Oversight of SBA’s Office of Entrepreneurial Development

Small Business Administration OversightHouse Small Business · 2026-07-22 · 119th Congress
The House Small Business Committee held this hearing to examine how the SBA's Office of Entrepreneurial Development (OED) manages its network of resource partners — small business development centers (SBDCs), women's business centers (WBCs), SCORE, and the State Trade Expansion Program (STEP) — after months of delayed grant payments and a June 2026 agency reorganization. Begins at 0:17:55
Transcript
Highlights

Title

Oversight of SBA entrepreneurial development grants, delays, and reorganization

Purpose

The House Small Business Committee held this hearing to examine how the SBA's Office of Entrepreneurial Development (OED) manages its network of resource partners — small business development centers (SBDCs), women's business centers (WBCs), SCORE, and the State Trade Expansion Program (STEP) — after months of delayed grant payments and a June 2026 agency reorganization. Associate Administrator Paul Fitzpatrick testified about a $340 million grant-payment backlog inherited from the prior administration, a new grant management system, and fraud findings in Illinois-based programs, while Democrats pressed on proposed elimination of most counseling programs and impacts of tariffs. Begins at0:17:55

Who spoke

Chairman Williams (R-TX)0:17:55: Opened the hearing, noting OED's resource partners supported over 2 million jobs in 20250:19:01 and that the Women's Business Center network generated roughly $6 in revenue and $7.50 in private capital per federal dollar0:19:29; later questioned Fitzpatrick on the new grant system0:31:21 and the Illinois-based B National Institute of Human Development case0:33:21.

Ranking Member Nydia Velázquez (D-NY)0:21:21: Said SBA resource partners counsel about 1 million small business owners annually0:22:45 and accused the administration of proposing to eliminate funding for 15 of 16 counseling programs and improperly withholding appropriated funds0:23:40; pressed Fitzpatrick repeatedly on why payments to SCORE and other partners were paused0:38:240:39:27.

Paul Fitzpatrick, SBA Associate Administrator for OED0:26:35: Testified the agency inherited a grant system reliant on emails and spreadsheets with no controls0:31:47, distributed roughly $340 million in delayed prior-administration grant funding0:28:44, and disconnected the B National Institute of Human Development (Illinois SBDC subrecipient with a Guatemala office receiving ~$100,000/year) after finding it served ineligible, non-U.S. clients0:33:560:34:24; said SBA has not found "rampant" fraud but did suspend some women's business centers for non-compliance0:58:531:27:15.

Rep. Elie (R-TX)0:41:36: Asked how integrating STEP grants under OED reduces duplication0:42:33 and what metrics measure STEP effectiveness0:43:51.

Rep. McGarvey (D-KY)0:44:49: Noted SCORE has ~10,000 volunteer advisers serving 300,000 people with a 94% satisfaction rate and a claimed $45 return per dollar0:46:13; repeatedly pressed Fitzpatrick on why SCORE staffing fell from 70 to 20 employees after the payment pause0:47:58.

Rep. Finstad (R-MN)0:50:10: Asked about the December 2025 pause of Minnesota grant dispersements tied to state fraud concerns and how SBA communicated with affected organizations0:50:38; Fitzpatrick said the Minnesota SBDC was cleared after a five-year review0:52:06.

Rep. Cisneros (D-CA)0:55:16: Cited small-business survey data showing 88% report rising material costs and a 50% year-over-year increase in small-business bankruptcy filings in early 20260:56:210:56:50; asked Fitzpatrick to identify specific evidence of fraud0:57:45 and noted California has $144,000 in outstanding STEP reimbursements0:59:48.

Rep. Schmidt (R-KS)1:00:22: Asked about the status of a Notice of Funding Opportunity (NOFO) needed for Fort Hays State University's SBDC host transition to a new institution such as Pittsburg State1:00:52, warning of a timing gap before year-end.

Rep. Tran (D-CA)1:03:46: Described Orange County SBDC and Women's Business Center success stories1:04:08 and said her office spent months recovering nearly $3 million owed to the Orange County/Inland Empire SBDC1:05:27.

Rep. Petronis (R-FL)1:08:46: Asked Fitzpatrick to detail SBA actions to improve oversight and prevent fraud, including moving grant managers into the CFO's office1:10:31.

Rep. Goodlander (D-NH)1:12:40: Pressed Fitzpatrick to name specific tariffs (AIPA, Section 232, 301, 122) New Hampshire small businesses must navigate, which he did not answer directly1:14:281:14:49; asked whether any funds have been returned to businesses after the Supreme Court found certain tariffs unconstitutional1:16:23.

Rep. Kim-Hines (Northern Mariana Islands)1:17:56: Asked why a new Women's Business Center competition was limited to select states/territories excluding CNMI and Guam1:18:56, and about STEP-eligible compliance costs for exporters facing Japanese/Korean market entry rules1:21:25.

Rep. Scholten (D-MI)1:23:03: Introduced the bipartisan Women's Business Center Improvement Act of 2026, which would raise the WBC grant cap from $150,000 to $350,0001:23:27; cited $12.6 million in outstanding WBC payments per an Association of Women's Business Centers letter1:26:17.

Rep. Fuller (R-GA)1:28:20: Asked Fitzpatrick to detail how the $340 million Biden-era backlog was overcome1:29:11 and about rural/Appalachian access to resource partners1:31:40.

Rep. Morrison (D-MN)1:33:23: Asked how OED helps exporters navigate retaliatory tariffs, including new Canadian tariffs1:34:39, and questioned staffing and leadership of the Office of Native American Affairs after its move into OED1:36:57.

Rep. Alford (R-MO)1:38:44: Asked how far back the $340 million grant backlog dates (Fitzpatrick said four to five years for some programs)1:39:35 and about AI training for SBDC counselors, noting roughly 2,000 counselors trained and 500 fully certified1:42:34.

Rep. Ossiander/Osheski (D-MD)1:43:53: Said SCORE and STEP delays forced real staffing cuts and canceled trade missions for Maryland exporters1:44:47; asked why grant delays weren't communicated to partners1:47:52.

Rep. Bresnahan/"Mr. President" (D-PA)1:49:25: Asked about OED's top priorities and progress integrating STEP into OED following the June 2026 reorganization1:52:19.

Rep. McIver (D-NJ)1:54:20: Announced the Small Business Development Centers Improvement Act of 20261:54:54 and repeatedly asked Fitzpatrick whether he personally supports SBDC funding, which he declined to answer beyond "we support the president's budget"1:55:561:57:37.

Rep. Van Orden/"Mr. Weed" (R-WI)1:58:15: Asked about the $4 million grant to the Illinois-hosted Chinese Mutual Aid Association flagged for violating eligibility terms1:59:11 and the rationale for moving grant managers to the CFO's office2:01:15.

Rep. Jack (R-GA)2:03:08: Asked about steps to eliminate duplicative OED programs2:04:16 and the impact of the "working families tax cut" (H.R.1) on small businesses2:06:15.

Key moments

Fitzpatrick said the agency inherited about 1,500 unpaid grant payments totaling roughly $340 million from the prior administration and had to build a new grant management system connected to SBA's finance system before resuming disbursements0:28:201:29:20.

Fitzpatrick disclosed that an Illinois SBDC subrecipient, the B National Institute of Human Development, operated an office in Guatemala, received about $100,000 annually in SBA funds, and served ineligible non-U.S. clients in violation of its agreement; SBA had it disconnected from the program0:33:430:34:24.

McGarvey and Fitzpatrick sharply disagreed over SCORE: Fitzpatrick said the program was "bloated" with staff earning up to $300,000 combined, while McGarvey noted SCORE had a 94% satisfaction rating and cut staff from 70 to 20 employees nationwide after payments were paused0:38:380:47:58.

Velázquez said SBA's FY2027 budget proposes eliminating 15 of the 16 entrepreneurial counseling and training programs; Fitzpatrick responded that the administration "supports the president's budget" given $40 trillion in national debt0:36:290:36:58.

Goodlander asked Fitzpatrick to name current tariffs New Hampshire businesses face; he was unable to answer specifically, saying "you probably have the wrong witness when it comes to fighting for" tariff details, and did not confirm whether any funds have been returned after the Supreme Court ruled certain AIPA tariffs unconstitutional1:14:281:16:23.

Fitzpatrick revealed a $4 million grant to the Chinese Mutual Aid Association, routed through the Illinois SBDC, was found in violation for claiming to serve all 50 states and describing itself as the only Asian-led SBDC, which SBA said violated federal executive orders on DEI2:00:01.

Fitzpatrick said resource-partner data shows only about 733,000 people served (not the commonly cited 1 million), and after accounting for duplicate clients across partners, actual counseling reaches less than 1% of the roughly 36 million U.S. entrepreneurs1:31:131:31:40.

Scholten cited a July 21, 2026 Association of Women's Business Centers letter documenting $12.6 million in outstanding payments; Fitzpatrick said $15 million has been disbursed to WBCs this fiscal year but did not directly dispute the outstanding figure1:26:171:26:33.

McIver asked four times whether Fitzpatrick personally supports SBDC reauthorization and funding; each time he responded only "we support the president's budget," which McIver characterized as prioritizing the administration's agenda over small businesses1:55:561:57:53.

Fitzpatrick confirmed SBA sent 562,000 loans worth $22.2 billion to Treasury and DOJ that the prior administration had flagged for fraud but not acted on1:48:42.

Metadata

CommitteeHouse Small Business
Chamber / CongressHouse · 119th Congress
Date2026-07-22
TypeHearing
Witnesses
Mr. Paul Fitzpatrick — Associate Administrator, Office of Entrepreneurial Development, U.S. Small Business Administration
Videoyoutube
Transcript359 caption blocks · 19,196 words · 2:08:54 runtime
EventCongress.gov 119483