rural regions, including deploying mobile recovery vehicles and portable loan outreach centers to deliver disaster assistance, no matter how remote the location.
▶ 0:34:59In july, we ended a policy that prohibited the sba from providing disaster relief to faith based organizations. This policy change removed an unconstitutional restriction, ensuring religious entities have equal access to disaster relief. Sba also reintegrated the disaster lending function back into our office. Since january 20th, 2025, the sba has approved 27,996 disaster loans totaling over $4.7 billion.
▶ 0:35:31This represents a 64% increase over the same period in 2024. Following the wildfires in los angeles, the sba deployed 189 personnel to support recovery efforts, with 12 of those staff still on the ground today. After the severe storms and flooding in kerr county, texas, sba deployed 67 statewide staffers and opened business recovery centers within five days of the disaster declaration. In.
▶ 0:35:57Most recently, the sba extended the standard disbursement period for california wildfire survivors, providing significantly more time and additional flexibility when needed for approved borrowers whose rebuilding efforts have been slowed by state and local permitting delays. This action underscores that even when local bureaucratic failures impede recovery, the federal government will continue to do its part faithfully to ensure survivors can access the assistance they were promised.
▶ 0:36:24The average approval time for a disaster loan application is now 15.4 days, improved from 21.7 days this time last year. We continue to strengthen the capacity of our disaster processing and disbursement centers and streamline the application process so survivors can access relief as quickly as possible. In closing, the lessons learned from our past challenges have fundamentally transformed sba's mission delivery and will improve our customers journey.
▶ 0:36:55Thank you. I look forward to your questions, sir. >> gentleman yields back. We'll now move to the member questions under the five minute rule. Uh, I recognize myself for five minutes, Mr. stallings, earlier this month, the sba announced that it was expanding its investigation into the over $1 billion fund or fraud scheme that took place in my in minnesota. This includes looking at alleged organization involved called feeding our future. My question is, what has the sba done so far to reexamine the potential fraud?
▶ 0:37:24And how much do these loans borrowed from the sba equate to? >> sir, under the leadership of administrator kelly loeffler, since day one, her priority has been to root out fraud, waste, and abuse in all of sba's programs. Even back in her senate confirmation hearing, she discussed that very importantly.
▶ 0:37:43So she's asked each of the associate administrators to look into the programs in which we have grants and loans and to attempt to identify that that particular program in which you speak of is under the office of capital access. I wouldn't have all of the details related to that, but our team can certainly follow up, and we'll get you whatever you might need on that. Sir. >> um, I also want to express my sincere gratitude for the sba's presence on the ground following the tragic flooding that took place in my state in central texas and camp mystic.
▶ 0:38:15The sba is by no means a first responder agency, but your, uh, your team showed up to the texas hill country incredibly meaningful ways. And that said, one of the most common critiques I hear about the disaster loan program is how difficult it is to navigate, especially in the wake of a tragedy. So what steps are you taking to streamline and simplify this process from your applicants, and what are the impacts of those changes so far? >> yes, sir. I'm very proud of the steps that we're taking.
▶ 0:38:44One of the most important things, I think, in disaster recovery is understanding the mindset of the folks that you're working with. My experience as an emergency manager in georgia, I understood that these folks have just come through the worst day of their life. And so something that's difficult or extremely critical makes it difficult to to navigate. So we brought back the human element. One of the most important things, I think, is that one, sit down and ensure that our disaster recovery centers, our business recovery centers are fully staffed.
▶ 0:39:10Make sure we have empathetic listeners that can sit there and walk you through the process. Uh, we're deploying more folks on the ground. But as I mentioned in my statement, we've included more mobility. So our mobile recovery vehicles, our portable loan operations centers are getting us out in the community. So to your point, there in the kerrville flooding, we didn't wait for them to come to us. We found anywhere there was a small vineyard right there, uh, that we set up in. We were willing to set up anywhere that we can find space.
▶ 0:39:38And I think the thing that we're doing that's that's most impactful is we're slowing down and we're taking the human touch back into the response. It's easy to use technology and get advanced, but at the end of the day, we're still dealing with real people who are facing real problems and making sure that we give them that opportunity to be explained and heard is extremely important. >> all right. Thank you. My time remaining, uh, regarding the funding lapse that happened in october 2024 under the biden-harris administration.
▶ 0:40:06At that time, you were leading the georgia emergency management agency and were actively dealing with the fallout from hurricanes helen, helene and milton. So could you describe what you experienced at the state level? When the sba announced that disaster funds had been exhausted. >> there were there were immediate calls wondering if there would be funding available. It was important that as me, as the state leader at the time, that I tried to explain that yes, there was a significant delay there, but don't give up hope.
▶ 0:40:33Uh, we have leaders in place that hopefully will figure this out. Uh, but it it casts a significant amount of doubt in georgia. I can speak solely on behalf of georgia there. And I saw it throughout the, uh, the region there that were impacted by states.
▶ 0:40:48I was talking with some of my fellow emergency managers there in region four, and we were trying to explain to our folks that were, again, facing the hardest times of their life, what it would look like without having any type of federal response and recovery efforts and that funding, as mentioned, how important it is to these small businesses and homeowners, renters that they can recover. Uh, and so trying to build back that energy and that excitement into folks encouraging them to continue to fight, uh, it took a little while. It was certainly damaging to to overall morale.
▶ 0:41:19>> I got about 40s and quickly, uh, what changes are you making to ensure that the funding lapse, the sba disaster loan program, does not happen again? >> I think we've brought in some great economists. We're working with our cfo's office. We've completely revitalized the report that comes to congress to make sure that it's legible. It's easy to read. It lays out exactly where we stand with our, uh, our lending platform, how many dollars are available. And most importantly, we're actually sending it. So you should be getting it every month. You should have an opportunity to review it.
▶ 0:41:48And we've been very faithful to that, sir. >> thank you very much. My time is up and I now recognize the ranking member for five minutes of questions. >> thank you, Mr. chairman. Thank you, Mr. stallings. Uh, it's great to hear, uh, your comments about, uh, using a touch, a human touch to deal with victims, because when disaster strikes, there's no red, purple, blue.
▶ 0:42:13We are all americans, and the federal government must deploy all the federal assets to help people recover. That wasn't the experience with puerto rico under donald trump, when money was withheld for three years. Still, puerto rico hasn't been able to upgrade the power grid.
▶ 0:42:42In fact, if there is a category one hurricane, the power grid will collapse. And, uh, I echo the sentiment of Mr. trump from california, you know, to say that we're going to withhold or withhold federal resources, uh, at a time when people are going through very distressful, uh, emotions, it just beneath any
▶ 0:43:14Office, public office that you hold. Mr. stunning in the wake of last year's lapse in disaster appropriations, the oig determined that sba's forecasting methodology hasn't been updated in 15 years. This has resulted in routine projections of $1.1 billion disaster lending each year. Despite steadily increasing disaster costs and credit subsidy rates. Mr.
▶ 0:43:42Stallings, in response to that report, the sba told the oig a new methodology has already been implemented. Was that new methodology used for the appropriation request made in may? >> yes, ma'am. We're starting. >> okay. Yes. So what assumptions were used to determine the 143 million? >> so what we did is we brought in one our cfo and economist.
▶ 0:44:11We also brought in meteorological partners to give us analog gear so we could look at what years we could expect. We pulled last ten year averages. We also allowed, uh, subject matter experts to look into what trends look like. So cost of construction, cost of rebuild and started formulating that into our plan as well. So we looked at all aspects of what disasters cost.
▶ 0:44:32So it might the analog year through, uh, your meteorology forecast might look like a 22 or a 2002 year, but obviously cost of 2002 aren't the same. So we adjusted for inflation and we used that in our program. >> thank you.
▶ 0:44:50And you mentioned in your testimony that you continue to strengthen the capacity of the disaster processing and disbursement center, but monthly reports show that the office staffing has decreased 44, 45% from 1207 employees last december to 667 in november. So what steps are you taking to strengthen it?
▶ 0:45:18>> so we just went through a process of recognizing, uh, position descriptions, pds, if you will. Uh, we started reevaluating those, making sure that the, the job descriptions and the employees that we have do more than just one job. So just because we had a bunch of folks didn't mean necessarily we had a lot of stuff going on. >> okay. So the administrator intends to cut the sba workforce by 47%. Have staff cuts affected loan processing related to disaster loan?
▶ 0:45:50>> absolutely not. As I said in my opening statement, we've reduced the time. We've actually got the money out faster. >> with less. >> yes, ma'am. >> okay. Well, we'll we we will see the next, uh, disaster, uh, that you might face, that we might face in the nation to see if a cut of 47% is, um, is the right way to go. I yield back. >> gentlelady yields back. And I now recognize Mr.
▶ 0:46:20Stauber from the great state of minnesota for five minutes. >> thank you. Ranking, uh, chairman williams, ranking member velasquez and Mr. stallings for being here in northern minnesota when a disaster hits, whether it's flooding along the saint louis river or windstorm that tears through our small towns. It's the local hardware store, the cafe on main street, and the family owned resorts that feel it first and and the longest. Small businesses don't have the luxury of $1 billion balance sheets or multiple locations across the country.
▶ 0:46:46If their recovery time takes too long, they are statistically unlikely to come back. Then the community loses jobs, part of the tax base and a staple on their main street. Mr. stallings, these sba's disaster loan program is supposed to be a lifeline in those moments. However, under the biden administration, the program did something that had never happened before.
▶ 0:47:09The disaster account ran dry in october of 2024 after hurricanes milton and helene, and for 68 days, the sba couldn't approve new loans for families and small businesses who had just lost everything. This was more than just a budgeting failure. It was a failure of basic communications with congress and of planning for more expensive disasters.
▶ 0:47:30How are you changing the way sba tracks, predicts, and communicates the state of the disaster account, so that congress will never again be blindsided by the program running out of money? >> thank you for the question. The first thing I'd like to highlight is that under administrator leffler's leadership, the first thing we did is reopened all active disasters for an additional 60 days. Under her leadership, we we acknowledge the fact that there was a funding lapse.
▶ 0:47:57So anyone who was impacted by those disasters, there was an immediate extension saying, we're here, we're in charge, we've got money available. Let's let's make a change. And so we tried to re-energize, uh, morale in those affected communities. The second part is we took a really in-depth look at the report, the report that was being submitted to congress when it was being submitted. It was very difficult to understand. It did not track meaningful metrics. And so we cleaned up that report. It made it.
▶ 0:48:26I joked, the only thing that's tough to look at is the photo. They keep sticking me on the front of the thing. Other than that, it's a pretty easy to look at report. And so with that report, it lays out very clearly where we stand. And so bringing in those economists and meteorologists and subject matter experts in building and recovery, uh, using a lot of the lessons learned as an emergency manager in georgia, when we were forecasting what our year could look like for our budget, I think it was important that we just used normal folks thinking normal ways, using common sense
▶ 0:48:57Approaches. And it's been so far very, very helpful. >> thank you. Uh, Mr. stallings, there's still a dark cloud hanging over sba's disaster program due to mismanagement of covid era funds and the rush to get money out the door. Over 200 billion. That's with a b in idle. And ppe loan funds are now suspect of fraud or ineligible payments. The gao found that nearly two thirds of the fraud referrals sba sent to the inspector general didn't even contain enough usable information to investigate.
▶ 0:49:27Since joining the sba under this administration, what has been the biggest challenge you found in the sba's disaster program as it was left by your predecessors, and how has that influenced your priorities for improving it? >> so I think one of the challenges that we're facing was, was the speed and inaccuracy of the deployment of funding. I think there was just a rush to get funding out the door. And so with that, there wasn't always the thorough investigation of who was getting it.
▶ 0:49:54Uh, our team is taking it very seriously, uh, through the programs that we operate and our internal controls, to make sure we're going back and confirming ineligibility or eligibility requirements. And so through that, we found a lot of program dollars that have individuals that were ineligible, should have never gotten the money in the first place.
▶ 0:50:12And so we've been getting recoupment processes, uh, our shuttered venues operating grant program is a prime example where we are sending out letters and demanding repayment or proof of eligibility. >> are you receiving the payment back? >> we've started receiving some voluntary funds back and then some recoupment dollars coming back as well. We have outstanding letters right now for folks, and those that refuse to respond will be referring to treasury.
▶ 0:50:38>> can you give us one reform you've already implemented that will make it easier and faster for disaster victims in rural communities to get a loan approved in dollars in hand after the disaster. >> I think the biggest thing that we've done is we've incorporated a lot of our field office into that as well. We've got a lot more folks that are understanding our disaster program.
▶ 0:50:56We're working very closely with our office of rural development, and the first call I took from emergency managers around the country as the new director was a series of rural listening sessions with rural states saying, how can we better serve you? How can we better get these processes into your hands? I think the human element, we get our team on the ground very quickly. That's extremely important. We try to get out there within three business days of or three days of the disaster happening. Uh, whether it's the weekend, it doesn't matter. Holidays. We're on the ground. Even through the shutdown, we were responding.
▶ 0:51:27>> Mr. stallings, you're a breath of fresh air. Thank you. And I yield back. >> uh, gentleman yields back. I now recognize Mr. mcgarvey from the great state of kentucky for five minutes. >> thank you, Mr. chairman. I want to pick up on something that Mr. pete stauber left off with when he talked about the covid era funds and what happened with the inaccuracy and the amount of fraudulent money that went out. I do just want to point out that that happened under the first trump administration, when covid actually hit the united states. And so the guardrails were taken down by the trump administration.
▶ 0:51:54The oig came and testified in front of this committee. That was the biden administration that put the guardrails back up. Now, here's the thing. I actually am not here to point fingers or casting blame. I think there are mistakes that have been made under administrations of both parties. And I think when we talk about covid and we talk about those things, a lot of what we did actually kept small businesses who were terrified afloat. Um, but this committee does a better job, I think, Mr. stallings, of dealing with things that impact small business on a bipartisan basis.
▶ 0:52:23And so I just I wanted to correct that for the record. And I hope we can continue to make sure that small businesses have what we need and that we are doing it in the right way. And that's where I want to pick up with you, because the last time we had one of your colleagues here, uh, capital access administrator kelsey, he was in front of this committee in september, and I couldn't get him to answer what I thought was a pretty simple and straightforward question. So I want to ask it of you, uh, because so far, he's also ignored my written requests.
▶ 0:52:49And that is the disaster processing center in the office of capital access shed, 196 employees this year. Were these jobs transferred to your office or another department, or they simply eliminated entirely? >> so under administrator loeffler's direction, she wants to bring the disaster lending program back under the office of disaster recovery and resilience, myself and, uh, associate administrator kimsey worked very closely with that. So we are, uh, detailing we are moving folks individually.
▶ 0:53:16So I don't know exactly if the 196 positions you are discussing, but we are moving folks around because we think that that that separation was not a good idea. I don't have cradle to grave visibility into a disaster loan. And so I think it's important that we bring that back. And the administrator echoes that sentiment. >> yeah. And if you guys could get us an answer on this, I mean, we want to find out what's going on and what's happening. Because again, this is this impacts our small business. Nobody wants to be a small business is expecting to get decimated by a disaster.
▶ 0:53:48And so when it happens, we want to make sure that the state of disaster loan funding, uh, is there that it's there to help our small businesses. It's there what we intend it to do. In fact, the sba's november forecasting data from this year indicates the disaster loan program may have sufficient funding through october of 2026. Good.
▶ 0:54:05But that, of course, is without any additional spikes or upticks in natural disasters, which we know can happen at any time, whether it's fires in hawaii, whether it's flooding in texas, whether it's tornadoes in my home state of kentucky, these things can happen and unexpectedly, and then we have money. So we want to make sure that you all and you talked about this a little bit with chairman williams. And I just want a little more detail on it that you all have what you need in the event of a funding lapse. The last funding lapse did drag on for almost three months.
▶ 0:54:35Yes, that was under the biden administration. But one thing I want you to hit on a little bit here is for the last two years, uh, the house republicans have not really passed a budget. We've had continuing resolutions. The funding has been flat. And it's my understanding that part of that flat funding is impacting the funding. You all are actually able to get out to small businesses who've just been impacted by a major disaster. Can you hit on that point a little bit? >> we we have no delay in our funding, any funding that we get.
▶ 0:55:00We're getting businesses and and homeowners, renters, private non-funded quickly, uh, just recently in alaska, uh, typhoon halong made landfall and we were able to get business loans, homeowners, renters funded very quickly there. So the money that we have appropriated, we've been very judicious with we've made sure that it's going into the right hands. >> but if you guys, I mean, again, if it's flat funding this year, there's an uptick in disasters. This could be a problem. The forecasting has it through october of 2026. But a couple of major disasters could throw that off. Correct.
▶ 0:55:31>> it could. Yes, sir. >> and and I say that I mean, first of all, I want to thank you guys. Uh, you know, I want to thank you. I think everybody up here can thank you all. Uh, just five weeks ago, in my hometown of louisville, kentucky, it was a tuesday. On november 4th, it was 5:00. People were going home from work. There was nothing remarkable about this day. And then all of a sudden, the entire skyline was filled with black smoke. Louisville became an apocalyptic scene as, uh, an md 11 bound for hawaii out of louisville crashed on takeoff. Um, you know, tens of thousands of gallons of jet fuel ruptured.
▶ 0:56:02I've been out there. I've walked to the site. These small businesses that were hit, there is nothing. There is nothing but ash remaining from where they were. You guys have been amazing, uh, right now. And working with the emergency disaster, uh, loans to make sure our small businesses have. We hope we we can can count on you to continue that. So I'm grateful for you guys being there and this tragedy and making sure that everybody who is eligible gets a small business loan.
▶ 0:56:27Um, we want to make sure to, uh, that the sba officially ended its hardship accommodation plan, which gave flexibility to people to pay 10% of their normal payment for six months. Uh, we want to make sure that this program is still there for people who need it. I'm out of time, and I yield back. >> gentleman yields back. >> uh, I now recognize Mr. alford from the great state of missouri for five minutes. >> well, thank you, Mr. chair. Uh, I do appreciate Mr. mcgarvey's questions.
▶ 0:56:53And also, I was remiss, uh, by not mentioning our ranking member on oversight subcommittee derek tran for his great work. Thank you. Sir, I look forward to helping make this a better organization. Um, I also on the, uh, appropriations subcommittee for financial services and general government, which oversees sba. I want to pick up on mcgarvey's line of questioning here. Uh, I believe in fy 2026, you guys requested 140 million, is that correct? And yes, sir. And that's what we came up with.
▶ 0:57:22Uh, I know this is an authorizing committee. I'm just curious. Do we need more money in this pot. >> at the current time? No, sir. I think our projections are. But we can't control mother nature, right. >> as we saw with helene and october 2024, there was no one thinking that a hurricane would hit north carolina and do the type of devastation that it did. >> yes, sir. That is correct.
▶ 0:57:44>> and yet we do have, uh, we have procedures in place where we have special funding, uh, coming through the appropriations process, chairman cole has made it very clear that we are going to take care of the american people. >> yes, sir. >> so should something come about, we will, uh, we will try to make that happen to where we can cover those in need. Uh, what steps have you already taken to make sure disaster victims receive assistance in a timely manner? And have you implemented any changes to better serve rural communities? >> yes, sir.
▶ 0:58:12I think one of the things that we've done is we've kind of done away with the or principle that was founded in our process and disbursement center. One of those or principles was after, uh, someone is put in an application and we were trying to reach out, we would reach out via email or we would reach out via text, or we would reach out via telephone, or we would try to send someone by.
▶ 0:58:34And we've done away with that because there's a three day window that if someone didn't reply, we automatically withdrew them, thinking they might not want our assistance. Well, until you've put yourself in a disasters. Yeah. Survivor's mindset, uh, you can't understand that. So we've we've taken away the or and we've made it an end. So you're going to try every way you can to get ahold of somebody, making sure that you've given them the amount of time necessary. The second part, and something I'm extremely proud of.
▶ 0:59:01One of the first things I did is we have a lot of folks that have never been on a disaster scene, so we've implemented a disaster training program where every single employee who's never that works in disaster, who's never been on a disaster scene, has to deploy. They have to sit down across the table from a disaster survivor. They have to hear their story. They have to see the tear streaks through the mud on their face. They have to experience walking through a community and hearing the stories of the disaster and how much we need to rebuild.
▶ 0:59:27Our goal is to make that no longer a loan number, but an actual individual that's facing something on the other side of that disaster. And so we've seen great success with that so far. Our team is very excited for a lot of our folks that's never seen a disaster, not a true disaster, not, you know, uh, and I won't say a tornado's not I've had a lot of tornadoes hit where I live, but they knock a few trees over and they move on. They're true disaster. Uh, it's it's changing some of our employees mindset give him a heart and a passion even more than what they already had.
▶ 0:59:56>> why is that so important, do you think. >> as an emergency manager, one of the most impactful things I ever saw in my life is I was standing around a burn barrel with my governor, talking to some disaster survivors. And if you don't know, I'm in georgia, so burn barrels, a 55 gallon drum. Sorry. And so we're standing around this burn barrel. It's a january tornado. We're trying to stay warm. And I didn't realize at first how we were getting a fire in this barrel. I just knew there was a barrel that was on fire. And we were warm standing there talking.
▶ 1:00:23And all of a sudden I looked over and I realized the homeowner was tearing parts of their roof that was laid in their front yard off the side of their house, and they were feeding this fire with parts of their home to try to keep us warm, because we they knew we were there to help. And I thought in that moment, the folks that are here to try to help somebody, we're still being served by folks who have a genuine heart. Our rural communities have a genuine heart. They need our assistance. And I thought in that moment I would do anything I could to recover that person. I saw the same thing in kentucky.
▶ 1:00:52I saw these things, and I talked with these folks and and to me, getting folks to understand that it's a real life person facing a scenario they didn't volunteer to be in, bringing that human element back to them, making sure that they have the opportunity to recover, get their life back to normal as best we can help them. It's it's a passion, sir. >> Mr. sterling, I'm out of time. But I don't know you from adam. But I respect you. And I'm so glad that you are in this position.
▶ 1:01:18And administrator loeffler as well, leading the sba with courage, conviction and heart. I think the american people will be very appreciative of your efforts going forward. Thank you sir. And I yield back. >> gentleman yields back. I now recognize miss mciver from the great state of new jersey for five minutes. >> thank you, chairman and ranking member, for convening this hearing. And thank you to our witness for being here, administrator stallings, for sharing your expertise with the committee today. We're grateful to have you here.
▶ 1:01:46The sba's disaster assistance loan program is a critical lifeline for our communities, providing direct, low interest federal loans that businesses, homeowners and renters rely on to repair or replace property damaged or destroyed by disasters. Today, the sba is managing more than 100 open economic injury disaster loans loan declarations, a responsibility of enormous scale and consequence.
▶ 1:02:12I have seen the human impact of that responsibility. Responsibility clearly in my district earlier this year, intense rainfall in mid-july 2025 overwhelmed drainage systems across northern new jersey that triggered flash flooding. That prompted a statewide emergency declaration. In nearby communities, floodwaters swept vehicles off roadways and and caused tragic loss of life.
▶ 1:02:37The sba had to make eidl assistance available to these impacted businesses. Similarly, following major sinkholes along interstate 80, the sba approved more than 1.8 million in eidl assistance to help local small businesses and non-profits stay afloat.
▶ 1:02:58These events underscore why timely and accessible sba disaster assistance is critical to helping families and neighborhood businesses during emergencies. With that, administrator stalin's, you are joining the sba at a critical time, overseeing a massive portfolio of existing loans and a high volume of new disasters.
▶ 1:03:20Many areas, particularly low lying areas in in cities, like in cities in a district like mine, specifically newark and jersey city are highly vulnerable to flash flooding from intense rainfall due to aging storm sewer systems. How is the sba actively updating its physical damage assessment protocols and business recovery center outreach models to effectively serve small businesses in dense urban areas where water damage is largely caused by infrastructure backup and street flooding.
▶ 1:03:51>> I think that's a wonderful question, ma'am, one that hits very close to home again. Emergency manager of georgia. The same thing happened in atlanta where we had, uh, damage. And the only responding agency could be sba. I think that's what makes our program so beneficial is the flexibility that we have, the ability to adapt to the disaster that we're facing. One of the beautiful things about working with these districts and these understand a lot of folks don't realize how impactful a small flood can be. And a very condensed community.
▶ 1:04:22So there's a lot of businesses that can be impacted by one street that backs up. So I think that makes our program very unique. Um, the governor's certification, uh, five businesses. I think that's something that, uh, doesn't need to change. I'm very proud of that. We work very hard to make those dollars available. And so for us, we're focusing on ensuring that our timeliness is is not held back by us. Again, as I mentioned, we've partnered with our office of field.
▶ 1:04:49And so, uh, I think it's important that those are established relationships, our district offices, our regional offices that are already out there, they're now getting a good understanding of what we're doing in disaster. And so it gives an opportunity to have those blue sky conversations that we talk about in emergency management, and so that there's a friendly face that they're accustomed to dealing with their on a regular basis. So we work very hard to ensure that we're keeping the focus on the community, whether it be rural or it be in an urban area.
▶ 1:05:14I think the the value is that we're very flexible and we bring our program as quickly as possible. >> thank you for that. Um, as you may know, you know, the trump administration is actively discussed narrowing the scope of the presidential disaster declarations and shifting more responsibility away from fema and now to the sba's disaster loan program. What specific contingency plans has the sba developed to observe that increased demand?
▶ 1:05:42>> so I think it should be noted, and I made a couple notes for myself because I wanted to be accurate. But in fiscal year 25, fema declared 143 disasters. Uh, we declared 476. So I just throw those numbers out to remind the committee, we work a lot by ourself. We have agency declarations, economic injury, disaster loans, governor certifications. So we're accustomed to working. And so it's nothing unheard for us to to be on a disaster.
▶ 1:06:10And with the, the only game in town, if you will. So our focus is just remaining on what we're good at, focusing on our, our areas of expertise and, and any additional responsibilities we'll tackle as they come. >> thank you so much, administrator. And thank you once again for being here. With that I yield back. Chairman. >> gentlelady yields back. I now recognize recognize, Mr. lalota from the great state of new york for five minutes. >> thank you. Chairman. Mr. stallings, how are you, sir? >> I'm doing well, sir.
▶ 1:06:39>> uh, before joining the sba, you led georgia's emergency management and homeland security agency, is that right? >> yes, sir. >> that's correct. And for how long did you serve in that capacity? >> I was there for four years, sir. >> and that role you dealt firsthand with communities hit hard by major disasters and helped deliver help quickly? >> yes, sir. That's correct. >> and now you're serving as the associate administrator for sba's office of disaster recovery and resilience, is that correct? >> yes, sir. That's correct. >> so when we're talking about whether the sba is ready to respond to the next storm, you're probably the right guy.
▶ 1:07:10>> uh, I am well prepared. I would think and hope we. >> would think as well. Yes, sir. We invited you here. Uh, my long island district is a coastal one. We get hurricanes, nor'easters and increasingly intense flooding in august of 2024. Flooding. Flooding hampered my district and the small businesses there, and just a few inches of water wiped out inventory, equipment and weeks worth of revenue. And though when the water finally receded, many of the problems that it brought with it remained, uh, nationwide.
▶ 1:07:39My staff's research indicates that after disasters, about 25% of businesses don't reopen and up to 90% can fail within two years. Um, from your experience in emergency management, what are the make or break first steps after a disaster that determine whether a small business can make it back on their feet? >> quick turnaround of help just getting it there quickly.
▶ 1:08:07One of the things that we saw, and I'm very proud of a change that we've made specific to businesses, is prior to administrator loeffler and myself coming in and reviewing, one hurdle was, is that if they a state, wanted to request a presidential declaration and there was a request for individual assistance and a few of those other steps, none of that benefited business.
▶ 1:08:26But our program was waiting for a response on an individual assistance or another level of the declaration to make a determination whether we were going to make a change. I love I'm like a two year old. I kept asking the question, why? Why are we waiting? Why, why? I needed to know and I could never get me an answer that made me happy. So we've changed one of our processes to we just call it a phase one declaration.
▶ 1:08:53Now, where if there's a presidential declaration declared, we immediately will turn on business loans. There's no assistance gained by an individual or any other level of presidential declaration. Why is that important? Unlike you, sir, I grew up in a very small community, uh, 1100 people from mccaysville, georgia. And if we lost a gas station or our one iga, uh, grocery store, we were shut down. It was 30 minutes to the next place. And so as a kid, I wasn't riding a bicycle. 30 minutes for eggs for my mom.
▶ 1:09:23I needed businesses to get back. And we felt that at that local level, we understand that if businesses close, communities are done, uh, we can lose a few homes and have some folks move out. And that's bad for the community. That's important. But if we close gas stations and we close restaurants and we close entertainment facilities and we close the the shopping centers and we close these other things and we don't get them back open soon, it doesn't take long for the community to dissolve.
▶ 1:09:53Folks begin to move out. And so for us getting that back open, that is a that is priority one, because without those businesses, there is no community. Sir. >> thanks. Before coming to congress, I served in state and local government for quite some time.
▶ 1:10:07I'm especially interested when I serve here in streamlining government services with the minute or so that I have remaining, sir, for a coastal region like long island, what can my state and local leaders do ahead of time to make sure that sba can move faster at the moment of such as flooding occurs the next time? >> so we've been making a very concerted effort. The administrator myself, traveling around the country as often as we can.
▶ 1:10:32Speaking to state emergency managers, governors, their staff doesn't matter who will listen, explaining the programs. You know, a lot of times when you hear disaster, there are certain names that automatically pop into your mind. Well, we want that to be sba. We want folks to think about the tools and the processes we can bring. We share our business resilience guide that just gives businesses some points that they can think about, just some opportunities to develop a plan.
▶ 1:10:57You know, I grew up in a world where a little bit of something be all or nothing, so a little bit of planning beats no planning at all. And so I think for us, focusing and getting folks encouraged to think about planning, you know, this, that I would say that the greatest thing I ever heard in emergency management was the only thing more difficult than trying to prepare for it is explaining why you didn't.
▶ 1:11:17And so for us, we're giving businesses, leaders, community leaders, state leaders at least the opportunity to have a have something to say that they tried, that they did something. And a lot of times it's just knowing our phone number, getting ahold of us so we can be a friend to help. >> thanks so much. Appreciate you being here. Chairman, I yield back. >> gentleman yields back. I now recognize Mr. tran from the great state of california for five minutes. >> thank you, Mr. chairman. Uh, associate minister stallings, thank you so much for being here.
▶ 1:11:46I truly want to echo my colleague's sentiment about the work that you do. Uh, delivering services to these devastated businesses. So thank you very much. Uh, just recently, the center for economic and policy research recently published a report, uh, about the seemingly partizan nature of disaster declaration denials, pointing out that recent denial, excuse me, pointing out that recent denials largely impact states that the president didn't win, such as maryland, illinois and california.
▶ 1:12:15Uh, I'd like to ask for unanimous consent that this report is entered into the record, Mr. chairman. Thank you. Associate minister stallings. Uh, should we consider amending the stafford act to include specific, transparent and nonpolitical criteria for issuing disaster declarations and distributing aid? >> I can tell you firsthand there is no point on sba's application where we ask if you're a republican or democrat. We just want to know the disaster.
▶ 1:12:45Are you a disaster survivor? I think for us, the focus is getting into those communities. If you look, our our program is very user friendly. I mean, we've come in, as you mentioned earlier, we've done $3.6 billion worth of approved lending in california. And to your point, I don't I don't think the president won california, but we're $3.6 billion of lending there. And so I think the fact that our program focuses on disaster survivors, we walk into a community.
▶ 1:13:14We don't care who you voted for. We just want you to know that you've faced the hardest day of your life. And we're empathetic to that. We're reasonable. We're here. Uh, we've done everything we can. We've learned some valuable lessons where we could be better, but we're working very hard. >> I do appreciate that. And I just recently learned that my governor, uh, submitted some supplemental requests. Do I have your word that you're going to take a look at that and make sure that californians get the funding that they need for the disaster that they're suffering from?
▶ 1:13:42>> if we we get supplemental requests, we we just send a whole team back out to california recently, sir, just to explain our programs yet again and walk folks through. We're very open, uh, with our program to assisting those with any needs. >> okay. Thank you. Thank you for that. And the sba provided members of this committee with helpful updates on disaster loans being made in los angeles county in response to the wildfire. Uh, what is the status of sba's disaster loan program?
▶ 1:14:10They're now nearly a year from the disaster. Can you give me an update? >> absolutely. So we did $3.7 billion in lending. We're right about 785 million in dispersed, with 415 million of that going to homeowners. So far. Uh, we've got 4500, uh, dispersals to homes.
▶ 1:14:33Uh, I would highlight that, uh, 1887 homes are fully dispersed, meaning the homeowner has gotten all the money that they requested and it's in hand. Um, we have gone out and done some windshield surveys. We would hoping to make sure that our program was assisting folks in recovery. We're not seeing as much build back as we would like to see, but we are getting the money out. And and still to the point I made earlier, we had a request that some seniors were struggling with some follow up.
▶ 1:15:01So we've just now put a whole team back out going, doing community events, uh, walking those program, uh, or anyone who's having difficulty with our program, we're going to, um, houses of worship, you name it, we're making sure we're getting in there. >> thank you, Mr. stallings. And a big thank you to your team that's out there on the field, uh, leading that effort. You know, my district is home to orange county women business center, um, and a small business development center at cal state university, fullerton.
▶ 1:15:27Uh, as you know, sba resource partners like sbdcs and women business centers are designed to provide counseling and technical assistance to help small businesses across sba financing. This is especially important after disasters where many people are looking for assistance to help rebuild. How is the sba currently working with resource partners in areas like texas hill country and southern california to ensure all businesses in the region receive the assistance they need to recover?
▶ 1:15:56>> so I think that goes back to my earlier statement where we're partnering with our, um, office of field, where we're going out into all our regions districts, sharing the good work that disaster does. I think it's important going into disaster, folks have a an understanding of what's available to them. Um, it's very difficult to think of a new idea in the middle of disaster. So we're making a big push to make sure that blue sky conversations are happening before disaster strikes. We know disasters coming.
▶ 1:16:26It's not it's not going to sneak up on anybody. We know disaster is going to happen. It's just the where. And so the more we can get out among communities and talk to leaders, making sure they know what programs we have available, it's extremely important to us. >> thank you so much, miss sterling. With that, I yield back, Mr. chairman. >> thank you. Gentleman. >> yields back. I now recognize Mr. ellzey from the great state of texas for five minutes. >> thank you, Mr. chairman. Thank you, Mr. stallings, for being here.
▶ 1:16:51And thank you for how you, uh, how you guys responded to the floods in kerrville. Do you have any after action reports on things that you could do better after after that particular event? >> yes, sir. I think one of the things that we're looking into and we've been very adamant about is our mobile recovery vehicles. We've bought a fleet of vehicles that we're upfitting right now, so that we don't have to bring disaster survivors in. We can just regardless of how rural, it's loaded with our own technology that allows our communications to operate. So we're not reliant on local, uh, internet or anything like that.
▶ 1:17:20We're bringing our own connectivity to the the process, the area. So I think that's been step one. And secondly, as always, just trying to get there faster, making sure that folks know what our programs are and staying longer. Uh, that's something that we've done in that disaster, and we're very proud of it. >> well, as you mentioned, you have declared four times as many disaster areas as fema has. And on june 23rd, 2015, my hometown of perryton, texas, which I never no longer reside, but it's a town of 8000 people.
▶ 1:17:50Uh, it has been 8000 people for 40 years. It's a two hours north of amarillo. It's 45 minutes from liberal, kansas, seven miles from the oklahoma border. It's in the middle of literally nowhere. It's a place I'm proud to have grown up. And that ef2 killed our town, killed three people, wounded 75, destroyed 200 buildings, 30 of which were trailer parks. It affected a thousand people, which is 12% of our population. It is a city killer. Fema decided, based on the damage that was done to some of those buildings, that it wasn't worth.
▶ 1:18:20>> their time to go up there and and aid it because it didn't meet the threshold, which I think is a whole other subject on those are the kind of cities that actually need fema's help more than anybody else, because it's a it's a city killer. I don't know if there was any response, but I would just like to ask you as a personal favor, not that you owe me one, but it was a different administration back then. Fema didn't help, and I don't think anybody else did.
▶ 1:18:44But as I went home for thanksgiving, I saw an entire city block that used to be there that's no longer beautiful buildings built 100 years ago. There is no movie theater. There is no entertainment in that city anymore. And a lot of folks didn't go back to business. So would you mind checking on perryton and what sba did? Because just because a disaster happened two and a half years ago, if there was no way, given it's still a disaster area in my opinion. So if you wouldn't mind for the on the behalf of of of the people of perryton, texas.
▶ 1:19:11Uh, checking on what sba did and could do going forward and get back to me at some other time, that's, uh, that's that's really just something I want to say. But it's clear to me that you're highly qualified for this. You're apolitical and you really care about what you're doing, and it's really refreshing. The worst part about this is, is that when we have ten, uh, tempestuous hearings in this, in this building, uh, they never occur here in small business administration. Everybody on this side and on that side is interested in actually helping people in the united states. And, you know, who's not out there?
▶ 1:19:41Movie or picture, uh, video cameras, reporters asking about what this government actually does very well, what this administration does well, what your department does very well. And that makes me sad because what gets clicks, what gets news media attention is not actually accomplishing the mission. It's causing problems. And I want to say on behalf of of me and everybody up here and the people of perryton and the people of this country, we're glad to have you in here, and we're glad that you're doing the job you're doing. Thank you so much for being here, Mr. chairman, I yield back. >> gentleman yields back.
▶ 1:20:10I now recognize miss skelton from the great state of michigan for five minutes. >> thank you, mister chair. Of course. I, uh, moved away from my my questions here. Just one second, but I got it right here. Uh, thank you, uh, to, uh, associate administrator stalling for joining us, uh, here today. We really appreciate your testimony and your service.
▶ 1:20:31My office has heard from small businesses in west michigan who are struggling to repay eidl loans received during the covid 19 pandemic. Many of these businesses, in an effort to stay afloat and recover from pandemic losses, have turned to cash advances and other short term solutions, only to find themselves in a crippling cycle of debt. Now, even though these businesses are profitable once again, the debt service on these loans make it difficult to reinvest in their businesses.
▶ 1:21:01That's bad for the economy from my perspective. Um, administrator stalling, are you aware of this issue across the country? >> yes, ma'am. I'm aware that we are having businesses that that took out loans, that are having difficulty. >> having having difficulty paying them back. How widespread is this challenge that that you're seeing? You say you're hearing about it. How how much are are you hearing about it?
▶ 1:21:23And are you are you tracking in a quantifiable measure, either the amount of outstanding debt, you know, how much it's costing to service, serviced it, number of businesses impacted, etcetera. >> so what we're hearing is that unfortunately, a lot of folks thought that maybe at a stroke of a pen, we were going to forgive these economic injury disaster loans and which there was no indication from the beginning of that that that was going to be the case. So I think a lot of folks put them on the back burner thinking that they wouldn't have to pay it, or at some point they wouldn't be owed that.
▶ 1:21:52So they've let um interest accrue. They've allowed payments to go behind. Our office is committed to working with those that have been impacted. >> sorry to interrupt you, but just to to redirect back to the question, is your office tracking how widespread the problem is at this point? Either the number of businesses who are impacted, the amount of outstanding debt. >> so my office is not yet because, uh, economic injury disaster loans fall under the office of capital access under the previous administration. They separated those. We're trying to bring that back.
▶ 1:22:22So I do have visibility into that. But we can follow up and see if we can get you those numbers. >> that would be fantastic. What further do you believe the sba, either your office or capital access or sba as a whole, could we do to help these small business owners? You know, we understand, you know, forgiving, outright forgiving all the loans might not be an option on the table at this point. But what additionally, you know, would you be open to considering to helping these small business owners? >> I think the most important thing is reach out to us early.
▶ 1:22:52If you have someone in your area, your district that's not that's facing that, but they haven't contacted us yet. Don't wait till they're 120 days past due and treasury's knocking on the door. Call us. We understand that running a business is not easy. It's. It's hard, but it's the it's the it's the bloodline and the backbone of our small communities. And so we understand that very much. So call us let us have conversations. The beauty of our programs are they're our programs. So if we can get creative and help a business change something, restructure a loan, look at it a different way. We're more than willing to work that well.
▶ 1:23:23>> thank you, thank you, I appreciate that. Um, according to a recent report in april, a recent report in april of this year, a memo from omb stated that fema officials are recommending denial of all major disaster declarations for snowstorms. This would be deeply problematic in a state like michigan, where I can tell you we're shoveling about six inches a day at this point.
▶ 1:23:46Um, and a devastating ice storm in march caused over $300 million in damage across northern parts of the state. It was devastating, leaving thousands of homes and small businesses without power for weeks. Communities are still reeling from the damage of this storm. Months later.
▶ 1:24:04Um, administrator stalling if fema ultimately follows through on its proposition to deny major disaster declarations for snowstorms, how will the sba step in to ensure communities across michigan have the resources that they need when winter storms cause such destruction? >> so for us, man made or natural disasters are something we deal with. As I mentioned in those numbers earlier, we respond to a lot of disasters that fema will never rise to their threshold.
▶ 1:24:31And so as we face those challenges, uh, snow is one of those difficult disasters. We had ice storms in georgia. Everybody remembers snowpocalypse. So we will work very difficult, difficult situations out. And so if our agency needs to declare, uh, or a governor's certification, we're still very open to that. >> even if there's not a fema declaration. >> we do that all the time. Yes, ma'am. >> thank you, thank you, sir. I yield back the remainder of my time. >> uh, gentlelady yields back.
▶ 1:25:00I now will tell you we've got a briefing over at the cdc. So this committee will stand in recess, subject to the call of the chair. Members, please return after the briefing to continue. Member questions? Thank you.
▶ 2:40:51And we will resume our member questions. And right now, I'd like to recognize congressman downey from the great state of montana for five minutes. >> well, thank you, Mr. chairman, for having this hearing here today. And thank you, Mr. stallings, for testifying. Really appreciate it. Um, president trump won an overwhelming victory campaigning on mitigating waste, fraud and abuse in the federal government. Unfortunately, under the biden administration, the sba became a hot spot for fraudulent spending of taxpayer dollars.
▶ 2:41:19According to the sba's office of the inspector general, over $200 billion of the $1.2 trillion in sba covid 19 loans and grants were fraudulent. Now, from your understanding, what was the driving force behind the biden administration sba's tolerance of fraud? And was this incompetence or malice? >> well, I appreciate the question.
▶ 2:41:44We've been reviewing certainly since day one, administrator leffler has said, we're going to look into all our programs. We want to find out eligibility criteria, things of that nature. And I think that what we're seeing is that money went to folks that were never eligible for the the money in the first place.
▶ 2:41:59Uh, our team specifically talking about the shuttered venues operator grant or svog, as it's so widely known as as we've been able to look into that program, we had a lot of folks that should have never gotten money in the first place, or they've not been responsive. They won't follow up and complete the application. We're still dealing with folks now, uh, four years later and businesses that have yet to send us in final, uh, documentation and things like that.
▶ 2:42:27So our team is actively pursuing that. I think it was just a. Not following through on what a grant is. >> so how how does the sba. >> plan to restore trust in its disaster loan program in the aftermath of this, you know, unprecedented fraud during covid? >> so something that we've done is we've reviewed and looked at, uh, loopholes that could make it easy to do so. For instance, um, verification of of damage. A lot of times it was done.
▶ 2:42:53It was moved to a 10% only where we would do a physical inspection. So of 100 loans, ten of them got eyes laid on it to make sure it actually was in the area, made sure it received physical damage. The rest of it was done, uh, virtually, if you will. And so we've we've taken that option away. We're there's a certain dollar figure there. We're looking at $25,000 or more of damage that we were sending our folks out to review.
▶ 2:43:21We've brought our loss verifiers, put them back on the ground, got them out of offices, making them, uh, go through, uh, the, the damaged areas to ensure that folks are receiving our funds, have actually received damage and are eligible. Also, we're following up making sure that that if you request our loan before we just give you this arbitrary large amount of money, you've done everything that you have to do to get the money, that we're not just giving you money and then hoping you finish up the drill. >> well, I appreciate all that.
▶ 2:43:49It's obviously important to a lot of us that sba does restore that trust. Uh, earlier this month, the house of representatives passed my legislation, sba fraud enforcement extension act. And this bill extends the statute of limitations from five years to ten years for investigating fraud in sba, covid era, uh, restaurant revitalization program and also the shuttered venue operators grant. So on the topic of investigating fraud, to what degree are cases of fraud within covid era programs like these still being uncovered?
▶ 2:44:19>> so every day we have an internal controls team that provides a report where they're going out and verifying, um, and flagging applicants. We have another team that's dedicated. So we right now, uh, I'm don't have the number right in front of me. I know we've got two pools of letters. Each letter is in different phases of recoupment for svog. The first is somewhere around 400 million that we feel that should be recouped. The second is around 70 million that we're working towards.
▶ 2:44:47So we're somewhere in that $500 million range, uh, where we have went after those that are not meeting those eligibility requirements or have refused to complete the process. So we're very dedicated to that. Administrator loeffler has said since day one, we will root out those and we will dig into those and find every taxpayer dollar and return it. >> important. Thank you. I'm going to switch gears here for a second. Uh, I want to touch on artificial intelligence and streamlining sba's operations.
▶ 2:45:15In march of 2025, the gao released a report evaluating the sba's use of ai and machine learning tools in the review of covid loans. So in line with this, could you provide an overview of how your office currently uses or is considering using ai in its operations? >> so we currently are not using ai in our our operations. That was stopped. Uh, our ocio wanted to do a review of accessibility and what that does. We went back and just put human eyes on it.
▶ 2:45:42We've had a team go in and say, hey, where are we good at? We've got to put the human touch back into it. What we found out our disaster survivors don't want a computer to talk to. They want a human to talk to. And so for us, it's more important that we bring back that human element. >> right. Well, thank you, sir. I appreciate your, uh, your answers there. And on that, Mr. chair, I yield, I yield back. >> uh, gentleman yields back. And I now recognize Mr. olszewski from the great state of maryland for five minutes. >> thank you, Mr. chairman. I want to thank you, ranking member velasquez. And you, Mr.
▶ 2:46:13Stallings, I appreciate your time and testimony. Today on march 26th, 2024, the key bridge in baltimore collapsed after being struck by a cargo ship around 130 in the morning. There were roughly two minutes between the mayday call to authorities and the bridge's total collapse. We lost six construction workers that day, all of whom were described as humble, hard working men, all of whom left behind spouses and children.
▶ 2:46:36At the time of the collapse, I was baltimore county executive, and with community partners and government leaders, we united quickly to deliver help and healing in this incredible time of need. One of those partners was former president biden, who addressed the nation within hours of the tragedy. As the emergency response was rapidly unfolding, president biden announced that he had directed his team to move heaven and earth to reopen the port of baltimore and rebuild the rebuild the bridge as quickly as possible.
▶ 2:47:03He informed congress of his intention for the federal government to cover the full cost of reconstruction. Just days later, we welcomed sba administrator guzman for a roundtable with baltimore small businesses. There was never a moment that marylanders felt left behind by the president or the administration. Unfortunately, we've had a different experience in maryland under this administration who has not only directly threatened to cancel funding for the key bridge funding that is law, but is also abandoned our state in the wake of other disasters.
▶ 2:47:31In may of this year, allegheny and garrett counties in maryland suffered catastrophic flooding. 200 elementary school students and teachers were evacuated from their classrooms by boat, with water levels reaching the heights of over 12ft. Despite easily clearing the federal threshold for assistance, fema rejected maryland's 15.8 million disaster relief request without any detailed justification.
▶ 2:47:55With support of the congressional delegation from maryland and governor moore, we sought an appeal to that decision, which was again recently denied. In the wake of all that, fema denials have hurt working marylanders and have weakened their trust in government. I do, however, want to thank you, Mr. stallings, uh, you and your partners at the sba for being present and offering small business loans and nonprofit nonprofits economic injury disaster loans.
▶ 2:48:23These loans can help provide support for businesses and the need for working capital caused by disaster. Even if many small businesses did not suffer any physical damage. So I do want to thank and acknowledge you. Uh, but I want to say that that is in sharp contrast to our experience with fema, and sadly, not a word from president trump. Um, who the hardworking people of allegheny county supported for the white house by a margin of 40 points. Uh, one resident told the new york times they thought president trump would, quote, take care of the little person.
▶ 2:48:53So I'm just worried that the statements, um, by inaction in other agencies, I know you're not responsible for fema. Uh, but I worry about the connection between fema and small business and the message it's sending to american and maryland communities that we cannot rely consistently on federal support when disaster strikes. In moments of our greatest need, I worry that marylanders are being punished for living in a democratic led state. I hope that's not the case, but the actions are concerning. Uh, two questions for you today. Um, first, Mr.
▶ 2:49:24Stallings is the congressional research service has concluded that cutting fema aid will grow the demand for disaster loans, since sba will need to step into that gap and address unmet needs. Um, what level of concern do you have about the added strain on the disaster loan program and the impact that could have on your program's budget? >> I would say sba is well positioned to handle any additional assignments that the president chooses. He wants sba to handle. Administrator leffler has given us resources and capabilities.
▶ 2:49:52We have great surge hiring potential. We have a great reserve pool of individuals that we regularly, uh, inquire about their readiness and their state of ready. Uh, we are doing a lot of training. We're developing our team. We're expending resource allocations on new technologies and ways to get out into more rural parts of our country, as well as work in those urban environments. So I think sba is well positioned, and we're very proud of the program we operate.
▶ 2:50:20>> I hope that's the case and let us know if you ever feel that won't be. Um, and then I also know that in the case of western maryland, uh, a lot of folks ended up having to go through tri county council and credit unions that were offering 0% options. I wanted to just ask about interest rates quickly if I can, uh, the interest rates on sba disaster loans, as I understand it, is based on sba determination on whether or not the applicant can access credit elsewhere. Can you explain the process the sba uses to make that determination for each borrower? Briefly. >> so we have a kind of a set standard.
▶ 2:50:50It's a credit profile credit worthiness. It's our program is designed for those who really can't find help themselves, but also remind everybody that we also have to take care of the banks, the local banks and community banks so we can't undermine them by coming in and giving everybody a rate that maybe that would undermine their business. I often say everybody loves free water except the person that sells water for a living. Uh, we have to take care of all parts of the community as we respond. >> and I appreciate that. And again, I appreciate your presence in maryland.
▶ 2:51:17I hope that the rest of the administration follows your lead, um, and that we get back to serving and meeting the needs of all that. With that, I yield back, Mr. chairman. Thank you. >> gentleman. Yields back. And I recognize Mr. winstead from the great state of minnesota for five minutes. >> thank you, chairman williams. Um, merry christmas to you all. And chairman williams, thank you for that. Uh, great reception, uh, last week. I appreciate the, uh, the cheer that was spread. Uh, we, uh, I really appreciate you holding this hearing today.
▶ 2:51:43Uh, in my home state of minnesota, small businesses have suffered, and too many have been forced to close their doors because of failed policies, have allowed criminals to wreak havoc. We have a widespread fraud epidemic that is, uh, just crippling our state government. Minnesota governor walz, uh, his incompetence has put a spotlight on our state by enabling this rampant fraud across federally funded, state administered programs. Thankfully, Mr.
▶ 2:52:08Loffler has recently ordered investigation into the state of minnesota and pledges to hold those responsible for these schemes and outright crimes. And we really appreciate that help. Mr. signs. During the pandemic, many small businesses across southern minnesota and across this country utilize the economic injury disaster loan program administered by the sba.
▶ 2:52:30Uh, however, we have had many reports that there were fraudulent actors who abused these programs, uh, during the biden-harris administration for their own economic gain and outright crime, given the lack of action of on fraud and this and other programs administered by the sba, what policies has the sba put into place to ensure that moving forward, taxpayer dollars are directed to those who truly need them? >> so we're taking a more in-depth look at the application, the applicant themselves, ensuring that they meet all our regulations.
▶ 2:52:58I think one of the things that we got, um, away from was the oversight because of the the speed in which we attempted to move at and we leveraged technology and thought technology was going to be the answer. And the reality is, is in disaster. I've never been around a disaster that a criminal didn't find a way to take advantage of.
▶ 2:53:19And we have to know that going into the disasters that we operate, I spent, um, the first portion of my career in public service as a state trooper, and so I spent a lot of time doing investigations. I understand what you have to look at, the questions you have to ask and the rocks you have to flip, looking for the places you have to go. So we're taking that mindset, looking at how do we change our, our, uh, perception of the applicant. Not that they're good or bad, but are you truly eligible?
▶ 2:53:46And if that means slowing down just a little bit to confirm eligibility on the front end, what we've seen is it's cutting out, uh, we put some stipulations in place, and I don't have the numbers right off. I know in our first month in january, by critiquing some of our programs, um, oca reported out almost $400 million in fraudulent applicants that they had identified that we needed to start looking at through the disaster loan program.
▶ 2:54:13And so I think for us, it's slowing down, you know, yes, you want to be told you're getting your loan in a hurry, and I get that. But at the same time, we want to be accurate. Uh, I use maybe a poor analogy, but when I was a state trooper standing on the firing line, it. I couldn't miss fast enough. Uh, it did me no good to just get rounds down range if I never hit the target it was intended to hit. So slowing down makes me accurate. And that's the that's the mindset we're going into. >> thank you for that.
▶ 2:54:40And thank you for your commitment and your focus on on this fraud issue. You know, $400 million that was was cut. That's $400 million that could have went to our small struggling businesses, excuse me, all over this country. And so they really, uh, you know, these fraudsters are preying on the goodwill of the taxpayers of this country. And these are well-intended programs that we're working our tail off on here to make sure that we can fine tune and and deliver to your point, as quick as we can.
▶ 2:55:06But knowing that there is there is crooks out there that are taking advantage of us. So it's great to hear your your focus. How, uh, how has your experience been with cross-agency communications? So, you know, a lot of times we'll hear in the news minnesota, we're starting to see it, that, you know, the usda isn't getting the data from the state. So we don't know if the social security numbers are good or if this person is getting benefit a in this state.
▶ 2:55:29And also that same benefit in state b, give me your experience or your your take on how agencies are working together. >> so coming from state government, that was something I knew was going to be a hurdle. Uh, I had trouble as a state director sometimes getting information from my federal partners. So coming in, something we've done is I've been very adamant. I've went and sat down, I've made the calls, I've made the the trips over. I didn't expect them to come and want to become my friend. I went and became their friend.
▶ 2:55:57We're working on our mou to make sure we're swapping our data equitably, making sure that we have those conversations. You know, I'm a trusted partner. This is what I'm here for. Uh. We're moving. I just remind everybody my focus is the disaster survivor. So every hold up we have is another day. Someone is out there, maybe living in a hotel or a motel because their home has been destroyed and our delays are affecting them. Uh, as long as I keep the focus on the disaster survivor, I think it's also reminding other partners.
▶ 2:56:25That's all our focus, and it's making our relationships work. >> appreciate that. And I stand ready and continue to to be available to work with you as we really get to the tip of the spear on this fraud and make sure it doesn't happen. Thank you, Mr. chair, I yield back. >> gentleman yields back. I now recognize Mr. cisneros and the great state of california for five minutes. >> thank you, Mr. chairman. And Mr. stallings, thank you for being here.
▶ 2:56:48Many times I've said in this room during other hearings that it would be great to hear from somebody from the sba who actually works there on many of the issues that we're talking about. So so thank you for being that person today. And thank you for taking time, um, to answer these questions. Um, so I appreciate combined efforts to support the effort to rebuild los angeles following the wildfires last january. Earlier, you shared 785 million has been disbursed.
▶ 2:57:17That's about 22% of the 3.7 billion, uh, you have shared that has been approved. Um, but 22% is the same number listed in the sba press release back in october 14th. If if we're being, as you claim, right to be more effective with less staff, why hasn't that number changed in the last two months? And what are you and the sba doing to get disbursals out in a timely manner?
▶ 2:57:44>> so a lot of folks, specifically californians, understand that if they take their money too soon, then our deferment doesn't work for them. So we give them a grace period of 12 months. So after their first dispersal, they get 12 months. They don't have to accrue interest and they don't have to make a payment. So what we're hearing when we talk to them is, why take money if I can't rebuild? Because they're not getting permits, they're not getting the ability to get moving forward. So they're waiting to get their disbursements. They want to take full advantage of that.
▶ 2:58:13So until they see permits start moving, um, there, there's no reason for them to draw their on their funds. So that's, that's been the the common denominator of most of the conversations we've had with californians. >> so just to follow up in response to my colleague's question, you said you've learned some valuable lessons. What were those lessons? And how can the federal response in disbursements alone be improved? >> the dispersal is is super simple. They call us and say, we're ready for the money and we give it to them.
▶ 2:58:40The approval portion is the part that we were making sure we get to everybody. As I mentioned, some of the seniors in california were not comfortable with the the technology piece, which I completely understood. My team has heard me since day one. I've got grandparents still alive. They're in their 80s. They're not going to get on a computer and fill out a a federal form. They want paper and pen and we're going to keep that. But what we're seeing there is, is it's not been an issue. We're getting a lot of approvals. So our system is working. We're there.
▶ 2:59:08It's just um, unfortunately, uh, california has seen some, some backlogs in permitting and they can't get construction started. >> uh, to follow up on like the technology question, like you said, um, my parents are senior citizens too. They don't like technology. But los angeles is also a diverse community with many naturalized citizens who are spanish speaking. Tagalog, uh, vietnamese, many, you know, mandarin? Um, yes.
▶ 2:59:36As you know, the sba has removed spanish language versions of its website. How are you ensuring disaster assistance programs are still being accessible to not only spanish speaking, but also other multilingual citizens that are entitled to these disbursements? >> I think that is a wonderful question. I'll give you a prime example of what we're doing. We've taken away just the idea of picking a few languages and making winners and losers of who can understand and who couldn't.
▶ 3:00:04So we're waiting and making it a bespoke experience at site. So take, for instance, alaska, the typhoon that just recently hit. They have oral only languages. Well, it would do us no good if we showed up with a bunch of fliers written in some languages that they didn't understand. So we wait till we get on the ground and we build a bespoke experience. So we had translators that went to the villages that spoke the language, that would take our information and translate it for us. So we understand that there's always going to be challenges, uh, with language and diversity. We accept that.
▶ 3:00:37That's one of the things that makes america so great, is that we are a hodgepodge of nationalities, and so we embrace that. But it was picking winners and losers if we just put a few languages on there. When our programs are more in-depth than that, I think it's important that if you're going to enter in a 30 year agreement with me to pay for some funding and you're going to give me back interest, I need to give you the experience you deserve as the end user. And so making sure that we speak to you directly was extremely important to us.
▶ 3:01:07>> so I see that I look I hear that and I understand that and I think that's great. Where are you doing to the people down in alaska. But how are we interacting with these individuals, like you said, that, you know, do speak and can write, but it may be in a foreign language or it's, you know, english is your second and they're more comfortable communicating in those things. Are you getting people on the ground to make sure that they're filling out the forms, and people are walking them through those forms so that they they know what they're signing and understanding? >> absolutely. We engage translation services our own.
▶ 3:01:36We we promote our own internal candidates who can go to those areas and say, hey, you speak the language of this particular disaster. Will you deploy? And so that we can use you as a valuable resource? We take that just as important as we do all the others. >> all right. Thank you very much. And I yield back. >> yes, sir. >> uh, gentleman yields back. I now recognize Mr. bresnahan from the great state of pennsylvania for five minutes. >> thank you, Mr. chairman. Ranking member, and thank you to Mr. stallings for being here today.
▶ 3:02:02Uh, natural disasters hit small businesses especially hard because mainly simply, they don't many, many of them don't have the resources to rebuild, especially if they are forced to temporarily close their doors in the process. Unfortunately, northeastern pennsylvania, where we have seen several floods over the years, is no stranger to this reality. Uh, just over 14 years ago, nepa was hit by torrential rains from tropical storm lee, which caused extreme destruction along the susquehanna river.
▶ 3:02:30In luzerne county alone, many businesses like crest quality cleaners and bonnie's beefy king. Uh, shout out to dennis bonnevay, number 27 of the wilkes-barre scranton penguins. Uh, were forced to relocate or shut down entirely, permanently changing the landscape of the surrounding communities. More recently, in 2023, nepa experienced yet another damaging flood where scranton's own giant flooring, carpeting a third generation small business estimated more than 200,000. In flood related damage.
▶ 3:02:57Our metis pizza, a clarks summit institution since 1988, was forced to close after sustaining flood damage and was only able to reopen later due to community fundraising and local support. Uh, my first question is in our region, it's not if, it's when the next flood will happen. So I want to ask about mitigation efforts. Under current policy, sba disaster loans are largely retroactive rather than proactive, and can only be used for mitigation efforts after a disaster strikes um.
▶ 3:03:26In 2000, the sba experimented with pre-disaster mitigation loan programs, but that program ended in 2006. Since then, we have, uh, there's been different proposals to bring back this program, but nothing has gone across the finish line. What allowing sba loans to fund pre-disaster mitigation, help businesses better withstand disasters and stay operational.
▶ 3:03:52>> so I think mitigation is one of those unique terms there where, um, yes, I think anything we can do, an ounce of prevention beats a pound of cure. So I believe that we would be willing to work with you and your team to see if that's an avenue we need to go down. I do think that if you're in a community that has been hit, taking advantage of our mitigation loans, they are very friendly. Um, they're a good rate. It does help you prevent potential, um, damage from disaster.
▶ 3:04:22So I think that conversation is certainly well worth having. Sir. >> I look back to back to 2020 during covid and that pandemic and remember going through the process, obviously that was a very unique set of circumstances. Um, but I remember trying to coach other entrepreneurs and other businesses, um, other subsidiaries who were working through the process. But I remember being on hold with the sba for, you know, 4 or 5, six hours before they can get clarity.
▶ 3:04:51Also, how quickly the program evolved and how it changed to the payroll applications as to when different things could be applied. So I remember specifically for the the pgp element, a lot of companies weren't eligible to operate or even function during the the entire shutdown, but still had the expectation to provide the payroll. So the employees that weren't, weren't working.
▶ 3:05:15So my guess my question would be, obviously we never have want to go back to covid 19 pandemic ever again. Um, but how could we be better should a situation like that unfold? >> so the first thing I would like to highlight is the work of our call center. We have made a significant change. We canceled some contracts and so you won't be put on hold. Our answering rate now is through the roof. Our customer service and our customer response is 96% approval and growing.
▶ 3:05:41We're really we understood that that was something I heard is yeah, once you get somebody you get a lot of information. But getting somebody. So I'd like to highlight the work. Under administrator lefler, that was a flip. We canceled contracts, we've consolidated teams, we've got a great call center. So we're working on that. Uh, to the second part of your question, I think that I go back to the the answer I gave earlier, slowing down a little bit, making us accurate.
▶ 3:06:07I think that there were teams that maybe were ineligible. But as you've seen, I'm sure the flexibility of our programs, the way we can look at things a little differently than maybe some of the other federal programs, because it's our program and it's a loan. Uh, we give it a little more flexibility. I go back to alaska. We just recently changed the policy that allows subsistence camps, eligible, uh, expenditures.
▶ 3:06:35So four wheelers and things like that, that are real world needs for these folks. I think partnering with us, talking to us in advance of some things is something we'd love to do. We love engaging with our members of congress because you bring us situations maybe we haven't thought of. And so opening up that opportunity to to be there and be responsive, I think the flexibility of our program is what makes us so great. >> well, certainly looking forward to continuing this relationship. And with that I yield, Mr. chairman. >> chairman yields back.
▶ 3:07:02I now recognize miss simon from great state of california for five minutes. >> thank you, Mr. chair. Uh, associate administrator, like I said before, on my way out during right before the recess, you're a breath of fresh air this year, and I just really want to thank you. Your testimony has been wonderful today. And thank you for your commitment to, uh, or your bipartisan commitment to all business owners in this country, your experience and disaster management.
▶ 3:07:31I was really excited, as a 30 year manager of a small shop, that you have a commitment of bringing your staff out to the field, to feel it, to be with people in their darkest of days. Um, that just says so much about how you're running your own shop. Uh, I had a lot to say. So many of the answers that you've given have satisfied those questions. But like I said, I come from the bay area, from california's 12th district, where earthquake country.
▶ 3:08:00We're also, unfortunately, fire country as some of the members of, uh, the panel have alluded to today or have been very clear about the fires in california, not just this last year, but in the last decade, have severely, severely affected our small businesses and our homeowners. You know, towns have burned to the ground.
▶ 3:08:26Tourism seasons have been all but wiped out throughout the state when we have, you know, witnessed these devastating wildfires, uh, our first responders have done a fantastic job, including folks from your office. Supply chains have been wiped out. Even businesses located miles away from these fires, they feel the brunt of these natural disasters with winds, uh, changing the whole landscape. I will remember a couple of years ago, uh, the campfire, uh, was very far away from oakland.
▶ 3:08:56And yet our air was our skies were orange, uh, for about 48 hours, it looked like something out of a dystopian horror movie. Um, you know, these levels of of bad air, uh, they don't just go away in a couple of days, you know that, um, I have just a quick question, and you answered some of it. I can go through all of my comments. But again, I think this hearing has been really, really helpful to all of us.
▶ 3:09:24How have california homeowners impacted by wildfires? I know that your span of jurisdiction is in some pretty far and pretty wide. How have they been able to use the mitigation funds to protect their homes? >> so I've not seen a lot of mitigation funding out of this most recent disaster. Um, because most of the time it's once the home is restored, the business is restored or things like that.
▶ 3:09:49But we've had some folks, I've heard some unique conversations where, uh, installing sprinkler systems and things of that nature that they can I think I've heard I've heard some very unique stories of just utilizing the funds to get back growth. Uh, that's near homes, near businesses, clearing, uh, naturalized areas, not to prevent growth of wildlife and things of that nature, but just to remove dead trees and dead vegetation and things like that.
▶ 3:10:15Um, putting up, uh, cleaning out drainage ditches so that water flows and it doesn't back up. So there's a lot of different things that have been utilized for those, those mitigation dollars. >> well, our staff were very interested in working with your office to learn more there. And about all the initiatives that you've laid out today. Uh, last question quickly. In march, the sba announced plans for an agency wide reorganization, including moving all disaster loan processing from the office of capital access to the office of disaster recovery and resilience.
▶ 3:10:44As of the most recent program report, staff remain at oca for processing disaster relief. Can you provide a timeline on that process? >> so we're working very closely with our human capital officer, our chico, um, a chief human capital, to ensure that we have our ducks in a row before we pull the trigger on that. I think we're all ready to see that that reorg take place.
▶ 3:11:08Uh, I would say that if we hadn't have had a shutdown of 45 days, we'd probably be 45 days closer to resolution on that. And so I would say that it's probably coming very soon. >> thank you. And actually, chair, I look forward to a field trip. Maybe um, I think us caring so much about our small businesses would love to meet your staff in the field at some point during this administration. Uh, again, with your bipartisan leadership, regardless of how you vote, it's really amazing seeing your leadership commitment and style and, um, and value.
▶ 3:11:37Um, so thank you so much. I look forward to working with you all. >> we would welcome the visit, ma'am. >> thank you. Sir, I yield back. >> lady yields back. I now recognize miss goodlander from the great state of new hampshire for five minutes. >> thank you, mister chairman. And thank you, mister songs, for being here today and for your work on behalf of our country. I, I wanted to start off by saying right now, in my home state of new hampshire, as the chairman knows, we get we have the best foliage in all of america.
▶ 3:12:05We also have we're we're in the midst of heavy snowfall, but we're also in the midst of one of the most vicious droughts that we've seen in a quarter century. And the drought has really impacted the family farmers of our north country.
▶ 3:12:19Uh, I was grateful to the sba for, uh, noticing the availability of disaster relief back in september when, uh, the declaration was, was issued in your press release, you note that, uh, advertising the loan assistance, you note that the sba, quote, the sba is unable to provide disaster loans to agricultural producers, farmers or ranchers, except for aquaculture enterprises. And, Mr.
▶ 3:12:48Chairman, I would ask to enter this press release and the the corresponding declaration into the into the record. Mr. stallings, can you help us understand why it is that farmers and ranchers are unable to qualify for sba loan assistance in the event of a declared drought? >> that's that's what's in the statute, ma'am. And they are traditionally, uh, partnering with usda.
▶ 3:13:12Now, if it is a usda declared disaster, we can come around and support the small businesses that support those agriculture experiences. So you've got a farmer that, uh, maybe has 15 tractors that he normally, uh, services at the local john deere dealership, but because of drought, he's not utilizing those tractors. Well, that farmer that john deere dealership feels the impact of that agriculture loss. We can support them with an economic injury disaster loan to help support that john deere dealership.
▶ 3:13:42But unfortunately we can't. That's a usda, uh, disaster deck that would cover the loss of the crop. So we support the businesses that wrap around those businesses. As a matter of fact, the usda is our number one declared disaster partner every year. And so we work very closely with them. And we love our relationship with usda.
▶ 3:14:02>> well, I would be grateful to work with you and your team to make sure that I'm giving the best and clearest information to family farmers who just don't have the bandwidth to hire an army of lawyers to help them sort through exactly how they access the federal funding that is theirs. Um, and would welcome you to the north country of new hampshire. It's a it's a beautiful place to come. And we would welcome you there anytime.
▶ 3:14:23You mentioned in your written testimony that, uh, through the office of rural affairs, which is an office I care about deeply and really look forward to seeing that office be expanded and elevated within the sba. You mentioned that you've deployed mobile recovery vehicles and portable loan outreach centers. Can I ask you how how how we could get a portable outreach center to the state of new hampshire. >> as soon as you have a an incident that occurs? Ma'am, that's part of our teams now. Um, deployment strategy.
▶ 3:14:50It jokingly, I'm a I'm a southeastern conference georgia bulldog kind of football guy. So it looks like we're tailgating. I mean, it truly is. It's it's tents that we set. >> up in the event of a declared disaster. So right now there's a usda declared disaster that sba has recognized. >> yes, ma'am. We will bring those in and we will set up. We will work with usda. >> and can I have your commitment that you will send these resources to new hampshire? >> absolutely. Yeah. We're committed to supporting any disaster that we're deployed to.
▶ 3:15:20Man. >> great. Well, I look forward to working with you on that. And I appreciate that. And just to note on on the prohibition on, on sba loans going directly to family farmers, you recognize family farmers are some of the most important small businesses in the united states. Um, is there a good reason why we've prohibited sba loans going directly to family farmers? >> that's the statute in which we have to operate with. Uh, that's a that's a decision for congress. Congress. >> good. Well, we would love your thoughts on that.
▶ 3:15:48And I'll submit some more questions to the record on that front. Um, in my remaining time, I, I wanted to to thank you for submitting these very helpful monthly reports, which I have benefited from. And I know our committee has I noticed that these have not been made available on the sba website. Is that something you could commit to doing moving forward? >> we've had that discussion. I'm not sure it's it's something that with it being ever changing and it's not, um, easily digestible.
▶ 3:16:17You understand it because you get the report every day. I think that we'll have those conversations. I can't commit to you right now that we will just automatically put our report online, but we can continue discussions on it. >> good. Well, I think there were good reasons why previously those reports were made public. I believe deeply sunlight is the most powerful disinfectant, and the public should know where. American taxpayers should know where their money is going. So look forward to working with you on that front. And with that, I yield back, Mr. chairman.
▶ 3:16:47>> gentlelady yields her time back. And I'd like to thank the witness today, uh, for your testimony and for appearing before us, and especially with the little interruption we had. Uh, without objection, members have five legislative days to submit additional materials and written questions from the witness to the chair, which will be forwarded to the witness. I ask the witness to please respond promptly if there's no further business. Without objection, the committee is adjourned.