▶ 0:15:59Uh before we get started, I want to uh recognize Representative Schultton from the great state of Michigan to lead us in the pledge and the prayer. Would you please sign uh stand?
▶ 0:17:18Also, before we get started with our business, uh I'd like to take a point of uh personal privilege. Uh as many of you know, this week is our chief counsel Nicole Vo's last week here with the Where is she? Hiding
▶ 0:17:34hiding in the corner. She's going to have to give a speech here in a minute. But Nicole, who has often been my I call her my co-pilot up here during hearings or on the floor, is leaving the house after six years. I want to take this opportunity to thank her for her service to the committee, this institution, and the small businesses across our country that depend on what you do. So Nicole, you'll be missed. We love you.
▶ 0:18:08Good morning to everybody. 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. Uh welcome to today's hearing titled From Startup to Scale: The Role of the SBA's Office of Investment Innovation Empowering America's Small Businesses. I want to thank our witnesses or witness for appearing today and for sharing the important work done in the SBA's office of investment and innovation.
▶ 0:18:38As we look back on 250 years of American history, we see a country built on innovative ambition and the drive to build what comes next. America's economic strength has retested on a simple promise that if you are willing to take a risk back an idea worth believing in and contribute to something greater than yourself, this country will give you a fair shot. It's simply called risk and reward.
▶ 0:19:01And in fact, America's always grown stronger when people who take risk and innovate are given room to try and more importantly the chance to succeed. The Office of Investment and Innovation exists to support that work and ensure that the risktakers have the tools, the capital, and the pathways they need to turn ambition into tangible impact.
▶ 0:19:20OI connects America's small businesses to capital, research, funding, and ecosystem support they need to launch a scale and scale and compete through the Small Business Investment Company Program. OI licenses privately managed funds that channel billions of dollars in equity and long-term financing to qualify small businesses through the small business innovative research and small business technology transform transfer programs.
▶ 0:19:46OI coordinates federal research awards that translate laboratory ideas into technologies our war fighters uh depend on. Thanks to the work of this committee, we have successfully reauthorized those programs through September 30th, 2031. For more than 20 years, the SBIC program has operated at a zero subsidy cost to the taxpayers. And over the past 5 years, it has run with a near zero default rule or rate.
▶ 0:20:13And under administrator Leler's leadership, this office has delivered historic results. In fiscal year 2025, the SBIC program closed with a record $53 billion in combined private capital and SBA leverage.
▶ 0:20:27In addition, the SBA's approved 48 new SBIC licenses and issued a record 88 green light letters building a pipeline projected to drive approximately 27 billion in new private sector investment concentrating in manufacturing, critical technologies, and the industries our country needs most.
▶ 0:20:47On the research side, more than six 1,600 SBI funded small businesses reported nearly 29 billion dollars in commercialization activity delivering real products, jobs, and returns on federal investment. And today's hearing will examine how OI has been restored to its core mission, how its programs are delivering measurable results from America's small businesses, and how Congress can continue to support this work in the years ahead. I thank you again for joining us today.
▶ 0:21:15I look forward to the conversation ahead and uh I now recognize uh the ranking member and my friend from California, Mr. Tran. Thank you, Mr. Chairman, and welcome, Mr. Carter. Uh innovation is the engine of long-term economic growth. It is through innovation that we raise living standards, improve the efficiency of business, and maintain American economic competitiveness. Small businesses pull more than their own weight in bringing that innovation to market.
▶ 0:21:46According to a 2022 SBA report, small businesses with between five to nine employees receive more patents per employee than any other category. Entrepreneurs are essential catalysts for technology transfer, moving research innovations from the laboratory into the marketplace and doing the hard work of raising capital, conducting market research, and bringing those discoveries to the public. Importantly, these small businesses are everywhere, not just in Boston and San Francisco.
▶ 0:22:16The promise of the America of America's innovation economy is that great ideas can come from anywhere and that even a startup in rural Missouri can have the same opportunities as a well-connected founder in Silicon Private capital markets remain extremely concentrated and our federal programs at the SBA exist to correct that market failure.
▶ 0:22:41The SBA's office of investment and innovation is the home of that mission and it houses three sets of programs that I want to briefly highlight. First is a small business investment company program established in 1958 to give small business high growth firms access to pay patient capital.
▶ 0:23:01In fiscal year 24, SBIC's deployed over 7 billion to more than 1,100 companies, supporting over uh 113,000 jobs. Since its founding, the program has backed some of the names that have come uh become most central to American economic life. Apple, Costco, FedEx, Intel. Second is the small business innovation and technology transfer or SBIR STR programs.
▶ 0:23:31For over four decades, these programs have been the federal government's primary vehicle for directing research and development funding to small innovative businesses. Just last year, they directed roughly 4 billion in early stage technology funding to 4,000 businesses. These programs are enormously successful in bolstering American innovation and generating economic activity which makes it all the more concerning that last year they were allowed these were programs were allowed to lapse.
▶ 0:24:01The impact was devastating for thousands of small firms struggling to continue lifechanging research. Thankfully the small business in Innovation and Economic Security Act was recently enacted. It reauthorizes the SBIR and STR program for the next five years. It contained genuine improvements supported by members of both sides, including my bill on extending due diligence requirement to protect American intellectual property.
▶ 0:24:29However, I would be remissed to ignore that it is much harder to negotiate a reauthorization package without up-to-date information which is supposed to be provided by the SBA. It is 2026 and we have not received an annual report on these vital programs since fiscal year 2022. I look forward to learning more about the actions the office is taking to provide this information. The third and final program sits in the office of investment and innovation.
▶ 0:24:57They support entrepreneurship through their regional innovation clusters, the growth accelerator fund and the federal and state technology partnership program. These are not just peripheral grant programs. They play an integral part and role of realizing the pro promise of the office to ensure that OI reaches firms that lack traditional pathways, capital or live in hotspots of VC funding.
▶ 0:25:24I look forward to your testimony and the ways you are diligently implementing these programs to ensure that there is equitable access to funding and resources for small business owners, no matter where they are located or who owns them. Thank you, Mr. Chairman. I yield back.
▶ 0:25:41Gentleman yields back and I will now introduce our witness. Uh our witness today is Mr. Joshua Carter. Mr. Carter serves as associate administrator for the US Small Business Administration's Office of Investment and Innovation. Uh, prior to assuming this role, Mr. Carter co-founded and served as coach chief investment officer of CPO Capital, a multif family office and institutional investment firm based in Salt Lake City.
▶ 0:26:06Uh, he also previously held positions at the Bank of America Mel Lynch and Goldman Sachs. He graduated from Harvard University with a degree in social studies and has an MBA from the Wharton School of Business. I want to thank you again for being here and I look forward to our discussion. Now, before recognizing the witness, I'd like to remind that uh you uh your oral testimony is is restricted to five minutes in length. You know that.
▶ 0:26:33And if you see the light turn red in front of you, it means your five minutes have concluded and you should wrap up the testimony. And with that in mind, uh and his knowledge of that, I now recognize Mr. Carter for his fiveminute opening Chairman Williams, Ranking Member Trann, and distinguished members of the House Committee on Small Business. Thank you for the opportunity to testify today on behalf of the US Small Business Administration.
▶ 0:26:59My name is Josh Carter, and I serve as the associate administrator for the Office of Investment and Innovation. It is an honor to discuss how the SBA's investment and innovation programs are helping America's entrepreneurs access capital, commercialize breakthrough technologies, and create jobs in local communities across the country. Under the leadership of President Donald J. Trump and Administrator Kelly Leler.
▶ 0:27:22The SBA has renewed its focus on supercharging access to capital for small businesses, commercializing new innovative technology, and creating good paying jobs through strong public private partnerships. Fiscal year 25 marked a record year for capital formation and innovation at the SBA. At the center of that success is the Small Business Investment Company or SBIC program.
▶ 0:27:45Last year, the SBIC program reached a record 53 billion in total assets, the largest in its history, and a reflection of unprecedented levels of private capital being mobilized through public private partnerships. For more than six decades, the SPSC program has served as one of the federal government's less well-known but most successful investment programs.
▶ 0:28:05In addition to priv providing capital, fund managers bring industry expertise, strategic guidance, and business relationships that help entrepreneurs grow and succeed. Today, approximately 360 active funds manage more than 55 billion in total capital. And since the program's inception, SBIC's have deployed more than [snorts] 147 billion through over 200,000 investments in American small businesses.
▶ 0:28:33These investments supported the creation of more than 10.6 million new jobs since Congress has also taken an important step to ensure the continued growth of the SBIC program through the passage of the Investing in All America Act, one of the most significant enhancements to the SBIC program in years. The legislation increases SBA leverage limits, allowing significantly more private capital to flow into American small businesses.
▶ 0:29:00For many funds, these higher limits can translate into nearly 200 million in additional investment capacity available to support growing businesses. The law also provides up to 125 million in additional leverage for funds investing in administration priorities such as critical technologies, rural tech, rural communities, and small manufacturers, which is essential to America's long-term economic competitiveness and industrial strength in an increasingly competitive global environment.
▶ 0:29:28During the past year, the SBA has removed regulatory barriers to facilitate SBIC investments in critical mineral extraction and processing and designated critical technologies while eliminating restrictive eligibility requirements for fund applicants and improving efficiency for experienced fund managers. Additionally, the SBIC program aligned its investment strategies with SBA strategic priorities to create additional flexibilities around pre-licicensing investments to ensure US small businesses receive the capital they need when they need it.
▶ 0:29:59[snorts] These reforms strengthen the SBIC program and position it to mobilize capital at greater scale for the next generation of American small businesses. And while capital is essential, innovation is also remains equally important to America's future. The small business innovation research and small business technology transfer or cersitter programs continue to demonstrate the power of investing in American ingenuity.
▶ 0:30:23In 2025, more than 1600 cersitter funded small businesses reported nearly 29 billion in commercialization activity, including follow-on private investment, government contracts, and private sector sales. These outcomes demonstrate the cybersitter program's effectiveness in translating federally funded research into deployable technologies with real world economic and national security impact. The recent reauthorization of the cyber sitter program provides critical certainty for innovators, investors, federal agencies, and entrepreneurs.
▶ 0:30:52All these accomplishments tell a powerful story. The SBIC program reached a record portfolio size, providing unprecedented access to capital for small businesses. The SBA approved new investment funds expected to generate tens of billions of dollars in private sector investment and the cyber sitter supported companies continue to generate significant commercialization activity with economic and national super national security impacts.
▶ 0:31:15These results demonstrate that when government creates the conditions for private sector investment and innovation, America's small businesses generate economic growth across the nation. The SBA remains committed to expanding access to capital, supporting innovation, strengthening domestic manufacturing, and helping America's entrepreneurs continue to lead the world in economic and technological advancement. Thank you for your time today. I look forward to hearing from members of this committee and answering your questions. Uh gentlemen yields back.
▶ 0:31:46We will now move to the member questions under the five-minute rule. I recognize myself for five minutes. Mr. Carter, since administrator Leler was sworn into office, OI has seen record record SBIC performance and modernized regulatory framework and two pieces of bipartisan legislation signed into law. Now, that record is difficult to match.
▶ 0:32:08In your in your view, uh, how have the Trump administration's priorities translate into concrete results for small businesses through OI's programs under Administrator Leler?
▶ 0:32:20Thank you, Chairman.
▶ 0:32:22Thank you, Chairman. And I've been uh so uh honored to work with Administrator Leler and under President Trump and Administrator uh Leler's leadership. She's focused us intensely on the key themes that matter for our country at this time. Uh number one, re-industrialization of America. Number two, strengthening of our supply chain choke points, increasing the resilience of those. And number three, continue to advance technology, uh the adoption of technology, advanced technology, the commercialization of it.
▶ 0:32:49Uh and it's been incredible to see already the impacts that that's had. Um just this last year for 2025, uh about 44% of our SBIC portfolio was in the industrials category, which is made up principally of manufacturing. Uh we've seen incredible support from the funds as we've focused on this. Um and we've seen three billion last year just in that sector in the SBIC program. And and what's so powerful is when you actually look at the individual company impact, right? It's all about the small businesses and the and the entrepreneurs.
▶ 0:33:18And we I I saw found an example that was in in your home state of Texas, Cleburn, Cleburn, Texas. There's a cement wall manufacturer that's there that received SBIC funding. And you look at those individual situations and that's what that's what this program is all about.
▶ 0:33:34Thank you. The SBIC's program has operated for nearly seven decades, and its ability to deliver private capital to small businesses without using taxpayer dollars remains one of the most efficient models in federal government. Now, under administrator Leler's leadership, again, the SBIC portfolio closed fiscal year 2025 at 53 billion in combined private capital and SBA leverage, the largest in the program's history.
▶ 0:33:58So my question is how has the Trump administration's focus on mission dis discipline and regulatory modernization driven that record performance and what does that signal about the direction of the OI as we move forward? Yeah, from the beginning of her time uh as the administrator of the SBA, administrator Leler's focused on efficiency and on aligning all of us at the SBA uh with the mission of the president.
▶ 0:34:23And it was incredible to see an OI and and and frankly the team that we have there in my professional experience, 25 years as an investor is as good as any institutional investor out there and watching how they came together last year to process a record number of funds about 170 funds that were processed. We mentioned the statistics, 88 funds that were approved for green light, which is a conditional approval, 46 licenses.
▶ 0:34:48Um, and watching them uh come together, find efficiencies, um, focus on uh, processing and helping funds through so we can get capital to American companies has been really inspiring.
▶ 0:34:59In the time we got remaining, access to capital still remains one of the most persistent barriers for small businesses looking to grow and scale. Uh, how has the landscape for small business investment changed over the past few years? And where do you see the private market falling short in ways that the OI programs are designed to fill? There's a few trends that in my mind make this program even more essential and more meaningful to American small businesses. We've all seen how um funds have become larger and larger.
▶ 0:35:29They're mega VC funds now. uh roughly 76% of first quarter volume in venture capital this year was was with was with was with was with was was with was with was with was was with six venture capital investments. So the investments themselves are bigger, the funds are bigger. Similar trend is happening in private equity where the funds are getting larger and funds over $5 billion are representing 35% of the volume. That's up from like 26% 5 years ago.
▶ 0:35:51So, our small funds, smaller funds that thankfully with the great um legislation you pass can have more access to capital now are vital to these small businesses because everyone else is moving up market and this capital allows them to stay focused on the lower middle markets and on the entrepreneurs and the innovators that are so important to our country and that all these programs are focused on.
▶ 0:36:10In the short time that I have remaining, I want to just well let me go to the back here. Uh my time I my time is up and I'll go to uh who's next?
▶ 0:36:26Ranking member.
▶ 0:36:27Ranking member.
▶ 0:36:29Thank you, Mr. Chairman. Mr. Carter, one of the main ways to do oversight is through reporting requirements from the administration in congressionally authorized programs. The SBA has not published data on the SBIC program, typically done through the SBIC program overview report since September 2024. Uh why has the SBA not published this data since fiscal year 24?
▶ 0:36:56Thank you for the question. uh Congressman, um the opportunity for us and I I've been in this seat since August of last year and one of the first things that I did was to analyze our data, analyze our technology and the resources we had because as someone who's managing the division, uh the office, you need to see the data to be able to understand it. And what I would say is that we've got a huge opportunity at the SBA that our CIO is focused on. He talks all the time about how there are 15 different data centers spread throughout the SBA that he's trying to rationalize and reconcile.
▶ 0:37:25Um, and I've been focused on this uh with with industry colleagues since I've been there. I'm pleased to say actually um we're going to be producing uh an SBIC annual report in the next two weeks. I've got uh my draft of it. It's not quite ready to be published yet. Um but we're very very focused on data and we're also similarly focused on it for the SB. Um uh and and you know, our first focus was to help work with Congress to get that reauthorized and that was what I spent most of my time in that uh part of my office on for the first six months. that it's a high priority for us and I appreciate you flagging it for us.
▶ 0:37:56Yeah. Thanks. So, you answered my next question so we can expect it in the next couple weeks. [laughter]
▶ 0:38:02the report
▶ 0:38:03that that is that is that is my hope. Yes. Barring unforeseen circumstances, but I I I've my team and I have been working late hours to get this done as as soon as possible. And and the reason uh for SB for private equity performance data, as you may appreciate, you have to benchmark it versus the industry. and we just now got our 2025 industry benchmark datas in the middle of May and so we've been waiting for that data and we'll have an annual performance report to you as soon as possible.
▶ 0:38:29Great. And and with that, would you be able to provide a timeline uh to us to this committee on uh when you expect the SBIR report to be uh sent in?
▶ 0:38:40You know, I don't have a timeline for that yet. What we're focused on first and foremost is uh updating our our policy directive given the the great legislation that that this body helped to pass. Uh and there's a significant amount of work involved in that. And as you can imagine, there's 11 major agencies, but there's probably 40 sub agencies that we all work with and interact with for all of our policy directives. And my team is working diligently on that. But as an administration, we're incredibly focused on getting that report out as soon as
▶ 0:39:07And and I'm sure as you can understand, you mentioned that you need to see all the data in order to manage. So do we. We absolutely need all the data and for us to be able to conduct oversight and manage as well.
▶ 0:39:17You know, uh GAO recently did a review of potential use cases for artificial intelligence systems at the SBA and specifically noted the potential for using AI to fulfill reporting requirements. Is that something your office is actively considering?
▶ 0:39:34Absolutely. We have an AI ZAR uh and an appointee in each office and uh we've and and as as you may know I I am a late adopter. Um some of the young folks in our office are unbelievable with it. And actually I literally have a list here of all these incredible companies that are in your districts that we are able to do by using AI to analyze our form uh 468 data for the SBIC program as well as the SBR data. So um I think there's a great opportunity and use case for it.
▶ 0:40:00That's great. I'm going to shift gears a little bit. Mr. Carter. Uh, Congress awarded 9 million in each of the past three fiscal years for the growth accelerator competition program. To date, the SBA has only awarded 5.7 million uh with the fiscal 24 funds. What is the what is the remaining 21 million being used for?
▶ 0:40:22Thank you for the question, Congressman. Um, one of my first jobs again in the office of OI was to focus on all of our programs. the administrator asked me to evaluate them all and make sure that they align with the priorities of our country and with the priorities of the administration. And so we're doing that and I'm I'm I'm excited that we're in process right now of getting our new uh gaffsy program out.
▶ 0:40:42Um and again uh without committing to specific dates, it's in process and and hopefully I mean certainly before September 30th and before the end of the fiscal year, uh that program will be out and you'll be able to to to look at it. So I if your word as you sit here that you're going to obligate those remaining funds. Uh
▶ 0:40:58uh I I'm doing everything I possibly can in the administration is to obligate those funds. Yes.
▶ 0:41:04Thank you Mr. Carter. Uh regional innovation clusters Rick are an important uh part of the entrepreneur ecosystem helping small businesses launch and scale their businesses. Why did Doge cancel 17 RAIC Rick programs
▶ 0:41:19Thank thank you for that question. Um similar it's a similar approach. Uh the administrator asked everyone at the SBA to focus on all the programs and to evaluate them based on their alignment with the mission of our country, their efficacy, their ability to to serve small businesses in our country and uh and that's what we're doing with uh the Rick program as well.
▶ 0:41:38Thank you so much. Uh Mr. Chairman, before I yield back, I'd like to enter into the record this June 10th article from uh Fed Scoop, Innovation on ICE, how Doge derailed an SBA tech program. Thank you so much and I yield back.
▶ 0:41:50Gentleman yields back. I now recognize Mr. Muer from the great state of Pennsylvania for five minutes.
▶ 0:41:55Thank you, Mr. Chairman. Uh thank you, Mr. Carter. Appreciate you being here. Thanks for your work at the uh SBA. You and Administrator [snorts] Leler have created some and revitalized much of the office and created some uh some important reforms. My understanding before I get to some of my questions regarding uh the all of America act and the SBIC program.
▶ 0:42:14[clears throat] Um so when you folks entered u year and a half ago, my understanding is SBA had somewhere in the neighborhood of 5300 5400 employees. That was up from about [snorts] 26 2700. So basically double. Um when we went and visited the SBA there was nobody there. I think they told us that maybe 15% of the employees were were showing up for work. Everybody else was remote. Who knows? Throughout the throughout the country.
▶ 0:42:44My understanding now is not only have you right-sized it, it's a little higher than it used to be, about 3,000 employees, but loans [snorts] to small businesses have actually doubled during that time. So, you have half the people and double the loans. I'd say that's pretty pretty serious improvement in operation. Could you expand on that?
▶ 0:43:03No, absolutely. I mean, it it's it's all it's all the same theme that uh the administrator and the president have focused this administration on on uh being effective and on streamlining. And it's incredible to see what they've done. And in fact, I I just this week had one of our team members who's moving from the portfolio management group into exams within the SIC business. She throw a party for her bosses. Normally, the bosses would throw the party for her.
▶ 0:43:27And in this meeting, she was thanking them for all that they do for her and how they came together last year with so much opportunity. They streamlined things and they worked as a team and got so much done. Uh and and another important thing to to to contextualize this is is the co era, right? I mean, this committee, this office, um put $1.2 trillion dollars out in a very short period of time to help save our country at a at a valiant time. And this office had to staff up materially for that.
▶ 0:43:54And it it's very rational that as that winds down that we can staff back down again to to pre-COVID levels and and do more with less.
▶ 0:44:02Well, good work. And it and it does sound rational. So on to [clears throat] the SBIC programs. Um $53 billion in combined private capital. Um largest amount in the program's 67year history. So congratulations to you there. Uh your flagship program is the SBIC program which by the way is run tremendously well uh by some some people in this room. So we appreciate that.
▶ 0:44:25[snorts] And um so with the all of America plan and the increases in the in investing in all of America act focused on rural areas, tech um manufacturers, uh tell us how that legislation has allowed you to serve more of where it was intended to serve and and support loans. Now
▶ 0:44:46again, I I just want to thank this body. Thank you for sponsoring and and Congresswoman Schultton for sponsoring. Uh it's an it's an incredible bill. I know it's been worked on for years and and you know many folks in this room have been very focused on it. Um I I think it's brilliant. Um you look at what's happened to you can look at CPI but you can also look at like the Russell 2000 for those you know investment nerds. Um it's gone up 90% since 2015.
▶ 0:45:13So if you just think about it in like purchasing power that our funds have like it's 90% lower had you not done this right. So it was huge and to me the brilliance is the is the bonus leverage that it's a way that that you know we're providing capital but but our country has such a need right now to re-industrialize. You know we're we're in a geoeconomic competition against very strong adversaries that think in decades and have been doing this for 30 years and hollowing out our manufacturing base.
▶ 0:45:39You've created an incentive for them to invest in manufacturing, critical technologies, rural, etc. And and it's and it's economic, right? It's it's economic. It's rational and it's scaling the investors that are professional investors as opposed to us picking all the companies ourselves. It's brilliant.
▶ 0:45:55Well, I will tell you and on behalf of the chairman, myself and many others, we're former well some of us are continue to have small businesses and all or even larger businesses and uh you're you're talking like someone who's very much focused on advocating, expanding and and uh um helping uh small business. So, that's what this committee is all about. So, it's great to hear what you have to say.
▶ 0:46:18You also mentioned your testimony um um how you're removing regulatory barriers to facilitate SBI SBIC investment in critical minerals. So maybe you can talk about that a little
▶ 0:46:30Yeah. Uh we our our SBIC Thank you for the question. Uh, Congressman, our SPC companies were not allowed to do project finance and we enabled through our regs through our re reeregulations for them to do project finance uh for critical minerals and mining companies which just allows them to invest in specific deals specific like assets and investments and it it's a great it's a great change and we're hoping that uh it will be taken advantage of and it will expand.
▶ 0:46:56Thank you. My time has expired. I yield back Mr. Chairman. Thank you. [snorts]
▶ 0:46:59Gentleman yields back and now recognize Mr. Garvey, one of the great catchers of all time [laughter] from the great state of Kentucky for five minutes.
▶ 0:47:07Thank you, Mr. Chairman. We still came up short in the game, though. So, uh
▶ 0:47:11that's why I brought it up. [laughter]
▶ 0:47:15I was cheering for you all and I was scared to death just being a 50-y old man. I I can't believe you guys could do that. So, congratulations.
▶ 0:47:21I broke my foot two years ago in the game, but it was uh [laughter] it's good to be back. Um so, no, thank you for being here, Mr. Carter. I appreciate this [clears throat] and and look, I think this is a really important hearing. um especially now as as we're all looking at the 250th anniversary of our country, the legacy in this country, of being able to build a business, of entrepreneurship, of innovation. Uh and and importantly, you know, I have sort of an overarching theory of government, right, which is if you want more people to do something, make it easier. If you want fewer people to do something, make it harder.
▶ 0:47:50We've made it easy to innovate in this country. And one of the ways we've done that is by having the governor as a government as a partner in the innovation for small businesses. And just look at what that has been able to produce. GPS, the internet, semiconductors, mRNA vaccines. Look back even further at precision manufacturing in the Civil War, telegraph lines, cutting edge lighthouse lenses.
▶ 0:48:13All of these worldchanging innovations and inventions began actually with investment from our government into small businesses. And I think when the government works as a partner with the people who are willing to innovate in our small businesses, when they provide seed funding, right? So we're talking about this SBIR, small business innovation research, often referred to as America's seed uh program, right? America's seed research, then it makes this type of thing possible.
▶ 0:48:40Since the second world war, US research and development has been the envy of the world over. Uh so have our universities, so have our federal labs. And so, you know, one thing I do want to point out, it was troubling for a lot of us on this committee to watch the very top levels of this administration attack and tear that down.
▶ 0:48:55When you had the president, when you had Elon Musk, when you had a kid who referred to himself literally as big balls going in and tearing down the system that made this legacy possible, that is something that is alarming because of what it has stood for for so long, what it has produced, and I think what everybody in this room wants it to continue to do as we move into the future. Um, I I think you believe in that legacy, Administrator Carter, and and I am and glad you are here.
▶ 0:49:21So, I hope you'll continue to fight for it and for those small businesses that count on our country to be the incubator, right? To be the engine that has produced this, to work as a partner, enable our small businesses to do what they have always done. Now, that said, I want to move on to a few specific questions. For many of the SBIR recipients, federal support ends once technology has been proven effective. And this is the period where we see, and you've probably heard this term, quote, the valley of death for small businesses. Uh, not something we want to have happen.
▶ 0:49:50It's where these companies struggle to transition from development to commercialization. And so, are there existing federal programs that can help SB funded firms survive that valley of death? And how is SBA connecting SBIR recipients with those programs and resources?
▶ 0:50:05Thank you for the question, Congressman. Uh, absolutely. Uh, one of the things that I'm so excited about in the cber reauthorization is that there's an emphasis on commercialization and as we update our policy directives, we're going to be very focused on that. There's training for contracting officers within the government agencies. Um, and and we're orienting all of our programs within OI on this notion of commercialization and so couldn't couldn't agree more with the sentiment. Uh, we're incredibly focused on that.
▶ 0:50:32It's not an easy problem as we all understand like acquisitions within Department of War which is as you know is 56% of the cyber program you know it's a massive challenge and opportunity for our country but we're going to do everything we can within our programs to support that and we've got a tremendous dialogue with our partners at all the agencies in particular department of war which is our largest partner for cyber
▶ 0:50:52and and you mentioned a bill earlier introduced by my colleagues are there additional tools or resources or things we can do to be helpful that would help more companies successfully make that transition to commercial scale nail
▶ 0:51:03Well, we appreciate absolutely the support of this committee for all of our OI programs. The administrator really views these as point of spear for for all that we're talking about and has been and her leadership team has been incredibly supportive of what we're trying to do, our resources, and all that we need. Um, and we thank you for your support. I'm sure we have a lot of ideas that we could talk about and our legislative affairs team would love to connect with yours and I'd be thrilled to to engage with you on ideas.
▶ 0:51:25Be be happy to. I look forward to that. Seriously. Um, last question in the quick time I have remaining. We often see these companies, they're fighting to survive. They're spending all their time trying to win these federal contracts. Then they lose the edge that made them the innovators in the first place. What can we do to make sure that businesses remain innovative once they graduate from SBIR?
▶ 0:51:45Thank you for that question. You know, it's it's a great I I I wrote a thesis in college on disruptive versus sustaining innovation, right? The idea that as you get bigger and bigger, it's harder to be an innovator, right? And you almost have to have companies spit spin out. What's so interesting about the CBREA program, we call it America Seed Fund, but if you read the statute, which I'm sure you're much more expert at it than I am, um it's really about small business R&D and and some of these companies are R&D companies themselves, not necessarily companies that are trying to become the next Anderoll or the next uh Qualcomm.
▶ 0:52:15And so I I I do think there's a huge opportunity for that. And I think a lot of the work we're doing with our programs that support uh the innovation ecosystem as well as SBER and our our regulations and our our engagement with each of the agencies are going to be very important for that. So thank you for the question.
▶ 0:52:30Thank you Mr. Chairman. I yield back.
▶ 0:52:32Gentleman yields back. I now recognize Miss King High from the great Northern Marana Islands for 5 minutes.
▶ 0:52:38Thank you Mr. Chairman. First of all, I I want to say um on behalf of the people of the Northern Marianas, I want to convey our appreciation to Secretary or Administrator Laughafler. Uh SBA's presence on the ground with regards to the disaster recovery has been um incredible. There's a woman who is I think the information specialist who has been very good about going out in the community. Her name is Ranada Mason. I just want to give her a shout out.
▶ 0:53:07she's done an incredible work in terms of, you know, just the disaster recovery programs and I want to say first of all, thank you. so I represent uh the Northern Mariana Islands and we are as remote as it it can get, right? And uh there's never been a SB cber or a SCTR grant awarded to a CNMI small business. And I think in large part because of our remoteness, right?
▶ 0:53:37And then we also don't have the financial ecosystems uh that every you know that that is available here on the mainland which basically serving as a barrier to um folks on the ground to have access to some of the programs that you know is currently un available under the under the SBA.
▶ 0:54:01And so I kind of just, you know, want you to talk [clears throat] me through how we get over some of these barriers so that our very hungry young entrepreneurs can be, you know, involved or participate in these opportunities.
▶ 0:54:17Thank you for the question. I was studying your economy last night and I think if you would invite me to visit
▶ 0:54:22Oh, you're invited. Let's go. That would be that would be a great if I could if you could get administrator Leler to bless a visit to you on on what looks like a beautiful place that I guess tourism is your main industry. wonderful question. Certainly something we're wrestling with with all of our states. I mean, I've got lists of all of all of your states and your districts even, you know, with all the awards that we have and it and it's it's it's disheartening to see that there aren't any cyber awards or SBIC's in, you know, in in in your territory.
▶ 0:54:50Um, and what I what I love about what we're doing and and the advances of technology and entrepreneurs uh is that you don't have to be on physical location to make things happen. So, our CBER uh we did our our annual innovation summit just after the reauthorization which was important to us in in May for two days and it was virtual and so we had three days of incredible virtual um seminars, lessons, engagements with each of the program managers.
▶ 0:55:16So someone, you know, in in your in your territory could actually be there and an entrepreneur could learn how they can engage with the CBRE program. Uh and so I think that's an opportunity. Um not an easy thing to to solve for sure, but certainly something that we're focused on for for all the states uh you know in this great
▶ 0:55:34So thank you for that and I and I'm and I am looking forward to welcoming you and Secretary Laughler hopefully as well to the Northern Moranas. I know that the chairman has been trying to do a Kodell out there, but just the schedules haven't aligned and I think it's very important um you know for folks to actually set sight to the ground and kind of see what the conditions are right you know um we just got as I stated we just got hit by a super typhoon which has damaged our utilities grid and so there's a lot of conversation as to how
▶ 0:56:04we can bring you know new innovation so that we're not wholly relying on fuel that we get from Southeast theast Asia, right? And uh right now our utilities uh has gone up from 22 cents to about 46 cents per kilowatt. And you know that's just cost prohibitive for for many people on the island. And so uh what I'm very curious is how do we incentivize researching, testing and commercial deployment of innovative technologies like that in the CNMI?
▶ 0:56:34How do we open up these opportunities? Especially given the fact that everybody talks about our location being strategic to national security, right? But that's not coming with the investment that supports the economy. And so, how do we have these conversations and and look towards opportunities like that?
▶ 0:56:51Thank you for the question. Um, you know, I I really think this while it it seems that it impacts and it's so it's so tangible with what's occurred there and and I'm I'm sorry for that and and it was very kind of you to give the shout out to uh a member of our team uh you know Chris Stallings and administrator Leler are on the road all the time incredibly focused on disasters and it's it's it's inspiring uh what they do and and um but what I would say is this is a challenge for our entire country. We have allowed China to hollow out our industrial base.
▶ 0:57:20Like we like I was at a critical minerals conference in New York a month or two ago talking to people about okay well if we have mining that's great we need mining right well we actually can't refine anything like we have we can do our mining and we still have to send it to China to actually be refined and so these are major problems that that our program cyber sitter and you know in particular and all the national research labs etc are focused on but our our SPSC programs and other programs can be focused on it as well and so it's an urgent priority for our entire country and I I
▶ 0:57:50appreciate you flagging it for
▶ 0:57:51All right. Thank you. I'm out of time. I yield back.
▶ 0:57:53Gentle lady yields back. I now recognize Miss Sculton from the great state of Michigan for five minutes.
▶ 0:57:58Thank you so much, uh, Mr. Chairman, and thank you, Mr. Carter, uh, for being here. Really appreciate your your knowledge on these programs and your enthusiasm. Appreciate the love, uh, for investing in all of America. Uh, it is such a common sense bill. I don't know if Dan remembers the the first time we passed this uh, out of the House.
▶ 0:58:17We were walking down the House steps together after, you know, after we passed and there were throngs of reporters and it was like they must be so excited to talk to us about this common sense bill that is going to put more uh capital in the hands of small business owners. No, they were there for uh another member uh of our our Congress who was, you know, stating the latest sort of uh clickbait of the day. Um, and I often refer to that just as like when people ask, is Congress actually getting anything done?
▶ 0:58:47Yes, it is. And I'm I'm so proud and I will give credit where credit is due. I'm grateful to President Trump for signing this into law and and it's going to really make a big difference. There are very few bills like this that have actually been signed into law th this Congress and we're we're really really grateful. So, um, to that end, we're going to stick with investing in all of America just a little bit. Can you tell us when the SBA plans to undertake the rule making and and what you anticipate that looking like in terms of the the timeline and actually getting this getting this
▶ 0:59:15Yes. You know, it's interesting what I've learned in this role is that thank you for the question. Um is that it's very important for me to dig in personally. Um you know, we have amazing people. We have an amazing staff. We have 40-year veterans that are just patriots beyond all patriots. Um that are the leaders of the OI that are career staff.
▶ 0:59:33Um, but what's important for me is to dig in personally and I do bring an outside perspective and I have sort of a perspective of what LPs might experience through our programs and we're trying to make it easier for them that you know the investors in the funds, the GPS who are the actual managers of the funds and um, you know, we so we did a simplification and and reeregulation if you would of our program uh earlier last year that I wasn't personally part of.
▶ 0:59:57Now, with this invest uh investing all America act, we are doing it again and I've uh I've literally spent 15 hours personally with my team so far. I have a list of 140 questions that I'm about threequarters of the way through
▶ 1:00:09and we're doing it again as quickly as we can and we've got very able staff that are focused on it. Um our our most urgent priority recently has been to get the the annual report out and the next is is updating the regulations for the act. But we're very very excited and we did put out a letter to the industry giving them instructions on how they can access the leverage. Okay. Uh now
▶ 1:00:27and again thank you for that context
▶ 1:00:31Of course. Thank you.
▶ 1:00:32Do you do you have a timeline?
▶ 1:00:33Oh time. Oh I thought you were just thanking me. I thought you were very happy with it.
▶ 1:00:36I am I am also very grateful for the context but the question was was about the timeline.
▶ 1:00:40No. So so it's very easy for us to uh for the for the increase in leverage from 175 to 250. It's very easy for us to just say that's done and submit your requests before August 15th. Okay.
▶ 1:00:50So we're getting requests for those. We're processing them on a case by case basis. We don't want we just want to make sure that people aren't just taking more money to have more money to charge more fees. We want to make sure it's not going to change their investment strategy and that it's going to fulfill the the intent with which you with which you authorize that. We have to do reeregulation for the bonus leverage that's obviously new and creative and ingenious. And so that's taking a little bit more time, but I've got a draft um that they told me as soon as I'm done with my hearing uh should be in my inbox and I can focus on it. My team tomorrow.
▶ 1:01:17Great. Uh
▶ 1:01:18so so as soon as as soon as we possibly can. We're working with with utter
▶ 1:01:22Heard heard. we would love to follow up with your team just to to stay engaged on that because I I think you know the devil is in the details on those kinds of things and we want to we of course want to make sure that it's moving forward. Um
▶ 1:01:33thank you for the compliment on the ingenious uh bonus leverage. Agree. Um can you say more about that and and and you know just explain from your perspective you know how the utilization of the bonus leverage in this legislation is going to increase investments particularly in some of these underserved communities rural communities you know communities that have not had the the ones that we raised the caps on.
▶ 1:01:54Yeah. No thank you. You know, it's interesting. Um, you know, professionally as as a professional investor, my whole career, I've kind of thought of myself and and you know, as almost like a lazy fair capitalist, like free market kind of guy as I've been in this job and and studied what we're facing as a country and understanding what's really happened. Um, I I think that I'm an industrialist now. I It's like I think that these are important programs, but there's a different ways to do it.
▶ 1:02:18you know, uh, Office of Strategic Capital is doing it one way and DOE is doing like they have direct dollars that they're putting to work in in in direct loans. This program is an incredible ability to scale. And and again, the ingenious part of it is that you're incentivizing them, but we're not telling them exactly what to do and exactly what to invest in. We're letting the professionals do that, but we're giving them themes to invest in. I think it's brilliant. Um, we meet with companies all the time, each week.
▶ 1:02:44Uh my team's meeting with companies today that are trying to get into our program and they're constantly telling us that the banks aren't lending to these companies and so they're able to get in and lend to them and it it it it's proving this the the virtue of this program that it's it's providing capital to companies in places that they're not getting otherwise. And so again, brilliant program. I think it should double, triple, quadruple. I think it's an amazing program, especially given what we're facing in our country right now.
▶ 1:03:08Let's work together to make it happen. We we would love to do that. Thank you.
▶ 1:03:13Gentle lady yields back. I now recognize Mr. Fuller from the great state of Georgia for 5 minutes.
▶ 1:03:20Thank you, Mr. Chairman, and thank you for having this hearing. Uh, Mr. Carter, thank you for being here. I I I think this will probably be the the toughest question that you'll get today. Uh, I saw in your background that you went to Harvard and to Penn. I was just wondering if you couldn't get into Cornell. [laughter]
▶ 1:03:36I wanted to play football at another school and they told me I wasn't good enough. So [laughter] it was disappointing.
▶ 1:03:42I I I wouldn't I didn't get into Cornell actually. Correct.
▶ 1:03:45Oh no. Well, I I appreciate the honesty here. So yeah. [laughter] Uh now to the the uh topic of the day. One thing that I I try to to share um from Northwest Georgia. And there's a an industry that was essentially started by a young entrepreneur, Katherine Evans. She saw this quilt in the 1890s and wanted to uh um do um how how that quilt was made, figure out how it was done. It was an art form that was basically lost.
▶ 1:04:14And this young teenager in our community because people started to invest in what she was doing created one of the largest industries in in my district, the carpet and flooring industry in Dalton, Georgia. And it all started with one teenage entrepreneur in Northwest Georgia. One of the things that I want to celebrate with President Trump and administrator Leler and with the work that you're doing. Uh for far too long, Investment Capital has stayed on the east and west coast. It didn't go into Appalachin communities uh like mine, what I represent.
▶ 1:04:42So, if you could kind of expound on how your leadership and the work you've been doing has been u getting capital into underserved communities like in Appalachia.
▶ 1:04:51Thank you for that great question and for the story. It's again, it's been really fun. I I went through all of your districts and had my team help me come up with uh with companies in your districts that have been benefited by our programs. And when you said Dalton Georgia, I'm like, I think that's one of them. Like there's a plant-based compounds uh uh company that is that is manufacturing compounds for type 2 diabetes.
▶ 1:05:10Um and and that is really again this China theme like Americanmade critical raw materials like we know the pharmaceutical like base um ingredients are are have been totally like we invented them and now they're over there. And so it's brilliant what's happening in Dalton, Georgia. Um, again, these programs are incredible because they're accessible by a kid in a garage or they're incredible.
▶ 1:05:31They're accessible by, you know, the Torrance, California firms that I meet with that are like R&D companies that are that use the SERB program to generate incredible uh innovations that that VC is not going to invest in, right? like VC is not going to invest in a repair an old part for the F-35 that this team can update and do using the CBRE program. And so um and and again SBIC's we've got them spread across the country.
▶ 1:05:58Um we're we're working urgently to expand that. We don't lower our standards. We have very I mean we haven't we haven't it's been zero subsidies since 1999. Our team's phenomenal. the people, the process, the way they do due diligence, the way they monitor, the way they exam. Um, we're not lowering our standards. That's not what this is. But we're working aggressively to double, triple, quadruple this program so that we can get more capital out to the small businesses across our country that need it, not just in the coast.
▶ 1:06:25No, and thank you for that work, too. And one of the things that I've seen you become most animated about besides our conversation on universities was when you started talking about the Communist Party of China and what we're facing there. Yeah.
▶ 1:06:36Um, I think this is an issue that I I I came to Congress uh to to work on. Uh, I think far too many Americans don't understand what we're facing when we come uh when we talk about the threat that the Communist Party of China u uh poses to our country and our national security. I think what you're talking about with critical minerals and rare earth uh uh metals is that race is just as important as the space race was to this country.
▶ 1:07:04and Americans just don't understand how important this is. If you could just tell Americans um h what is that race? How do we compete? And how important is it for us to to win that race?
▶ 1:07:20Thank you for the question. Um obviously it's something I've become passionate in about uh you know in particular since being here serving in the government. Um it's it's mindboggling. I mean, you can go back and read their doctrine that's 30 years old that essentially says that that we're in an economic war and we don't follow the rules of the rest of society. Like their their war, their doctrine is to steal from from their enemies, their economic enemies.
▶ 1:07:45You know, it's estimated lowend$500 billion dollars a year that is being stolen in in economic intellectual property probably more like two or three trillion, right? And so like the folky work that you've done on the cber uh reauthorization is huge. We're gonna we're going to bolster that. And it's it's ironic that, you know, the small businesses are leading out on folky, but it's, you know, it's there's all sorts of different standards. There's all sorts of different challenges and threats even within DoD who, you know, are expert at this. So it's it's a huge urgent need for our country.
▶ 1:08:14Uh we saw that in COVID when we had supply chain choke points and we had inflation and all these other challenges. And so we're we're doing everything we can working with our partners at USG to address that problem with NOI and with our programs and at the SBA under under Administrator Leler's leadership. She's incredibly focused on it.
▶ 1:08:30Thank you, sir. Mr. Chairman, I yield yield back. Gentleman yields back. I now recognize Miss McCyver from the great state of New Jersey for 5 minutes.
▶ 1:08:39Thank you uh so much chairman and thank you to our ranking member for convening today's hearing and thank you to the associate administrator Carter for appearing before this committee today. I can say it's been a little refreshing having you here today and I don't usually say that a lot about members who come before from this cabinet here but thank you for being here. Uh small businesses are extremely anxious and with good reason.
▶ 1:09:01Across the country entrepreneurs are being squeezed by the affordability crisis, rising costs and increasing uncertainty about whether they can keep their doors open. The system is failing them and the consequences are extremely real. Recent polling shows that 67% of small businesses have seen their expenses increase in just the last three months, while half have watched their revenue fall. These are real people being forced to raise prices, delay hiring, and lay off workers.
▶ 1:09:32In my district, New Jerseys 10th, I regularly hear from small business owners struggling with rising operating costs, inflation, and uncertainty about the future. This is the reality facing startups and small businesses trying to survive and grow. Instead of easing the pressure, we've seen in some sorts that this administration has chosen to pile on more uncertainty, imposing broad tariffs, shuffling agencies, and pushing policies that make it harder for businesses to truly plan.
▶ 1:10:02The people need SBA to step up and defend them more now than ever. Even with some of the progress we've seen happen in just this Congress with bills that we passed with with, you know, support and partnership from both sides of the aisles, still small businesses need more. Small businesses are telling us that they do not know if they can make it week after week, month after month. Their costs are just rising and rising.
▶ 1:10:28Associate Administrator Carter, do you believe small businesses are better off economically today than they were a year ago in your opinion? Thank you for the question, Congresswoman. Um, the the challenge that we've been talking about is so important and so real and our focus at at OI and at the SBA is to support the small businesses across America and we understand um we understand that all the challenges that we face. Um, and and I I think you know you mentioned tariffs.
▶ 1:10:59Um I I am again like you read the economic textbooks that that you know that we that we studied when we were young and it talks about comparative advantage and how rational it is. But we're not operating in a rational world. We're operating in a world where our main competitor globally doesn't obey the laws of economics. They're not you know this sort of like perfectly rational utility seeking economic actor. They are operating uh they're subsidizing industries to basically make it so that we can't compete and so that we don't have those supply chains.
▶ 1:11:28And I'm I'm so thrilled that President Trump had the courage to stand up and demand fair trade. Right.
▶ 1:11:36But with all that being said, I'm still looking for the answer. Do you believe they're doing better now than they were a year ago? Small businesses.
▶ 1:11:43I think yes. There's indicators that small businesses are doing better. And importantly, like what's the time frame on which we measure? if we can actually have fair trade for our companies while there will be a transition period for sure and we're incredibly focused on that where you know uh the administrator launched the onshoring portal that came out of a meeting where someone said oh I can't I have no choices but to but to go to China uh because my textile is only made there someone at the table said oh I actually do that and that started the manufacturing portal
▶ 1:12:11so let me just um interject so despite the fact that half of small businesses report declining revenue and 63% % report shrinking profit margins. You would say to these struggles, you know, these struggling small business owners that they are better off today.
▶ 1:12:31So the cha Thank you for the the followup that the changes that are being made in our country right now that are longtailed changes. They're not all going to happen overnight, right? It's we're not going to transition from 50 years of of export allowing our um industry to leave our country. That's not going to change overnight. But the changes that we're making are making us all better off and we're focused on small businesses and on serving them um in the programs we have.
▶ 1:12:56So basically and what you're saying is that you acknowledge that they are struggling like small businesses are struggling and they're not better off because you're saying that things are not going to happen overnight with the policies and the plans that you guys have, you know, implemented. They're still struggling despite all of what you said and how proud you are of Donald Trump, of the president. Still small businesses are struggling. I think we can I think it's okay to agree to that.
▶ 1:13:20Like there's small businesses who are watching this who are struggling and I invite you to come to New Jerseys 10th congressional district at any given time. I know Kings Hines has the great sun over there in her district, but you're more than
▶ 1:13:31I want to come. I I lived in New York I lived in New York City and my sister-in-law in lived in New Jersey. I love it. It's beautiful there. You've got two great cber You've got amazing cber and and SBAC companies there that I'm looking at. A specialy packaging manufacturer that it's had a $12 million investment. You've got defense communications for off-grid connectivity with CBRE. Would love to to come there. Uh, no, I mean, of course, at any time, I mean, we're I mean, I'm a small business owner. I started a small business with my partners in 2017, nine of us. We were all wearing five different hats and struggling.
▶ 1:14:00Anyone that is a small business owner, that's the definition of being a small business owner. You struggle. Uh, and there's macroeconomic factors all the time that cause us to struggle.
▶ 1:14:08I'm [clears throat] going to have to um cut you because our chairman is banging on his gavvel. Um, but thank you so much for your questions. And with that, uh, Mr. Chairman, I apologize and I yield
▶ 1:14:18Thank you.
▶ 1:14:18It's just a habit. Uh, gentle lady yields back and I recognize Mr. Weed from the great state of Wisconsin for 5 minutes.
▶ 1:14:25Thank you, Mr. Chairman. Thank you, Mr. Carter, for being here. It's so refreshing to see somebody that um, like you said, started and founded and worked in a small business and struggled and you know exactly what it takes uh, to run a business and and of course that's what drives our economy is small businesses. So, it's so great to have you here working in an agency uh along with administrator Leler who too who also was in in business for herself and I see you have your loving and supporting beautiful family behind you.
▶ 1:14:56So, welcome to all of you as well. Uh since the beginning of the Trump administration, we've seen a new emphasis on supporting American Because of this, many manufacturers are looking to increase their production capacity and invest in R&D. How does your office help a manufacturer or small business secure R&D funding?
▶ 1:15:20Thank you for the question and for the the kind comments. Um the SER program is incredible. I mean if you look back at the history of public private partnerships for R&D and for innovation. Um you know it's not an easy thing to do right. We have the national labs. We have all these different approaches to it. Uh and and as was pointed out earlier, our country's been a leader in innovation and it's what one of the things that makes America so amazing and our capital mobility.
▶ 1:15:42Um the SER program which is a huge focus of ours as well as the the programs that support it, the fast program and and our other programs we spoke about earlier today are are focused on helping innovators get the access and get the training and get the support they need. So like our our innovation conferences, we introduce them to the program managers for each of the different agencies and as as everyone I'm sure understands that the agencies themselves are the ones that create the topics and you apply directly to the agency and so that's how you get the access.
▶ 1:16:11So our job is to is to is to train them to support them to help them be more successful in that and then importantly as they're trying to commercialize which is just as hard as the innovation at times um how we can support them in doing that.
▶ 1:16:24Thank you. I was very pleased to see the president sign the uh the bipartisan investing in all of America act and the small business innovation and economic security act earlier this year. H how do these laws strengthen OI's programs? Oh, they're huge. They're huge. I mean the there sort of six major changes that came about from CBER. I could talk, you know, for for minutes about each one of them. They're all they're all very impactful. We talked about folky and due diligence earlier. That's that's an important one.
▶ 1:16:52um you know, and commercialization, like we're going to continue to focus on commercialization and making sure that we both track and hold ourselves accountable, hold the hold the the companies accountable, the the innovators accountable to commercializing. Um and so that that that that program, that reauthorization is is vitally important. And again, we've spoken about it already with Invest in all America, but I I think it's a brilliant way to incentivize the type of investment that we need um in in a way that's different than just making the investment.
▶ 1:17:20Like we've all seen the challenges of the government making every investment decision. It's it doesn't always go well. Um this program allows the professional investors who are the experts and it highly incentivizes them through the structure of a fund to have those companies succeed unlike loans where they get securitized and there's not that accountability in that same tie. These managers get paid more money if their companies succeed and that's that's using economic principles to incent what we want. I think it's a phenomenal partnership.
▶ 1:17:46So again, thank you uh for for for the increase the leverage cavs, for the bonus leverage, for the cyber reauthorization, and for the support of the OI programs, which which we feel are are point of spear for what's important in our country right now.
▶ 1:17:58Um I want to thank you and of course Administrator Leler for really making a priority to reduce the regulatory burden um here um you know, in this country and with the SBA. my bill, the Dump Red Tape Act, which passed the House last year, it what it does is codifies the SBA's um red tape hotline, which allows small businesses, you know, the owners to report burdensome federal regulations uh that that they encounter.
▶ 1:18:25What regulatory burdens have you uh and your office helped to eliminate? Have you gotten feedback through through that
▶ 1:18:35Uh I'm not aware of getting Thank you for the question. which I'm not aware of getting feedback from the hotline that is very probable, but you know, ours is a little more esoteric and a little more nichy in terms of our programs. Um, but we're constantly seeking feedback from everyone. We're, you know, I'm a I'm a I'm a former LP and a former GP and so I can understand the world from both the investor and the invest the invest investment fund perspective. And so when I go through the regulations, we've already done some incredible changes where we made it easier for subsequent funds to get through the program.
▶ 1:19:00So we're already seeing subsequent funds coming through more quickly than they had in the past because we've made it easier and there were some burdensome regulations that were in our regs for those. But as we're going through it now again, not just to update it for the investment all America, but we're literally asking why Y why for every single thing that's there to make sure that it's not unnecessarily burdensome. We're not going to lower our standards. We're not going to lose money in this program. Uh we're going to do everything we can to not right. Uh but it's it it's it's an it's it's very much a focus of ours.
▶ 1:19:27is a huge focus of the administrator and she has that sort of uh client focused perspective that comes from the private sector that she's instilling in all of us.
▶ 1:19:34Well, keep up the great work. You're doing a wonderful job. And with that, I yield back.
▶ 1:19:38Gentle gentleman yields back. I now recognize Mr. Cisneros from the great state of California for five minutes.
▶ 1:19:45Thank you, Mr. Chairman. And I want to thank you and the ranking member for having this important hearing today. And thank you, Mr. Carter, uh, for being here. We don't often get somebody from the SBA to join us. However, I'm I'm a bit surprised we're only now hearing from you given the SBIR and STR programs under your purview have recently paused for six months. Given your stated commitment to small businesses and the effectiveness of the programs you mentioned in your testimony, I would have expected more urgency and engagement with Congress to get these programs reauthorized.
▶ 1:20:16I'm glad we are there for the sake of America's small business innovations. Now, I do hope we can count on working with you and your office more proactively going forward. [snorts] I also have concerns regarding the regional innovation clusters under your office that previously had been bipartisan had bipartisan support. The clusters help match small businesses with technical assistance, providers development and financing opportunities and mentoring among other things.
▶ 1:20:42They touched on a lot of important topics such as advanced manufacturing, biosciences and health, unmanned aerial systems, critical minerals, cyber security and defense. In 2024, the SBA awarded 14 new awards to innovative small businesses as part of the reg regional innovative cluster network. It is my understanding that the Trump administration canled some of these grants because of Doge.
▶ 1:21:07I agree with the ranking members quote from a recent article that read, "If we are serious about making the US mo the most innovative country in the world, it makes no sense to walk away from these programs." Unsurprisingly, like the like with the SBIR and the STR, we didn't hear from you or the SBA. We found out about these cancellations as they happened.
▶ 1:21:32The small businesses you were committed to, according to your testimony, were just hung out to drive with these There was an announcement last year from you from new clusters that went nowhere. Millions have been appropriated for regional innovative clusters over the last few years, and Congress has no idea how much has been awarded and how much remains unobligated. So, Mr.
▶ 1:21:55Carter, of the money Congress appropriated for regional innovative clusters, how much has been awarded and how much remains unobligated?
▶ 1:22:07Thank you for the question. Um, and uh, just want to state that the as I mentioned before um, administrator Leler has been and and and let's make no mistake like the the
▶ 1:22:20it's a simple question. How much has been obligated and how much remains So, let me get the data the the numbers for you, but the essence is other than what we talked about before that went unobligated last year for Rick's uh we are planning to obligate all of those all of the money appropriated to us by September 30.
▶ 1:22:39You don't have that information with you right now. How much remain?
▶ 1:22:41I have it with me. I just don't have it all memorized, but
▶ 1:22:43Well, then you don't have it. If you have it written down somewhere, you could you would have it with you. But, uh get back to me on that. Super. Well, yeah, absolutely.
▶ 1:22:51All right. Um, so there are four Ricks listed on the SBA website, but under uh the Office of Investment and Innovation page under the Rick programs, it mentions 25 Ricks across the country. Why the discrepancy? Was the the website administrator, was that one of the Doge cuts that got cut there when they came through? Um, why the discrepancy on the websites?
▶ 1:23:15Thank you. Thank you for the question. Um the accurate information is for Ricks that are existing to their focus on defense industrial base to their focus on critical minerals. Um and they're doing a great job and we're engaging with them very regularly. And I mentioned before that we have some technology challenges. I'm not exactly specifically aware. I can't verify um that but I I trust that that's the case and so we'll work on fixing that. So thank you for bringing it to our
▶ 1:23:38All right. Well, let's get that fixed. Uh the SBA canceled clusters throughout the nation, including in California that had hundreds of small businesses depending on them. What did your office do to ensure that these small businesses could stay afloat without the resources they were relying on?
▶ 1:23:53I'm sorry. Could you repeat the
▶ 1:23:56So the in you canceled all these clusters throughout the nation. So we said there was like 17 that were canceled including some in California that had had hundreds of small businesses depending on these clusters. What did your office do to ensure that the small businesses could stay afloat without these resources?
▶ 1:24:13Got it. Thank you for that. Um, I appreciate that. So, um, all of our programs were focused on, uh, aligning with the priorities of this administration and making sure that there's accountability for these programs and that they're effective in what they do. And that's what the administrator tked us to do and that's what we've done. Um, you know, while it's our intent to support small businesses, uh, you know, this is a this is a capitalist economy, right? It is not the government's job to support, uh, to to make sure that a small business doesn't fail.
▶ 1:24:43That's the risk that we all take as entrepreneurs.
▶ 1:24:45Well, the fact is these these these companies were left out to dry because the carpet was pulled out from under them. And that's unfortunate that it was done by this administration. And with that, Mr. Chairman, I yield back.
▶ 1:24:57Thank you.
▶ 1:24:57Gentleman yields back. I now recognize Mr. Schmidt, great state of Kansas for 5
▶ 1:25:03Thank you, Mr. Chairman. I appreciate you convening this hearing and Mr. Carter, thank you for being here with us today. It's such an important area that uh you operate in and your team operates in uh as has been discussed both for the country's top line and also for many of our districts and our communities. Uh getting things from concept to market and and the role you all play in that uh that chain. I I know it's been discussed a bit uh sort of the intersection and the work you all do with respect to the research universities. I want to focus on a slightly different aspect of the same issue.
▶ 1:25:34Um and just to frame it uh uh to make the point I mean the the mostly division one the major research universities critically important to this country's uh future to innovation. Um but so too are smaller colleges and universities at least to the extent they choose to fill a role there. So, for example, in Kansas, uh we're very proud of our three major research universities, none of which are in my second congressional district, though we love them all.
▶ 1:25:58Um, but we are particularly interested in our three regional public universities, Pittsburgh State, Emporia State, uh, Washurn University in Topeka, and in the half much smaller private colleges and universities that I represent, some of which are performing similar types of activities.
▶ 1:26:15They may not be doing, you know, front edge research on on uh uh the chemistry of polymers, but they're Pittsburgh State, for example, is very much in the graphine commercialization stage and and how you do the research to get from the scientific discovery to something that an entrepreneur could pick up and run with.
▶ 1:26:33Um can you talk a little bit about the role of those smaller uh universities may not be major research universities but how how you all interact with them so that they get the type of assistance you're able to provide or or the folks who want to invest uh based on ideas that they're helping develop uh get the assistance you provide. Th
▶ 1:26:51Thank you. That's uh really appreciate the question, Congressman. um the the focus that we have right now, especially with reauthorization and with all the work we have to do that that we've been talking about and that we're very focused on. Um just to the the individual agencies that you know 44 or so sub agencies, the 11 major agencies, they create the topics. They um are the ones that are that are engaging with the research institutions um with respect to CBER.
▶ 1:27:18Um, but we do have our federal and state technology partnership, the fast partnerships, and we have all the other SBA uh partnerships within each state that that are there. Um, but I I certainly think that um, you know, as we focus on administration, as we focus on policy, uh, there's opportunities for us to engage more with the universities and frankly if I haven't personally engaged much with the universities yet on on sitter. Um, but it's I appreciate you flagging it for me and it's something that we'll that we'll follow up on.
▶ 1:27:46Well, I know your schedule's full, but uh we would love to be some of the early engagement. And I'd invite you out to Kansas. We've got some folks doing some really sort of forward thinking work. And and again, they're they're not they're not so much in the laboratory space. They're taking the laboratory ideas, they're looking at entrepreneurs, they're looking at at business needs, and they're trying to do the next step of research to connect those. I think there'd be a very very natural fit. sort of on the related space.
▶ 1:28:10Uh do you all have any sort of collaboration uh interaction with uh DIU, the defense innovation unit to the extent that you might be working with businesses, entrepreneurs that are are working on products or or ideas that that are in their space as well as general business
▶ 1:28:26Absolutely. Uh thank you for the question. We have an incredible partnership within the SBAC program with the Department of War. It's called the SBACCT program. You're probably familiar with it. critical technologies where funds commit to invest over 60% of their portfolio into the critical technology areas that the department of war have have established are their priorities. There used to be 14 of them now there's six of them.
▶ 1:28:47Um it is and and and so we've enga we engage regularly uh in fact my investment committee is meeting as as we're meeting today and we have often uh OSC representatives there to engage with our SB SBACCT funds. Uh and we've personally been developing relationships with Department of War for for all of our programs with the SBA and in particular in OI and with DIU. Uh we've got contact center. We're having conversations.
▶ 1:29:11One of the things that I meant to focus on with with uh Rick's uh and and with these other programs is that we did an RFI where we went out to the whole marketplace and said, "Hey, tell us what are your biggest pressing issues? Tell us what are your supply chain choke points? Let us talk to you." And and and we're hearing back in order to uh focus our programs on those supply chain choke points.
▶ 1:29:29and um and and and the engagement we've had with the small business groups at at at DO within ANS within R& um it's it's been incredible that there's a spirit of collaboration that you know I'm new to government but it's been it's been surprising to me and uh DIU um and and and the other agencies there there's so many that are all doing similar things trying to solve similar problems but it's great to see more collaboration frankly the SBA can all can help with that because a lot of times they don't talk to each other there's like 25 different groups within DO that are doing supply chain mapping and none of them talk to
▶ 1:29:59each other. So, it's a huge opportunity for us across government to come together and to get leadership from Congress, from the administration to really make a difference in these areas.
▶ 1:30:07Well, thanks for your work in that space. The relationships and the information flow matter. We might have some folks we might perhaps bring to you if you're open to it and do some introductions. And Mr. Chairman, I yield
▶ 1:30:17Gentleman yields back. I now recognize Miss Goodlander from the great state of New Hampshire for five minutes.
▶ 1:30:22Thank you, Mr. Chairman. Thank you, Mr. Carter, for being here today. I want to start in a place that I think we can all agree on. The programs that your office runs are good for America and they work. And to me, that's because every public dollar that's going towards these programs is pulling in private capital that turns American ideas into American companies into American jobs.
▶ 1:30:49So, I come to this as someone who really wants to see the programs that you administer succeed and to grow. And and that's exactly why I am very concerned by many of the choices that the Trump has made. Some of them very very quietly quietly pulling the rug from under small businesses in my state of New Hampshire.
▶ 1:31:13And I want to come back to the discussion we were having about regional innovation clusters uh or Ricks. These it was a good idea to start these clusters to support small businesses including in the life science center se sector. Uh New Hampshire was awarded in um with the lead being an incredible life science company based in Lebanon, New Hampshire, Selara.
▶ 1:31:41They were awarded and named to be the head of the Rick for New Hampshire. Um the rug has been quietly pulled from underneath them because right now this innovation cluster is no longer listed on your website. So Mr. Carter, I want to ask you, can you confirm yes or no whether the Sara Regional Innovation Cluster was terminated?
▶ 1:32:08They're not currently one of our four Ricks that I mentioned. So you
▶ 1:32:13uh they were they were discontinued.
▶ 1:32:17So So how did you make that decision?
▶ 1:32:21Uh just to be clear, I was not I was an adviser to the administrator uh until August of last year. So I personally didn't make that decision just to just to clarify. Uh but as I mentioned before, the process uh for all of our programs that the administrator encouraged us to do was to go through and evaluate their efficacy, their accountability, and how they were serving the mission of of our country and the administration. And so those decisions were made based on that
▶ 1:32:45Well, I will be seeking from you a full written explanation for how this completely arbitrary, capriccious, and costly decision was made. What's your timeline or expectation on reinstating the cluster in New
▶ 1:33:02Uh we're uh pursuing a solicitation for regional c innovation clusters as I mentioned based on the priorities of the administration and that we'll we'll have those out by September 30th by the end of the fiscal year in terms of uh
▶ 1:33:18Mr. Carter, you mentioned the fast program which is you know I come from a law enforcement background. Whenever we can partner between the federal government and the state government um on technology partnerships, it's a good thing for the country. What I'm concerned about, you've spoken highly of this program, but your budget request for the the coming fiscal year zeros out the fast program. Why?
▶ 1:33:45Uh thank you for the question. So, uh, the, uh, budget requests reflect, uh, the, uh, administration, uh, the president's and the administration's priorities, and we support those 100%. My job is to execute the law and what is given to me as the head of OI. And so, as those programs authorized and appropriated, I will do my best to make them effective and make them serve the mission of our country.
▶ 1:34:08Well, they won't be effective if they're zeroed out in the budget. And you know, I hope we can count on you to continue to provide the testimony that is true to how it's operating on the ground. This is a good program for the country. How much of the money that was appropriated by Congress in fiscal year 2024, 2025, 2026 for fast and for the regional innovation clusters remains unobligated
▶ 1:34:44Mr. Carter.
▶ 1:34:45Yeah. Sorry, I was just taking notes to make sure I had the data correctly. You asked for 24 25 26 for fast and Rick
▶ 1:34:52and for GAFC
▶ 1:34:54and for growth accelerators fund competition. Super. Um I have that data in my binder, but I think it would be best for me to get back to you uh through our legislative fair.
▶ 1:35:03Carter, we don't often have the opportunity to have you here in person, so I I'm willing to wait.
▶ 1:35:08Oh, perfect. Okay. I'll I'll work I'll look for my data right here.
▶ 1:35:12Okay, this shouldn't be a hard question. When is when are the funds that So, obviously there is a sizable chunk of unobligated funds. When are they going to go out the door?
▶ 1:35:22Uh by September 30th.
▶ 1:35:26All right. Well, with that, Mr. Chairman, I I'm out of time, but I appreciate you being here, Mr. Carter. These are pretty basic questions. We have an obligation to our constituents and to the American taxpayer to have visibility into how funding decisions are being made. So I expect a full accounting of these reckless and extremely costly decisions that were made quietly without any transparency and that have hurt my home state. Thank
▶ 1:35:52Thank you. Gentle lady yields back. I now recognize Miss Maha from the great state of New Jersey for five minutes.
▶ 1:36:01Thank you, Mr. Carter. Thank you, Chairman. Um, Mr. Carter, you spoke earlier about doing more with less, although, however, I think sometimes less is just less. Um, you also spoke at length about the need to and while most of us on this day support rebuilding American manufacturing, uh, it seems like your stated efforts are undermined by this administration.
▶ 1:36:29I want to return a little bit uh to what my colleague started to ask you about. Your office has invested millions of taxpayer dollars to help small manufacturers commercialize new technology, expand production, build in America. All laudable.
▶ 1:36:48But simultaneously, this administration has imposed these sweeping tariffs that are driving up costs for these same businesses, driving up cost of machinery, electronics, industrial equipment, raw materials, and countless other manufacturing inputs. It almost seems like your efforts are actively undermined by the policies of this In my district, this matters a lot.
▶ 1:37:16We have a diverse and innovative manufacturing base from medical technology to food products, advanced manu uh pharmaceutical manufacturing. I also welcome you to New Jerseyy's 11th congressional district right next to the 10th if you're visiting. Um but I'm curious, how are you helping small businesses navigate this volatility?
▶ 1:37:40My first question is whether or not first and foremost whether or not you believe specifically President Trump's tariffs are hurting American small businesses? I'll ask you all three of my questions at once. Uh second, has the SBA analyzed the impact the rising cost of these tariffs for different small business small businesses and sectors?
▶ 1:38:08And are you sharing that information, that rising cost and impact for both to both the small businesses that you are hoping to to support as well as investors so that they they can navigate the volatility created by this
▶ 1:38:30Thank you. So can I just repeat the I think you had two questions.
▶ 1:38:34Three. First is are the tariffs from your assessment are tariffs harming small businesses? Second, are have you created are you analyzing the impact the percentage of of impact or rising costs? And third, are you sharing that information with small businesses and investors alike?
▶ 1:38:57Got it. Thank you very much for the questions. Um, Congresswoman, um, so we talked about tariffs earlier, right? I talked about my um appreciation that the administration has been strong enough to demand fair trade from our trading partners and I think that has been a
▶ 1:39:12Yes. But are they hurting? Have you made an analysis or shared information on how much these tariffs have actually increased production or or cost for small businesses?
▶ 1:39:23It's it's it's a great question. is not an easy question um that I'm sure many economists and both in the government and without outside are analyzing and have many various whether or not you report or or created some kind of analysis and then shared it is kind of
▶ 1:39:39Yeah. No, no, no. I I appreciate it. I think I mentioned earlier that my priority right now is to get our data in order. Um I'm publishing our first SBIC uh annual performance report shortly. Every conversation we have with our SBIC
▶ 1:39:52I'm sorry.
▶ 1:39:52Got it. I understand. I'm sorry. I'm short on time. I don't mean to be rude.
▶ 1:39:56So, um, with this analysis, if since you're saying that, um, you've created you're going to issue your report and it will include the the percentage of rising costs in different sectors and industries. Will will we expect that in your report? specifically the rising costs that tariffs that President Trump's tariffs have created.
▶ 1:40:21Is your report going to include both an analysis and perhaps the percentage of of rising
▶ 1:40:27Oh, thank you. I understand. So, my report is focused on my programs and my areas of expertise. Those are those are economic questions that are very important for sure and we discuss them in every meeting we have with our fund managers. How are you dealing with all the macro economic and micro challenges you have with your company?
▶ 1:40:42I have 20 seconds. So, I would say I'm walking away with a no. Um, I will say that not having data and information on on the volatility created by these tariffs by by this administration's policies in effect are are creating a condition in which both investors and small businesses are flying blind. They're therefore investing.
▶ 1:41:08We're asking them to invest millions of dollars and yet not giving them critical information about the environment in which they're going to operate. Thank you. I yield.
▶ 1:41:17Thank you. Gentle lady yields back. I now recognize Mitch Oilski from the great state of Maryland for five
▶ 1:41:26Thank you very much. Uh Mr. Chairman, thank you to our ranking member. Uh thank you to Associate Administrator Carter for your time here today. We can all agree that supporting American innovation and helping small businesses grow remains a bipartisan priority. I think you've heard some of that today. The Office of Investment and Innovation plays a critical role in that mission and I appreciate the work your office does to expand access to capital and to foster entrepreneurship across the country.
▶ 1:41:51The small business innovation research and small business technology transfer programs are among the federal government's most effective tools as we've discussed today for supporting early stage innovation. Together, these programs provide more than $4 billion annually to help small businesses develop new technologies, create jobs, and bring cutting edge products to market. In my home state of Maryland, small businesses received nearly $140 million in cyber awards in 2024 alone. We thank you for that.
▶ 1:42:21Across our district, technology, engineering, life sciences, and defense related firms have leveraged these programs to compete for federal research funding from agencies such as the Department of Defense and the National Institute of Health. These investments help level the playing field and allow innovative small businesses to compete and succeed. That's precisely why I'm so concerned about the recent lapse in cyber authorization and the uncertainty it's created for businesses that depend on these awards.
▶ 1:42:50Delays in funding have real consequences for small firms, limiting access to capital, slowing research and development, and making it harder for entrepreneurs to plan for growth. Now, I recognize that the challenges surrounding cyber reporting and data transparency span multiple administrations.
▶ 1:43:07I appreciate your willingness to work with Congress to improve oversight as accurate and timely data are essential for evaluating program performance, ensuring taxpayer accountability, and demonstrating the value these programs deliver to innovators across the country.
▶ 1:43:23I look forward uh to continuing to learn more about what your office is hearing from small businesses regarding the importance of a stable and predictable cyber program and the ongoing implementation of the program following its recent lapse and the steps being taken to get back to annual reporting. Uh so with that, Mr. Carter, just two two questions. Um fir first of which is what feedback has OI received from small businesses regarding that recent lapse in authorization and what impact did those delays have on companies who are awaiting awards.
▶ 1:43:54Thank you for the question and for the support of the of the program. Um absolutely. I mean during that lapse and we're so thrilled that Congress was able to do that and we worked diligently. That was one of my main areas of focus during the lapse and and since being in this seat to help Congress have the data and the analysis and the information that they needed to be able to uh to reauthorize the program and um and and so we're thrilled that that was able to happen and of course we had feedback.
▶ 1:44:21We had countless people telling us how how terrible it was and how difficult it was. There are companies that as I mentioned earlier that are set up as R&D companies, small businesses that are focused on R&D and with this without this program their business models are completely uh blown up and so it it was a challenge. We're thrilled that Congress was able to make that happen and we try to do everything we could to support it and we will continue to do that especially as we update uh the policy directives and improve uh reporting and and efficiency of the program.
▶ 1:44:50I I appreciate that and agree that it it definitely makes things difficult for those companies. So, uh sort of as a a follow on, can you talk to the committee a little bit about what steps OI has taken to ensure future reauthorization uncertainties don't have that disruption to the flow of funding um to innovative small businesses?
▶ 1:45:09Yeah, thank you. I thought a lot about that because it was a difficult six-month period to to see something that seemed so obvious that should be reauthorized and wasn't and and so we really struggled and again worked hard to help um all sides to agree to get it reauthorized. Um what I feel and it goes back to the same question that that that you know we've hit on already which is that we I think OI needs to have the resources the capabilities the the focus and that's what we're doing to produce reports and to be the owners and the master of the data.
▶ 1:45:38There's all sorts of there's a whole cottage industry focused on reporting and opining and sharing their perspectives on cyber and its effectiveness and and and how it should operate and how it shouldn't. Um we need to own that and we need to control that and and that's uh certainly within my my mandate uh to do that uh in the time that I've given to be the AA of OI.
▶ 1:45:59I appreciate that feedback. Um, I'm sure I speak for members of this committee of both sides of the aisle and we say we would welcome um any solutions including legislative that would help bridge the gap in the event we have uh a lack of reauthorization which should happen but um clearly we should be talking about what happens in the event it doesn't. So thank you again for your testimony and with that Mr. Chairman I yield back.
▶ 1:46:19Thank you.
▶ 1:46:19G gentleman yields back. I now recognize Mr. Jack from the great state of Georgia for five minutes.
▶ 1:46:25Thank you Mr. Chairman and thank you Mr. Carter for testifying. Um, Administrator Leler has made reducing regulatory burden and cutting red tape a priority of the SBA's approach to small business success, something I wholeheartedly support. And in January 2026, SBA finalized the SBIC modernization rule, which streamlines licensing for follow-on funds, eliminates obsolete provisions, and aligns a program with President Trump's executive orders on critical minerals and industrial dominance.
▶ 1:46:52The rule also clarifies that certain longduration investments in critical minerals and critical technology qualify for an exemption from the program's project financing restriction. What specific barriers has OI eliminated and how has that deregulatory approach translated into more investment reaching Main Street?
▶ 1:47:10Thank you for the question. So, I think you actually hit on some of those um and I mentioned them earlier in in in my remarks. um that we we've gone through and we're going through all of the regulations with an eye towards how do we make this simpler and easier for our LPs, our our investors in these funds and then the managers of these funds without lowering our underwriting and our diligent standards. And so that's been a focus in terms of what's already happened. Um I talked about subsequent fund.
▶ 1:47:37One of the main things that we accomplished in that first round was making it easier for subsequent funds, meaning funds that are already in the program to not have to go through another, you know, threemonth intense due diligence process and to not have to have burdensome constraints on the way they operate their business that were put in place by the last administration. And we've removed those and we're making it simpler. and we're already see the the seeing the flow through in the record numbers that we had last year and and and funds are very happy with the improvements that we've made and and and we look to make more uh in the near future as well.
▶ 1:48:07Mr. Chairman, I'd like to next share a story about a constituent and something I think you'll appreciate, Mr. Carter. Um this concerns a company called Nico, NECO, and its president, David Bergman, who is an outstanding example of what the CBER and STR programs can accomplish. In 2014, NAO was 14 years old and had enjoyed steady growth and success. After acquiring a former competitor and seeing how they operated, my constituent, Mr.
▶ 1:48:31Bergman, concluded that if Nico wanted to remain competitive over the long term and needed to make research and development a much larger part of its business strategy. Unfortunately, the cost of pursuing a truly ambitious R&D program was more than he could commit at the time. So, in 2018, he attended an SBA event on Georgia Tech's campus, and there he was asked, "Have you ever heard of an SBIR grant?" The following year, Mr. Bergman applied for and received NAKO's first phase 1 cber awards.
▶ 1:48:56Seven years later, NAO has received three phase 1 cber awards and one phase 2 cber award, totaling approximately $1.9 million in funding. Approximately half of that funding went to the national laboratories with whom NAO collaborated, strengthening both the research and the partnerships behind this technology.
▶ 1:49:12The question I have for you is uh more broadly speaking, what opportunities do you see to build on the reforms of the cyber STTR programs and more innovative small businesses like Niko uh leveraging or seeking to successfully leverage commercial new technologies and how is SBA working with agencies like the Department of Energy to ensure companies have a clear pathway from research and development to market?
▶ 1:49:35Thank you for the question. Great great topic and in terms of how I think about the various priorities that we have obviously we've talked about getting the direct the policy directive uh updated uh getting our report out uh improving our data um analysis um commercialization is huge you know it's like for decades uh you know the valley of death that's already been spoken about today is in focus and I think there's a lot we can do working with the agencies I mean they ultimately have to control it right they they're the ones that have the programs of records in the case of DO W
▶ 1:50:06uh that we need to get we need to have the demand signals coming out of DOW and the other agencies to be clear signals and not noise because if you have noise these great innovators may respond to a topic but there's nothing behind it. There's no outtake and so that's going to be the opportunity that we have and we're working across the SBA uh with our partners at DOW and other agencies to make sure that we can improve that uh in the time that we have. It's an urgent need um for our innovators.
▶ 1:50:32Thank you, Mr. Carter. Lastly, with the minute we have left, would love for you to illuminate to this committee how helpful the one big beautiful bill acts enactment has been for small business and how you have benefited as a department serving small businesses through the authorities granted therein.
▶ 1:50:47Thank you for that question. Uh the administrator Leler is is phenomenal at at at you know at talking about this. she she's constantly talking about the benefits of these small businesses of of the specific actions um that that are that are making a difference, you know, the the no tax on tips, no tax on overtime, the the opportunities uh for for capital uh write-offs. And so um I think she's been amazing at talking and meeting with small businesses and and hearing directly from them on how impactful this has been.
▶ 1:51:16And um you know, we're we're thrilled that we have the um the tax relief for small businesses that that is so important uh at this time and and at all time.
▶ 1:51:26Well, wonderful job today. I'm a big fan of the administrator. I represent of course the state. She wants to represent in the Senate. So, I appreciate your testimony. Mr. Chairman, I yield back.
▶ 1:51:34Gentlemen, yields back. I now recognize Miss Simon from California. Great. State of California for five minutes.
▶ 1:51:41Thank you so much for being here today as Secretary. I'm super excited to meet you because uh before I go into my comments, I'm gonna really ask you, can you come to Alama County, California's 12th district? We really, really have so many great things going on, and we could deeply use again the information that you have, the expertise, but more importantly, the resources. So, that's a yes or no question. Will you come? I'll host you all.
▶ 1:52:05They told me not to say yes or no to anything, but I but I but I I grew up in the East Bay and I I worked with a [clears throat] Boy Scout troop in Oakland. You did? And so I uh I would love to come to Alamina.
▶ 1:52:15Okay. You're not supposed to say yes or no, but that
▶ 1:52:17I didn't say I don't know what I said. I said I said I enjoy I enjoy I enjoy
▶ 1:52:23The Bay Area particularly the East Bay and I love that you know Oakland. Um, one, Oakland is the number one food city in this country, and that's all small businesses. But it's also, if you go, you know, three miles over the bridge, you're in Alama, the city of Alama, which host, I think, one of the most innovative uh, innovation strolls in the country.
▶ 1:52:46You know, I have business owners there that are this close to ensuring that people who have retinal or macular degeneration can see again. They're in third stage clinical trials. I have a company that is so close uh to creating new molecule and opportunities to cure uh hormonal breast cancer that's killing tens of thousands of women every single year. We have folks uh who are doing, as you know, plant-based innovation to create more opportunities in our food ecosystem.
▶ 1:53:16And I can go on and on and on. It's one of the reasons why I'm so happy to be on this committee because red or blue, we know this administration, the past administration, the administration before that small businesses do deserve everything. They are competing in the market. And yet our innovators oftent times believe and feel like they're on their own to create new innovation and opportunity, whether it be in medicine or materials or in manufacturing. They're they're on their own. And we know that that's not true.
▶ 1:53:45So I cannot wait to host you. We're going to go to Alama. We're going to visit your old boy scout or boys club troop in Oakland. Um, but I have just a couple of of quick questions. The qu and you mentioned it. I'm not even going to go by my script. You said that your wonderful staff created a list of uh small businesses in each of our districts. I would love to hear mine. That's California's 12th district.
▶ 1:54:09Yeah. Yeah. I'm a
▶ 1:54:10You did all that homework. So, I
▶ 1:54:11know we did. We did. And I uh I wrote them out so they would stick in my mind now. about I'm going to pull them up so I can talk about. No, it wasn't exhaustive. It was just it was um it was CBER or SBIC investments. Um you know what you can and or funds you can send them to me.
▶ 1:54:27Oh great unless you have but no but they're great. I mean there's I'm not going to say all the names but there's a a cyber success story and I've actually engaged with this company. They offer AI riskdriven intelligence solutions for detecting and mitigating financial crime. So it's like a it's like a folky due diligence company.
▶ 1:54:42Um, and you know, and I met, um, funny enough, here on the hill, a company in, I think it was either Emeryville or maybe Oakland that was recycling critical minerals from old equipment and turning it into precious uh, metals and they were a CRA award recipient. And so, I mean, there it's it's it's very exciting to see the innovation, but we will but we'll be happy to circle back with you and give you an exhaustive list of all our investments in the SPSC and the CBRE program in your district.
▶ 1:55:11I think that's great. And I have more questions to you, but I will send them to your office. I have a staff member here and we would love to connect. At the end of the day, um, our innovators on Main Street, they need the SBA. You talked about the competition element of what makes this country so great. But I can tell you in my district, there are innovators who will in fact cure cancer, who will in fact cure blindness, who will uh extend uh the opportunities of how folks breathe clean air and eat good food.
▶ 1:55:37and they need SBA's help, particularly uh small businesses that are led by women, people of color, uh immigrants who have come to this country to build great opportunity for their neighbors in our communities. And I want to make sure that with the staffing shortages that we know that are real in the SBA that folks can see uh what you're doing here in Washington and we can get you on in a round table. I'm really looking forward to that, sir. And I'll yield back.
▶ 1:56:01Thank you.
▶ 1:56:02Gentle lady yields back. I now recognize Dr. Morrison from the great state of Minnesota for 5 minutes.
▶ 1:56:08Thank you, Chairman Williams and Ranking Member for holding this hearing and thank you to Associate Administrator Carter for taking the time to be with us today. I think I'm bringing us home, Mr. Chair. You're almost done, sir. The Small Business Administration's recent budget request proposed eliminating the FAST partnership program.
▶ 1:56:27As Representative Goodlander mentioned, um I was especially concerned to see this proposal since it's the only program within the SBA specifically dedicated to helping firms in low participation areas compete for cyber awards. I have the honor of representing Minnesota's third congressional district.
▶ 1:56:45And one of the recipients of the fast program funding is Minnesota Small Business Innovation Research, an organization located in the third that has helped over a 100 small businesses across Minnesota secure over a hundred million in funding through the Small Business Innovation Research and Technology Transfer Programs. Their work has helped advance technological innovation and scientific excellence, bolstering Minnesota's economy.
▶ 1:57:09um MN CBER and fast partnership organizations like them assist small businesses and startups in applying for these federal research and development programs for the first time and help them navigate this complex process. So how does SBA reconcile the need to support new entrance and rural participants with the proposal to eliminate the program that delivers that
▶ 1:57:33Thank you for your question. Um and I think I maybe spoke about this a little bit earlier. Um we support the president's budget proposal and we support uh the administration priorities with respect to those. My job as the officer or as the administrator for the office of investment innovation is to execute the execute the law within the within the uh construction construct that I have.
▶ 1:57:55And so as we have authorization and appropriation for these programs, my job is to make them as effective as possible and to have, you know, in particular for FAST to have them effective at helping small businesses achieve success within the SER program and to drive innovation that's so important for our country.
▶ 1:58:12Uh, thank you, Mr. Carter. So it sounds like we're not really reconciling the need. Um, if fast were eliminated, what mechanism would SBA use to sustain cyber outreach and proposal assistance in states that currently send few So, uh, all of our programs within OI, as I mentioned, we're orienting towards, um, the three, you know, I'd call them like investment themes or three themes for, uh, that the administration is is laying out and that we're in, we're we're
▶ 1:58:42implementing re-industrialization, supply chain choke points, uh, and advanced technology. And so um both the SPSC, the CBER and our other uh programs uh growth accelerator as Rick uh fast um will you know to the extent they're authorized will be focused on accomplishing those missions and those themes and an important one of them of course is driving innovation within the SERB program within our innovative small
▶ 1:59:10Thank you. Um just one more question Mr. Carter, as as my colleagues have highlighted, the SERB program lapsed for over 6 months from October to April. And as a result, agencies could not make new awards or publish solicitations. During this time, I heard from small business owners in my district about the impact of this funding lapse on the future and the stability of their businesses. What steps is SBA taking to understand the impact of this funding lapse on small businesses and communicate with them about changing program requirements?
▶ 1:59:40Thank you for the question. We spoke a little bit about it earlier that obviously we heard from many many small businesses and we were doing everything we could to help Congress uh reauthorize the silver program and we're thrilled that you did that. Um and we are we are focused on supporting them. Um as you know it's it's a joint effort with with each of the you know 40 plus agencies. So you know the on the ground work that happens uh is is done you know at the agency level with the topics but our role is to advertise to educate and to inform.
▶ 2:00:09So we had our literally right after the um reauthorization we had in May our annual innovation summit that was virtual so the entire country could attend. We're having another one in July that will go through the whole month that will partially virtual partially in uh you know in in location. And what's so crucial to these entrepreneurs is that they need the connectivity to the program managers of each agency, right?
▶ 2:00:30Like we we're not the experts in the topics and what each agency wants, but we need to get the program managers and the and the the subject matter experts out to meet with the entrepreneurs so they can actually understand what are the demand signals and how can they be successful in in meeting the needs that our US government, federal government um has uh with regard to innovation.
▶ 2:00:49Okay, Mr. Carter, thank you. Mr. Chair, I yield back.
▶ 2:00:53Gentle lady yields back. U I'd like to thank uh Associate Administrator Carter again uh for your testimony for uh appearing before us today. Without objection, members have five legislative days to submit additional materials and written questions for the witnesses to the chair which will be forwarded to the witnesses and I ask the witness to please respond promptly if that happens. If there's no further business without objection, the committee is adjourned. Thank you. Thank you chair. Okay, buddy.