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House Small Business U.S. House of Representatives
Follow its sittingsNydia Velázquez
And these programs have proven successful by consistently delivering a strong return on investment and improving outcomes for entrepreneurs and fostering long-term economic growth. Unfortunately, these services reach only a small fraction of our nation's small businesses, and too many entrepreneurs, particularly those in underserved communities, get left behind. Many minority-owned businesses face significant barriers to growth because they lack access to experienced mentors.
Without that guidance, entrepreneurs miss valuable networking opportunities, industry insight, and advice on raising capital, making it harder to compete, grow, and create jobs in their communities. But rather than focusing on the immediate challenges facing small businesses today and leveraging the resource partners to unlock that untapped potential, the Trump administration has proposed to eliminate funding for these programs altogether. They have also improperly withheld congressionally congressionally approved funds for political reasons. These actions are disrupting the delivery of services that entrepreneurs all across the country rely on to launch and grow their businesses. Concerns has also been raised over SBA consolidation of the grant management specialists in the Office of Chief Financial Officer and the effect this will have on the issuance of timely reimbursement.
And to make matters worse, small businesses have been navigating significant uncertainty with Trump's tariffs, persistent inflation, and rising energy costs. At a time when Main Street needs our support, this administration's action demonstrate a profound disconnect from the challenges they are facing. It is important to note that for years I have been imploring this committee to reauthorize the entrepreneurial development programs. Bipartisan legislation to reauthorize these bills easily passed the House of Representatives in the 116, 117 Congresses, in which I was chair of the committee. Unfortunately, it is unlikely that legislation will pass with the time remaining in Congress in this Congress.
Today, I hope to get straight answers to my question and a strong commitment that you will implement these programs according to the law and congressional intent. I look forward to hearing your testimony. Thank you.
Speaker 3
Lady yields back and now introduce our witness, Mr. Paul Fitzpatrick. Mr. Fitzpatrick serves as associate administrator for the US Small Business Administration's Office of Entrepreneurial Development. He oversees the SBA's nationwide network of resource partners, including Small Business Development Centers, Women's Business Centers, and SCORE. Prior to his work at the SBA, Mr. Fitzpatrick served as CEO of the 1792 Exchange and held senior roles in Capitol Hill, where he served in the offices of Senator then office of then Senator Kelly Loeffler and Congressman Mark Meadows of North Carolina. Mr. Fitzpatrick named and earned a a Bachelor of Arts in Political Science from Trinity College in Connecticut and a Master of Business Administration from Marymount University in Virginia.
I want to thank you again for being here today. Look forward to our meaningful conversation. Now, before recognizing the witness, I would like to remind everybody here that your oral testimony is restricted to five minutes. If you see the light turn red in front of you, it means your five minutes is has included has concluded and you should wrap up your testimony. And then if it gets so bad and we have to do this, you know, okay.
And then I now so with that in mind, I now recognize Associate Administrator Fitzpatrick for his five-minute opening remarks.
Paul Fitzpatrick
Chairman Williams, Ranking Member Velázquez, and distinguished members of the Committee on Small Business. America's entrepreneurs don't just create businesses. Thank you for the opportunity to testify today on behalf of the US Small Business Administration. My name is Paul Fitzpatrick and I serve as the Associate Administrator for the Office of Entrepreneurial Development.
They create jobs, build communities, and drive our nation's economic growth. The Office of Entrepreneurial Development exists to manage the public-private partnerships providing aspiring and existing small business owners with access to counseling, training, technical assistance, capital, and resource partners. Under the under the leadership of President Donald Trump and SBA Administrator Kelly Leffler, the Office of Entrepreneurial Development has delivered measurable results for taxpayers while equipping America's job creators with the tools to compete and grow. Across our nationwide network of resource partners, we are helping entrepreneurs start businesses, access capital, expand operations, create jobs, and strengthen local communities. At the same time, we are holding ourselves accountable for responsible stewardship of taxpayer resources and measurable program performance.
In fiscal year 2025, the agency took significant steps to strengthen oversight of entrepreneurial development programs. We conducted comprehensive reviews to ensure taxpayer dollars are being used efficiently effectively, improved internal accountability across our grant programs, and rooted out waste, fraud, and abuse. Additionally, we inherited a grant management and payment system from the previous administration with significant record management and turn and internal control deficiencies. For that reason, we moved quickly to implement a new grant management system ahead of schedule, which will lead to improved transparency and reliability in grant administration. We also delivered on our commitments to America's entrepreneurs by working to distribute approximately $340 million in grant funding that had been delayed by the prior administration, ensuring our resource partners could continue serving small businesses without interruption.
These investments support counseling, mentoring, technical assistance, and business development services that help entrepreneurs launch, grow, and compete. At the same time, we are aligning entrepreneurial development efforts with clear, measurable outcomes for the small business owners we serve and the taxpayers bearing the costs. Resource partners across the country are moving beyond one-size-fits-all workshops and instead helping entrepreneurs line up capital, break into new markets, and improve their competitive position in global supply chains, consistent with the Trump administration's broader focus on Made in America and fair trade. These efforts complement SBA's record capital delivery in fiscal year 2025 and ensure that counseling and training are directly connected to growth, job creation, and long-term competitiveness. We're also proud of our new Manufacturing in America Growth Grant program, designed to help develop the next generation of America's skilled workforce by expanding small business access to hands-on training, entrepreneurial education, technical assistance, and capacity building opportunities.
Combined with the SBA's broader efforts to expand access to capital, reduce unnecessary regulatory burdens, strengthen domestic manufacturing, and promote Made in America, these investments are helping to build a stronger pipeline of entrepreneurs prepared to meet the demands of the modern and future economy alike. Entrepreneurial development efforts complement the SBA's broader accomplishments in fiscal 2025, including historic capital delivery, strengthened program integrity, record investment through the Small Business Investment Company program, rooting out waste, fraud, and abuse, efforts to eliminate unnecessary regulations that burden small businesses, and rapid disaster assistance. I can say with full confidence that these initiatives reflect a renewed commitment to SBA's core mission of helping America's entrepreneurs start, grow, and succeed. Thank you and I look forward to your questions.
Speaker 5
Thank you, and we will now move to the member questions under the five-minute rule. I now recognize myself for five minutes. Mr. Fitzpatrick, earlier this year the SBA set out to modernize the grant management system, and during this time payments to its resource partners paused. Can you tell us more about how the SBA's new grant management system improves accountability and transparency going forward?
Paul Fitzpatrick
Mr. Chairman, thank you for the question. When we arrived last year, we realized that our grant management system needed to be upgraded. But when we dug deeper, we were frankly shocked. We found a system that was not auditable, with inconsistent processes that were not accountable to the taxpayers. And when we dug deeper, we realized that the prior administration had a system that relied upon a series of emails and disconnected spreadsheets with inconsistent processes.
And so it's not a surprise that they had trouble dispersing funds. And so what we did is we rolled up our sleeves and we worked with the grant solutions team and developed an integrated system. So the grant system is now connected to our finance system. And we simplified and harmonized the processes and the codes so that now we will be able going forward be able to disperse funds and have proper controls, but also actually we'll be able to do it faster. So we believe the pause was necessary for the sake of the taxpayers.
Speaker 5
So a follow-up on that, what safeguards are going to be put in place to make sure Congress is notified about any potential pause of appropriated funds before they go into effect?
Paul Fitzpatrick
Well, Congressman, Mr. Chairman, thank you for the question. SBA will always appropriately notify Congress. And what we also have done is we have proper internal controls now, so that if we see a problem happening, we're going to know it sooner rather than years later, and so we will be in the position to notify Congress.
Speaker 5
That's good. My last question is part of the OED's program oversight efforts, SBA identified a service center operating under the Illinois Small Business Development Center, the Binational Institute of Human Development, that maintained an office in Guatemala and reportedly directed services toward individuals who were not eligible recipients of SBA assistance while receiving approximately 100,000 annually in SBA funding. So the question is, how was this issue identified and what steps has OED taken to strengthen oversight and ensure entrepreneurial development funds are being used solely to support eligible American small businesses and entrepreneurs?
Paul Fitzpatrick
Mr. Chairman, thank you for the question, and that's really our obligation to make sure that taxpayers go to serve the folks paying the taxes and the American citizens. And what we have done is reviewed many states, and in the normal course of reviewing Illinois, because we had concerns about fraud, we came across the website of the Binational Institute of Human Development. As you said, this organization had an office in Guatemala, was receiving 100,000 dollars in taxpayer funds. Its resources on its website appeared to be solely focused on immigrants and illegal immigrants. And these are, and they also said that they would serve anybody regardless of immigration status.
And these are in clear violation of the terms of their agreement that they signed, this cooperative agreement with SBA. And so we let, we alerted the state of Illinois and that organization was disconnected from the program.
Speaker 5
One of this committee's priorities is ensuring that SBA programs deliver results for entrepreneurs while being responsible stewards of taxpayer dollars, we've talked about that. And as you look ahead, what are your top priorities for OED to improve program performance, reduce unnecessary administrative burdens, eliminate inefficiencies, and ensure that federal resources are directed where they can have the greatest impact for America's small business owners?
Paul Fitzpatrick
Under Administrator Lefler, we've, we have some major overarching priorities at SBA when it comes to specific industries. Mr. Chairman, thank you for the question.
We're talking about manufacturing, we're talking about food supply, and we're talking about actually areas, rural communities, which have really been devastated over recent decades. And so what we're we've been working to do is align the resource partners' efforts with those priorities. But we're also encouraging other those organizations, the resource partners, to raise funds from other sources. These are public-private partnerships, and the ones we find that are most effective actually have raised other source funds from other sources and not solely dependent upon the federal government. The other thing that we're doing is we see the most effective help for small businesses when there's an ecosystem of resource partners that are collaborating.
These are federally funded organizations, state-funded organizations, county, municipal, chambers of commerce. And so we are encouraging that collaboration, so not reliance not relying just on federal dollars in these private public-private partnerships, but multiple organizations. And the other finally what I'd say, Mr. Chairman, is that we are working with underperforming centers to help them get up to speed, and if not, then we'll move them out of the program.
Speaker 5
All right, thank you. Gentleman yields back, and I recognize the ranking member for five minutes of questions.
Nydia Velázquez
Thank you, Mr. Chairman, and thank you, Mr. Fitzpatrick. The administration's budget proposes to eliminate funding for 15 of the 16 counseling and training programs. What evidence do you have to justify cutting these programs that assist nearly a million small businesses each year and generate billions in GDP?
Paul Fitzpatrick
Madam Ranking Member, thank you for the question. We fully support the president's budget, and the president's willing to make the hard decisions when we have $40 trillion in debt and we have challenges economically globally.
Nydia Velázquez
That wasn't a that wasn't a problem or a concern when we you passed and Republican passed the big ugly bill. Was that an issue about not tell us what is the rationale for the administration to cut all those programs?
Paul Fitzpatrick
Madam Ranking Member, the the administration has to make priorities. We can't fund everything, and by our estimates, the resource partners are funded
Nydia Velázquez
But you have funds for cutting taxes for the billionaires in this country. The resource partners have experienced significant delays in reimbursement. For example, SCORE did not receive full funding for more than a year, resulting in a 70% reduction in staff and significant cutbacks to services provided to small businesses. Why did you withhold the fund, and what specific legal administrative administrative or policy reasons do you claim to support your decision of withholding those funds?
Paul Fitzpatrick
Ranking Member, thank you for the question. First, we're in communication regular communication with the resource partners. We haven't heard of any that have laid off staff, so I'm not sure where you're getting that statistic. I'd love to have you send that to our office.
Paul Fitzpatrick
Ranking Member Velázquez, what we did is when we came to Washington and we saw that the SCORE had a bloated program, and what they had done is they had two staffers making $300,000 between their two organizations. And yes, that organization had 66 staff members, and it was bloated. So we we didn't cut their budget. They actually made decisions. They had new leadership that came in and realized it was bloated, and so they brought efficiency, which we support that.
But what they also realized, and what we've heard around the country, is that yes, there are many fine SCORE mentors who are really helping a lot of entrepreneurs tremendously. But there are also many who are are frankly wasting the time of some entrepreneurs.
Nydia Velázquez
Did you withhold money for other programs, for other counseling programs? Did you?
Paul Fitzpatrick
Ranking Member Velázquez, we paused payments as we were upgrading the system that was broken.
Nydia Velázquez
And you paused... And you paused... We paused all payments. With total disregard... All payments, yes.
...all total disregard as to the impact that pausing those fundings will have on those partners, resource partners. That is how much you care about assisting small businesses. Did OMB ask you to delay the disbursement of those funds?
Speaker 9
Ranking Member Velázquez, I would say our team works tirelessly to serve small businesses.
Nydia Velázquez
Yes or no, did OMB... Did OMB... If you know, Ranking Member, no, OMB does not tell us what funds to disperse. OMB released the remainder of FY25 funds in March 2026, at about the same time the SBA closed Grant Solutions for nearly three months. Given the backlog in reimbursement, why didn't OED process some of the payments before shutting down funding?
Was that a coincidence?
Paul Fitzpatrick
Ranking Member, we've been working diligently for a year and a half to upgrade systems. And frankly, what we were doing is flying the plane while rebuilding it. And ultimately, we were getting payments out, but ultimately, working with the Grant Solutions team and our finance team...
Nydia Velázquez
Okay, you're not going to answer my question. On July 6th, SBDC directors received an email which stated, and I quote, "SBA will post the Notice of Funding Opportunity, NOFO, for FY27 funds after Congress passes legislation that includes appropriation for the program." Will SBA post the NOFO if there is a continuing resolution, yes or no?
Paul Fitzpatrick
Ranking Member Velázquez, that would be up to if the funds are appropriated and then apportioned to us. So if we have the funds, we will, of course, if the funds are...
Jake Ellzey
Gentlelady yields back, and now recognize Mr. Ellzey from the great state of Texas for five minutes.
Thank you, Mr. Chairman. Thank you, Mr. Fitzpatrick, for being here today. As part of the Small Business Administration's reorganization announced this past June, the Office of Entrepreneurial Development will now be administering the Office of Native American Affairs, Center for Faith, and the State Trade Expansion Program, or STEP. I was proud to be a Republican co-lead on Representative Davids' bill, the Native American Entrepreneurial Opportunity Act, which would codify into federal law a Small Business Administration Office of Native American Affairs. I was also proud to support funding for the Office of Native American Affairs in FY27 Financial Services and General Government Appropriations Bill.
As a member of the Appropriations Interior Subcommittee, I've had the opportunity to learn about tribal issues firsthand from leaders of the American Indian and Alaskan Native communities. I appreciate the work this committee has done to support tribes through bills such as the Native American Entrepreneurial Opportunity Act. So ensuring that tribes have opportunities to start businesses is very important to me, and I know it is to you too. So can you walk us through how integrating the STEP grants under your office will reduce duplication and improve service delivery to entrepreneurs?
Paul Fitzpatrick
Congressman, thank you for the question. Really, what we've been doing since... remember, Administrator Laphler is a business person, and when we came in, we had offices... we had functions that were spread out, such as HR, IT, within different offices. And no company would operate that way. By the same token, we had some programs and some grants programs dispersed throughout the agency. And so what we're doing is, frankly, bringing groups together, like groups that have similar functions.
And so while our... the STEP program has critical connection to our Office of Capital Access, for example, and our trade, Office of Manufacturing and Trade, really what we're doing is we're putting together the program staff that are actually doing the hard work day in and day out of processing grants. And part of that is to drive efficiency. What we had before is we had staff spread out, and they were... sometimes they're busy, sometimes they're not.
Now they're being cross-trained and so they can surge where there's a demand. And so that'll happen with STEP and other programs.
For STEP in particular?
Yeah.
Paul Fitzpatrick
We're really look like we look at the dollars of exports for businesses and then businesses that are new to exporting. Those are really for that program, that's really the heart and soul.
Speaker 11
And so under the current budget framework, do you have enough money, do you have enough staffing to where you can pull this off?
Thank you for the question, Congressman. Yes, we believe we do.
Jake Ellzey
Okay. And so what reforms would you recommend for us today to improve the efficiency, reduce administrative costs, and maximize the impact of the taxpayer dollar?
Paul Fitzpatrick
I would thank you for the question, Congressman. I would say for Congress to give us the freedom to make decisions to direct the resources to where most needed and guided. But we are happy to work with Congress on legislation all the time to improve these programs to help small businesses and our Office of Legislative Affairs would be happy to work with you.
Great. Thanks a lot. Mr. Chairman, I yield back.
Speaker 5
The gentleman yields back and I now recognize Mr. McGarvey from the great state of Kentucky for five minutes.
Morgan McGarvey
Thank you, Mr. Chairman. Thank you, Mr. Fitzpatrick, for being here today. I'd like to follow up a little bit on the SBA SCORE program because SCORE is one of those things it provides mentoring, it provides personalized one-on-one opportunities for entrepreneurs, people who are putting themselves out there, they are risking it all. It is tricky, it is difficult, it is hard, something that, you know, we know you're not as successful if you're truly trying to do it alone. SCORE's work is provided basically free or at low cost, right?
It's staffed with tons and tons and tons of volunteers, people who who want to help us succeed, who know the importance of starting a business, of growing a business, of the importance that small businesses have to our overall economy. Nearly 10,000 business advisors serve in this program across all 50 states. And it's the federal support from the SBA to the SCORE program that enables it to keep running. Right? So you've got all of these volunteers, 10,000, I mean literally 10,000 volunteers who are mentoring 300,000 individual people.
This is what we're talking about, the backbone of the American economy. And they're they're doing it and they're providing, you know, access to expertise in everything from AI and digital commerce to financial management to emerging technologies to just the stuff you have to deal with when you're trying to open up your own business. I've always said there's a difference between government spending and government investment. And when we invest in growing our small businesses, that is not only something we should be doing, but for every dollar we're putting into the SCORE program, it is returning $45 to the US economy. And so I really am curious as to why when you have this program, over 10,000 volunteers, over 300,000 individual participants, $1 we put into it yields $45 to the American economy.
And for all of these people who are doing it, tens and hundreds of thousands of people, it has a 94% satisfaction score. That's kind of unheard of when we talk about the SBA and the size and scope of this program. So why is the administration concluding that the program should no longer receive federal support?
Paul Fitzpatrick
Congressman, thank you for the question. And we as I've said, we support the administration's budget of making hard decisions with limited discretionary budget.
Speaker 13
But you just said a minute ago, and I wrote it down, you said, "We've paused all payments for a system that was broken."
Those are your words, not the administration's words. Why? For a program tens of thousands of volunteers, hundreds of thousands of people utilizing, a 94% satisfaction score, and $1 that we put into it from the SBA, $45 back to our economy. Why do you think, why did you stop, I mean pause is government speak. So we don't have to do government speak in here.
You stopped all payments, you stopped giving money to this program, and you said it was broken.
Paul Fitzpatrick
Congressman, thank you for the question. Yeah, our system, our grant system was broken. I also alluded to challenges within SCORE, but our grant system was broken. And we're accountable first to the taxpayers. And on the numbers...
Speaker 13
But you said it was bloated. I mean, there's, you've gone from 70 employees to 20 employees across all 50 states with 300,000 people trying to participate in this. You've stopped all payments. Why?
Paul Fitzpatrick
Congressman, thank you for the question. No, we, again, like I said, we, as Secretary Bessent said in recent days, it is easier to prevent waste, fraud, and abuse than to claw funds back. And so that's what we're doing across all programs. That's why we're upgrading our systems and moving forward, we can now get the funds out to the organization. And we have gotten funding to SCORE.
They are, they're in good shape. Working, we're working closely. And the other thing on the numbers...
Morgan McGarvey
So you could tell me, I mean, where has the Inspector General identified waste or fraud in SCORE? Look, I mean, one thing, you're in front of a committee where we want small business to succeed. Nobody wants waste or fraud in government. No party owns that issue. Where is the waste or fraud in a program with a 94% satisfaction rate?
Paul Fitzpatrick
Congressman, thank you for the question. We've talked to, we've talked to small businesses, excuse me, and we've talked to other resource partners and we've talked to our field staff. And as I said, some of the SCORE mentors are tremendous and they've gotten great credit. But some of them are not, they're not great, and the organization is working to move them out.
Right, but is that fraud?
Speaker 13
So, so how are you determining which ment-, so you're cutting the staff, you're stopping all the payments, right? You didn't say you were stopping the fraudulent payments. You said you're stopping all the payments. Why? That's not fraud, that's stopping a program that's successful.
Paul Fitzpatrick
No, actually since we've turned the, the, started, restarted the payments, we have $125 million out the door. But again, SCORE is a separate nonprofit organization. We have a public-private partnership. They are free to raise funds from other organizations. I would say the actual most effective Women's Business Centers and SBDCs are the ones that raise more money than we actually require them to do in the match.
So that's one. We want organizations to be independent of the federal government. But they are actually, the SCORE management is doing a good job of improving and we're, we're happy to work with them.
Speaker 20
You thanked me for my questions, but I'm not sure I got good answers. Mr. Chairman, I yield back.
Brad Finstad
Gentleman yields back and I recognize Mr. Finstad from the great state of Minnesota for five minutes.
Thank you, Chairman Williams, for holding this important hearing today and thank you to our witness, Mr. Fitzpatrick, for being here. In my district, we're lucky to have two great Small Business Development Center regional offices, one in Rochester and one in Mankato. These centers provide counseling, technical assistance, and guidance to entrepreneurs and business owners who are looking to start, grow, and expand their businesses and are necessary to connect federal resources with local business owners. Mr. Fitzpatrick, on December 23rd, 2025, the SBA announced it was pausing grant disbursements to SBA resource partners in Minnesota, citing fundamental breakdown in the public trust of Governor Walz and the broad concerns stemming from fraud schemes taking place in Minnesota. My staff met with SBA on January 6th, 2026, after hearing from affected organizations that they had been not given a clear explanation of the funding pause.
Once the decision was made to pause the disbursements, what process did SBA follow to communicate with the affected organizations?
Paul Fitzpatrick
Congressman, thank you for the question. Yes, I think we all saw what was going on in Minnesota, Feeding Our Future, etc., rampant waste, fraud, and abuse, and it was prudent of Administrator Lefler to pause all payments until we found out what was going on in the state. And the SBDC in Minnesota is one of the seven that is actually state-hosted. So other state, you know, the most others are at universities.
So the same state that would be administering the, some of the other programs where there was fraud would be administering the SBDC program. So what we did is we followed up with that organization, but we actually took our, had our program team go back five years and review just to make sure the documents were clear. We looked at annual reviews, semi-annual reviews. We looked at their accreditation reviews, our financial exam reviews, their quarterly, literally every quarterly report. And we reviewed their websites.
And so that's the process. And we communicated with them. We had several meetings with them. We also had meetings with their, the SBDC's, I would call it management at the host within the state, including going up to, I spoke with a gentleman, I think it's Judge O'Malley, who was appointed by the governor to oversee. And so that was our process, sir.
Brad Finstad
So were, were these organizations, you know, after that thorough review, provided any corrective actions that they could, that they had to satisfy before the funding would resume?
Paul Fitzpatrick
Congressman, thank you. We, we told them that, that they actually were clear. I don't remember, there may be each state had one or two small records within, within their filings, but we did not find, thankfully, fraud and abuse at the Minnesota SBDC. And their team was very good to work with, and we appreciate them.
Brad Finstad
Good. Well, I'm happy to hear that. They have been a huge asset to Southern Minnesota. I've seen them in action in communities all over the state, and it's good to hear that they, they passed the test. So making sure that these centers and programs are funded, it's important to me and the communities that I represent.
I'm thankful that the SBA has worked trying to combat waste, fraud, and abuse. What steps can be pre-, can be taken to prevent another funding pause, and how can we here in Congress be helpful?
Paul Fitzpatrick
Congressman, thank you. I think what we're doing now of, of building this new system, and, and I would add that like any new system, it's a major systems upgrade and expansion. The team is learning how to use it. We're going to get better. We're going to add features and functions in the future.
So we will get better and faster with better controls and accountability. So I, I think that's the key. I think certainly at the individual level program, just as long as they comply with the terms and communicate with us, I don't see any reason for any delays or pauses, sir.
Brad Finstad
So I have about a minute left, and I, I would just maybe just shoot from the hip here a little bit, but you've talked about upgrading the systems. And we've seen this government-wide where we're still operating systems that are on 1980 platforms. I mean, you can play Oregon Trail on some of these things. What have you seen in, in your tenure at SBA that, you know, should really wake us up to say, listen, there is a need for internal controls and systems within government to, to meet the, the state of the times that we live in right now? What are some of the archaic systems that you've uncovered, and what steps have you all been taking?
So I, you know, you've talked about the different grant disbursement systems, and some were relying on emails. I mean, are we using spreadsheets? Are we using Excel, or are we using like modern-day drop-down box, easy-to-use software platforms?
Paul Fitzpatrick
Congressman, thank you. No, that's exactly the, the grant system. We had a grant system. That's a system of record, but, but no, the rest of it was emails and spreadsheets with different tools, with different nomenclature, etcetera. But yes, we, we have five-year-old laptops.
Our operating system when we got here was probably eight years old. So was and our technology on the lending side, different office than mine, is being upgraded, very archaic as well.
Speaker 16
Gentleman yields back. I now recognize Mr. Cisneros from the great state of California for five minutes.
Gilbert Cisneros
Thank you, Mr. Chairman and ranking member, for convening us today for this important hearing.
Mr. Fitzpatrick, after over a year and a half, thank you for finally making an appearance before this committee. I hope we can take this rare opportunity in direct engagement with you to get some real clarity and solutions for our entrepreneurs nationwide that look to programs under your purview of resources, counseling, and training to launch and grow their small businesses. There is a wonderful small business and development center at the University of La Verne in my district that plays a critical role in fostering growth for small businesses and the broader local economy. I strongly support SBDCs, but I also support the other resource partners that work with them. I need to stress that small businesses are hurting and that this is not the time for the administration to recklessly eliminate programs that are critical to the success of our small businesses.
The president's tariffs have cost Americans over 317 billion dollars. I keep hearing from small businesses about rising costs and uncertainty. A recent survey by Small Business Majority saw 74 percent of business report an impact from rising fuel and transportation costs, 88 percent said cost of raw goods and materials have increased this year, 89 percent said healthcare premiums are up, 72 percent said commercial rent costs are up. Bankruptcy filings for small business during the first half of 2026 now represent a 50 percent increase over the same period a year ago. It is more important than ever to support our small businesses through the counseling, training, and mentoring that entrepreneur development programs offer that help entrepreneurs successfully launch and grow their businesses.
We shouldn't eliminate programs, we shouldn't withhold funds for programs, we shouldn't subject them to meaningless audits, and we shouldn't blindly shuffle and reorganize who oversees them. I also think that it's unfortunate that my Republican colleagues have refused to work with us on entrepreneurial bills that have been bipartisan in the past on this committee, and I encourage them to come to the table and let's start working on some of these bills that will benefit our entrepreneurs. So Mr. Fitzpatrick, you say in your testimony that you hold yourself accountable for responsible stewardship of taxpayer resources. Have you found any evidence of fraud in any of the programs you oversee and if so, which ones, how much, and how do we legislatively fix it?
Paul Fitzpatrick
Congressman, thank you for the question. I, excuse me, first and foremost, I want to say, you alluded to tariffs and challenges. We are thankful that we have a president who has the courage to fight for the safe streets, lower taxes, reduced regulations, fair trade, and capital markets.
Gilbert Cisneros
Mr. Fitzpatrick, that wasn't my question. Do I need to repeat it? Because the tariffs, I keep hearing from my constituents that tariffs are killing them. And right now that the tariffs that the president just said, the 50 percent, it's going to have an even more impact, the ones that he just put on Canada, where a lot of our paper goods come from. So coffee shops in my district, ice cream shops, anybody use any paper product, they're now going to have to pay higher costs.
But back to my question. Have you found evidence of fraud in any of your programs you oversee, how much, which ones, and how do we fix it?
Paul Fitzpatrick
Congressman, I mentioned the Binational Institute of Human Development as an example. We have women's business centers that we have put on a suspension and we have other programs that are just not complying. But we don't have, I'm glad to say, we have not found massive fraud and abuse in these programs, in part because we are looking at quarterly reports and finances with them and so that's good. And I will say that the strength of the organizations are when they have other partners, not just reliant on the federal government, but they have other funders, in part with the match requirement, that does also help to bring accountability.
And so we're thankful for that. And we're, as I said earlier, we are always happy to work with Congress to provide technical assistance, and our Office of Legislative Affairs is happy to work with you on ways of improving the programs to help more small businesses.
Gilbert Cisneros
Well, I'm glad to see that this overall fraud investigation that you say has really kind of shown no fraud. I will say, you know, California has an outstanding reimbursement of $144,000 that needs to be resolved, and this is with the State Trade Expansion Program, you know, a program that is 30 to 1, and we're still looking for those resources to come back to our state. But right now, I will submit my other questions for the record, and thank you for your time, and I yield back.
Speaker 21
Gentleman yields back. Now recognize Mr. Schmidt from the great state of Kansas for five minutes.
Derek Schmidt
Thank you, Mr. Chairman, and thank you, Mr. Fitzpatrick. I just wanted to talk about a Kansas-particular matter that's on my mind. So our Small Business Development Center for the state is out of Fort Hays University now in Northwest Kansas. The university's decided they don't want to remain the host. We have other, at least one other location in Kansas would like to host, Pittsburg State in my district's interested, there might be others, I don't know that.
My understanding is that the state of play is that there is an application process by which a new host could proceed, but they tell me they're not able to do that until the appropriate notice of funding opportunity has gone out, that that hasn't happened yet, and that it may be over at OMB. Can you tell me the status on the NOFO going out?
Paul Fitzpatrick
Congressman, thank you for the question. I'm very familiar with the situation at Fort Hays, and we're excited to find a new partner in Kansas. No, the, what it is is we don't have the funds. We need the funds, the fiscal '27 funds, so when Congress passes a budget, appropriates the funds, then we can issue the notice of funding opportunity.
Derek Schmidt
Well, that's going to create a little bit of an issue, right? Because unless I'm mistaken, and tell me if I am, the end of the calendar year is when the shop closes at Fort Hays. The new applicant or applicants, depending on how it is, have to have sufficient time to put their application together, get it submitted, and get a bow put on it prior to the end of the year so that things don't shut down, people leave, get employed otherwise. And, you know, with all respect to my own institution, I'm not anticipating the appropriations process concluding before the August recess, and who knows what'll happen in September. So what options do we have?
The bidders can't bid, the applicants can't apply until they know the conditions in the NOFO, and they can't know the conditions in the NOFO till they see it. What options do we have to at least enable that process to start moving?
Paul Fitzpatrick
Congressman, thank you. One, I would say the Fort Hays team has been really good about this during this transition and serving small businesses, so I want to give credit to them. The, we are happy to work with anybody who is interested in applying, because it is not going to be a dramatic change of any application and the terms in this notice of funding opportunity. So an organization could be getting ready in advance, and we will move very quickly because it's, we're not going to have hundreds of applicants, so we'll be able to make a decision very quickly. But we do appreciate that it's going to be tight.
We understand that, and we're hopeful that maybe even Fort Hays could bleed over into the, if there's a couple of weeks into the new year, but we're confident that we'll be able to move quickly.
Derek Schmidt
Okay. Well, I appreciate that. So would the appropriate advice for me to give to the folks that are interested at Pittsburg State or otherwise in Kansas, if they want to talk to me, to connect them with your team timely so that those discussions can commence and they can do whatever preparatory work may be necessary to move quickly when things break loose?
Yes, Congressman.
Derek Schmidt
We will follow up with your team, and I thank you very much. And Mr. Chairman, I yield back.
Speaker 5
Gentleman yields back. Now recognize Mr. Tran from the great state of California for five minutes.
Derek Tran
Thank you Mr. Chairman and ranking member for holding this important oversight hearing. Mr. Fitzpatrick, thank you for being here today. In my district, I've seen firsthand the impact of Orange County Small Business Development Center and the Orange County Women's Business Center. That's what's hosted in my district. Take Ms. Jessica Gutierrez, the owner of Stamp and Ship in Orange County.
She had a simple dream to start a small business, but like so many first-time entrepreneurs, she ran into obstacles securing a commercial lease and finding startup financing. With guidance from the Orange County SBDC, she turned an idea into a successful neighborhood business. Or look at the Orange County Women's Business Center, which recently graduated dozens of entrepreneurs from its in-home licensed childcare program. These graduates are starting businesses that provide desperately needed childcare options for working parents. So I struggle to understand why the administration claims that these programs are wasteful and fraudulent, especially when I've seen how they contribute to the local economy.
As the administration tries to eliminate SBDCs, they have also delayed funding that Congress already approved. My office spent months working with the Small Business Administration to recover nearly three million dollars that was owed to the Orange County Inland Empire Small Business Development Center. It should never have taken congressional intervention to release funding that Congress had already appropriated. I was happy to hear that you reported that your office has improved grant management, but I know there is still lots more we can do to strengthen accountability. SBA's resource partners collectively serve nearly one million entrepreneurs each year.
They provide business counselors, technical assistance, and support for local entrepreneurs. For entrepreneurs in my district and across the country, SBA's entrepreneurial development programs are often the difference between a dream that never leaves the kitchen table and a small business that creates jobs and grows our economy. I hope today's hearing helps us separate rhetoric from reality as we continue to serve the small businesses across this nation. As mentioned in my opening, my office successfully fought to release nearly three million in SBDC funding to the community after the administration withheld it. You mentioned safeguards that are in place with a new system to inform Congress of pauses, but I want to know what safeguard is the SBA providing to ensure that grant payments to resource partners are delivered on time and without unnecessary political or administrative delays.
Paul Fitzpatrick
Congressman, thank you for the question. I can assure you there's never been a political delay. Our obligation is to first it was to fix the broken system that we inherited and then that will then help us to get funds out faster and we're doing that. But I would say on in certain situations when a resource partner submits for a reimbursement for example, that's not the end of the story. Typically about a third of them have errors.
So our team has to follow up with them. So I don't know that that particular payment that you're speaking of, I'm glad it was rectified, but that's that's not uncommon. But what what we're doing is making our teams nimble just like any business would do so we're cross as I mentioned, we're cross-training staff so they can surge to where the demand is. So if there's more activity payments, things such as that in the SBDC program, folks in the WBC program could go over and help on that. And what we're doing is trying to make sure we get the funds as quickly as possible but in to the right folks.
And I didn't say by the way that there was rampant fraud and the administration hasn't said that.
And we we've done reviews and we're thankful that we haven't found rampant fraud.
Derek Tran
I didn't even talk about that in my statement or my question administrator but you know a consistent theme that we're hearing is these safeguards that are not being provided to ensure notice to our grantees. Like I want to know specifically what you're working on to provide those safeguards. We heard it from Mr. Finstad. We heard it from the chairman. I want to know what these safeguards are.
Paul Fitzpatrick
By safeguards you mean we just we are in communication with the resource partners and if they submit and we review we can we can pay as quickly as possible. And but there's several steps. Remember we have obligations and we have payments. So there's those are two separate steps and we're happy I'm happy to talk more but we are committed to moving as quickly as possible and reimbursing and and obligating etc.
Derek Tran
Yeah I hope you would commit to making sure that these programs are healthy healthily funded and as we continue down this path we continue to give notice to grantees and to members of Congress when there's impacts that's happening in our district. Mr. Chairman with that I yield back.
Speaker 3
Gentleman yields back. I now recognize Mr. Petronis from the great state of Florida for five minutes.
Jimmy Patronis
Thank you Mr. Chairman. Paul great to see you. Thank you for coming and spending some time with us. Members Paul has been such a a fantastic public servant so many different capacities. I got the opportunity to serve with him years ago when I was in the state of Florida and and it's just great to see folks that care about the future of our nation come back to be a servant in this process.
So thank you for your sacrifice and leadership. I want to focus on taxpayer dollars and cracking down on fraud waste and abuse. I think I pretty much already know the answer to this but I think it's important to all of my colleagues to to hear you expand upon your your successes. So can you highlight some of the actions the SBA has done to improve oversight to ensure the taxpayer dollars are reaching only eligible Americans who are needing to use these systems especially when it comes to the creation of small business.
Paul Fitzpatrick
Congressman thank you. Congratulations on entering the body and thank you for your service here too. He's a he's quite a restaurateur. We are we're really trying to do pull every lever we can when it comes to accountability. We've got our field teams we're improving the way they're doing their reviews of the resource partners.
We're training our program teams and our grant teams. What we have done is we've actually simplified the documents and the terms making sure we're dialing up the oversight side and the compliance with executive orders again to make sure only those who are eligible receive and to make sure dollars millions of dollars went like in the last administration to DEI programs and other divisive programs. And so we we are also then working to improve the accreditation process for example with the SBDCs and we are making sure that our teams are thorough and reviewing. And and I would say the other piece is it was alluded to on the part of our reorganization having our grant pro grant staff the grant managers move to the CFO's office. That's actually a good thing.
They were distributed and now they're integrated. Those are the people with the warrant so actually their name is on the line when they sign it for a hundred thousand or five million. They are integrated with the CFO's team where they should be. So those are the kinds of things that we're doing. We're really trying to run more like a business but thankfully as I've said we we you know waste fraud and abuse are different things.
We want to drive efficiency to eliminate waste. And we're making sure there's not fraud and we haven't seen rampant fraud thankfully.
So that if that answers the question.
Jimmy Patronis
It it if give me do you have a specific example of something that you I mean you you've touched on the efficiencies. But a specific example that you're most proud of?
Paul Fitzpatrick
Congressman, I I think the the simplifying and harmonizing the documents and the process. Every grant program was run with different rules, different documents. And even within programs there were silos. But within even within the Women's Business Center program, there were two program managers sitting next to each other who had different processes. That's what we inherited.
And so we have to we're building the foundation. And so we're really proud that we're harmonizing the documents and the processes so then our team can work more efficiently. But frankly, we'd rather not spend a lot of time talking about documents and processes. We'd rather work with resource partners to help them be more efficient and productive to help more small businesses. Because it's really it's about the small businesses, not the resource partners, though we we appreciate the hardworking staff at the resource partners, absolutely.
Well, again, thank you for taking time out of your day to be here with us. Thank you, Mr. Chairman. He's a great witness to bring before us and I yield.
Chairman yields back and I now recognize Ms. Goodlander from the great state of New Hampshire for five minutes.
Maggie Goodlander
Thank you, Mr. Chairman. And thank you, Mr. Fitzpatrick, for being here today. 99% of our businesses in New Hampshire are small businesses. And they employ about half of everyone who works in my state. So when New Hampshire's small business is hurting, our whole state is hurting.
Your office has one important job that I want to focus on in my questions this morning, and that is helping small businesses to start, grow, and compete, including in markets beyond our borders. So I want to start with a program that we've talked about a bit today that your office runs, the State Trade Expansion Program, or the STEP program. So STEP helps small businesses sell their goods abroad. And I want the record to reflect the numbers because they're pretty remarkable. Since the year 2010, STEP has helped more than 15,000 small businesses break into international markets.
And the return on investment from this program is more than 30 to 1. In a single year in 2024 alone, STEP supported nearly 22,000 jobs. So this is a program that works. And I've seen it firsthand all across my state. So the entire purpose of the STEP program is to help small businesses trade.
Is that right?
Speaker 24
Congressman, thank you. Yes, it it's to to expand exports or get or begin exporting.
Speaker 23
So here's a question I want to ask you. Can you tell this committee plainly what tariffs the Trump administration has imposed that a New Hampshire small business has to navigate today?
Paul Fitzpatrick
Congressman, thank you for the question. We fully support the administration's policies to fight for fair trade.
Speaker 25
That's not my question. This is a factual question. I get this question from my small businesses every day. So can you can you please answer the question? What tariffs that have been imposed by President Trump does a New Hampshire small business have to navigate today?
Paul Fitzpatrick
Congressman, when it comes to the minutiae of tariffs, you're probably have the wrong witness when it comes to fighting for.
Speaker 23
This is this is not a minutiae question. Thank you, Mr. Fitzpatrick. This is obviously not a minutiae question. But I'm asking it because I'm not sure that anyone can answer this question cleanly anymore. And that is the core part of the problem.
We've got IEEPA tariffs. We have Liberation Day tariffs. We have Section 232 tariffs. Section 122 tariffs. Section 301 tariffs.
It changes by the week. This week alone, here's what we're seeing. The Section 122 tariff expires this Friday.
A new 25% tariff on Brazil took effect today. Earlier this week, President Trump announced a fresh set of tariffs against Canada under authority that's never been tested before. So, my point is that if the associate administrator for the very office that is charged with helping small businesses trade cannot keep it all straight or offer a clear answer, how on earth is a small business in New Hampshire supposed to do that? And the answer is, they can't right now, and that is a core part of the problem. Small businesses shouldn't be asked to hire an army of attorneys to navigate a constantly shifting set of tariffs and barriers, taxes on their own bottom line, just to try to get by, but that is the situation that you have put small businesses all across New Hampshire in.
Now I want to ask you, I've been very focused on the IEEPA tariffs, and in February we fought those tariffs at every level, in every court. The Supreme Court declared them unconstitutional in February. How many dollars have been returned to small businesses who were unconstitutionally taxed by President Trump?
Paul Fitzpatrick
Congressman, thank you for the question. The Office of Entrepreneurial Development does not, is not responsible for that. What we are responsible for is helping the small businesses that want to grow, and I would say 98% of small businesses are manufacturers. They are, we're going around the country and they are telling us they're having opportunities to compete now finally because there's not cheating going on from other countries and our competitors. So those are the ones that we're talking to.
We understand we're in a transition as we try to reindustrialize America, but we support the President's policies because he's fighting for that. It's time that we fight for the small businesses in New Hampshire and every other state.
Speaker 23
Well, we are fighting for those small businesses, and one of the things I spend a lot of my time doing is trying to get those small businesses who are unconstitutionally taxed. Do you acknowledge that these were tariffs declared unconstitutional by the United States Supreme Court?
Paul Fitzpatrick
Congressman, thank you for the question. I know what the Supreme Court decided, but we are fighting for fair trade.
Speaker 23
And right now, I hope you will join me and everybody in this body who is fighting to make sure that unconstitutional taxes are reimbursed to the small businesses who are hurting because of the decisions made by this President, which are chaotic and have been extremely costly to my state and to our small businesses. Thank you, and I yield back.
Speaker 5
Gentlelady yields back, and now recognize Ms. King Heinz from the Northern Mariana Islands for five minutes.
Kimberlyn King-Hinds
Thank you very much, Mr. Chairman, and thank you so much, Mr. Fitzpatrick, for being here today. I really appreciate the SBA support for the CNMI SBDC. The CNMI SBDC team has been phenomenal. They're a rock star. So there's a lot of military contracting that's happening in the CNMI right now with just military expansion in the region, and unfortunately we still don't have an APEX accelerator, but what the SBDC has been doing is filling in the gap, and so I just wanted to say thank you for that.
Several months ago I met Elizabeth Habib. I think she's the administrator of SBA's Office of Women's Business Ownership. Is that you right there? Yeah, hi. When I met Ms. Habib, she was incredibly enthusiastic about potentially finding, creating an opportunity to have a WBC in the CNMI.
So I was kind of surprised when a couple of weeks ago we learned that the competition was limited to applicants from Florida, Louisiana, Pennsylvania, Tennessee, Texas, West Virginia, Wyoming, and the US Virgin Islands. Can you explain how the SBA decided to limit application to just these states and one territory, because for Guam and the CNMI, our closest WBC is a seven-hour flight away in Honolulu, which, you know, makes it kind of difficult to access that opportunity.
Paul Fitzpatrick
Congressman, thank you for the question and thank you for recognizing the the incredible talent that Administrator Lefler has attracted to SBA, including Assistant Administrator Habib. We have limited resources and we are really excited about the Women's Business Center modernization initiative. And what that is about is building a wrap-around services, really modeled on the the population-based funding formula of the SBDCs, and with a statewide focus. So that's just for everybody's benefit on this initiative we're excited about. But it is limited resources.
And so we we had to go through and the team went through and and identified several that did not have services, several states that is. These are these are four states that were underfunded and four states that had no WBCs. But the good news is we have a lead center and two service centers in the SBDC network for CNMI. And and that's there doing good work as you said. And so we're excited that they can serve male and female entrepreneurs in CNMI.
Kimberlyn King-Hinds
I guess I just wanted to kind of understand the criteria so that, you know, the that opportunity's provided to the CNMI as well in terms of just selection, the selection process. But I think that's something that a conversation that we can we can have offline and and we'll flag for you. So one, you know, the STEP grant has been the STEP program has been mentioned. And so, you know, as I've stated, the SBDC has has done a great job with the innovation incubator. And, you know, you have all these young entrepreneurs creating products.
And, you know, one of our biggest challenges in the CNMI is just you you don't have access to the customers, right? And so people are looking to to export. Like, you know, coconut oil for the body, hot pepper, noni. So um, one of the challenges that we are hearing is that, you know, they're having to navigate these very complex requirements in these foreign countries, like in Japan or or South Korea, for example. And so I just kind of wanted to kind of get a better understanding from you, you know, if these compliance costs are already allowable use under the STEP grant funds and and how can we work together to be able to open up these markets to these small businesses who are looking to export.
Paul Fitzpatrick
Congressman, thank you for the question. No, those kind of, for example, health-type regulations, that's not the kind of compliance costs that the STEP program is currently designed could cover. It's for trade missions, trade shows, marketing, translation, those kinds of things. But we're happy to our team is happy to anytime work with you, provide technical assistance to help improve. We have to see when it comes to the the think of the impact financially on the program.
It is limited. It's $20 million a year in current appropriations. So there are limited dollars. I would say the team just let me know we had $8 million just got obligated in the STEP program just recently. So we but we're happy to work with our Office of Legislative Affairs with your team and get together and and talk about the options.
Hillary Scholten
All right, thank you. I'm out of time. I yield back, Mr. Chairman.
Gentlelady yields back. I now recognize Ms. Scholten from the great state of Michigan for five minutes.
Thank you, Mr. Chairman, and thanks to my my teammate Ms. Kim-Hines for tossing over a great tossed me we play softball together and that teases up perfectly a lot of the questions that I had for you about a bill that I just introduced yesterday, the Women's Business Center Improvement Act of 2026 along with my colleague Sharice Davids.
This is a bipartisan bill that would address so many of the issues that we were just discussing in the last question line. A bipartisan bill in the last several Congresses. You know, we don't have to work on this alone. Invite you to take a look at the bill, get on board, and would love the administration's help in championing this bill and getting it across the finish line. We can address so many of these issues.
This bill would increase the authorization level for Women's Business Centers, add program integrity provisions, and increase the grant amount that WBCs can receive from 150,000 to 350,000. Is that something you could support?
Paul Fitzpatrick
Congressman, thank you. Excuse me. We're always happy to provide technical assistance and work with you through the Office of Legislative Affairs. Really, one of the challenges, frankly, is program design when it comes to the Women's Business Center program. And so you're addressing some of that, but it's also we have duplication.
And ultimately, where these centers are located and how they're dispersed. For example, right now California has 21, Texas has three. And so, you know, that's an issue that we have to address. But it also comes down to efficiency, and is this an efficient use of funds with smaller groups, and should Congress talk about combining all these resource partners into one, have one grant per state? And that what that would do is it would have lower costs for SBA and actually lower administrative costs for the resource partners.
For example, the WBCs, one of them told me their compliance cost is 60,000 dollars a year. We give them 150, they raise 150. The average has a couple of employees. 60,000 dollars go into compliance costs. That's not efficient.
So we have a program design issues.
Hillary Scholten
And I would agree with you there, and our office is very happy to work with you to see the ways in which we might be able to improve this bill. Teammate, we want to get you on board as well. She's like, "I'm out of here." No, I'm kidding. But truly, you know, this is not something that we're doing just for messaging bills.
This is a great bill that has been bipartisan in past Congresses. We would love for your office to take a look, get on board, see where we may be able to improve some of those efficiencies. But I am going to circle back to my question. Would you support lifting the cap from 150,000 to 300,000? The economic advantages are so significant.
Speaker 33
Congressman, we support the President's budget that's making the hard decisions when it comes to these discretionary programs.
Hillary Scholten
I want to move on to talk a little bit more about some of these outstanding payments to the Women's Business Centers. Our ranking member has touched on this before, and I would like to introduce for the record a letter from the Association of Women Business Centers dated July 21st, 2026, and the data collection results that they have here, which goes to something specifically that you had said. 12 million dollars. 12.6 million dollars to be specific. This figure reflects an outstanding payments.
Do you think that's acceptable?
Speaker 33
Congressman, as you've heard I testified, we inherited a broken system, and actually Women's Business Center program had some of the worst records and processes. And so we had to pause to bring clear, and we've actually in the last years dispersed 15 million dollars to WBCs.
Hillary Scholten
But how far into this administration? I'm sorry, Mr. Pittman, give me one second. So we respect that this was maybe not something that initiated with this administration, but you guys are in control. So I mean, do you find this acceptable? Do women not deserve to get paid?
Paul Fitzpatrick
Well, Congressman, thank you, but that's a ridiculous assertion. We pay everybody, the resource partners.
Hillary Scholten
I mean, if it's answer the question. There's 12.6 million dollars in outstanding payments. You guys are in charge.
Paul Fitzpatrick
We've dispersed 15 million dollars this fiscal year to Women's Business Center, so that's not nothing. And payments have resumed, and we are working very quickly. But frankly, if you think about it, we've lost 25 percent of the time in this administration between the shutdown and the pause.
Hillary Scholten
In my remaining 30 seconds, I want to ask, you said there have been no layoffs as a result of delayed payments or grants not getting out, these notice of funding opportunities. How do you know that?
Paul Fitzpatrick
Congresswoman, now frankly, I misspoke when I I did not I was not thinking about SCORE. And so I misspoke on that. But SCORE, what the SCORE new leadership did, they realized, yes, yes, that was my mistake. But but SCORE's leadership team admitted that they were it was bloated. And their board admitted that it was bloated.
So that that is clear.
Paul Fitzpatrick
We're not paying women, we're paying the organization, some of which are run by men.
It's the Women's Business Center, so let's not be pedantic about it. All right, thank you. Yield back.
Speaker 36
Gentlelady yields back. I now recognize Mr. Fuller from Georgia for five minutes.
Shaun Fuller
Thank you, sir. One of the things that drives me insane as a career prosecutor is when questions are asked about of a witness and they're not allowed to give an answer. So pardon the pun here, but I'd like to give you the opportunity to give some fuller answers here. And I know that one of the things that you talked about, you, President Trump, Administrator Leffler, and you inherited an absolute mess from the prior administration. You've talked about the bloated agencies, you've talked about salaries that people had in your organization that would shock the conscience of Americans, you've talked about outdated systems.
And despite all of that that the Biden administration had in place, you put in your testimony that there were $340 million in grant funding that was delayed by the prior administration, delayed by the Biden administration. Can you tell us a little bit about how you overcame those delays and those issues that you inherited from the Biden administration and what those fixes were?
Paul Fitzpatrick
Congressman, thank you for the question and I appreciate the opportunity. Yes, our team inherited about 1,500 payments, about $340 million that they hadn't processed in part. We don't know exactly, we I think they had some staff that were well-meaning, but they didn't have good leadership, they didn't have good technology, they didn't have good processes. And so what we've had to do is roll up our sleeves and get it out. So as I mentioned, we've lost 25% of our time in processing obligations and payments because the shutdown and because the pause that was necessary.
So we're having to work through their $340 million and our $330 million. And and the team is working very, very hard, all of the team at all levels. And so we're we're committed to doing it as quickly as possible. But as as I said Secretary Bessent said the other day, it's easier to prevent waste, fraud, and abuse than to claw the funds back. And so we are working day in and day out.
And we're we're very thankful that our resource partners have been patient. And the other thing is the important point is that we don't want to see these organizations solely reliant on the federal government. That we want to see them raise additional funds above and beyond what we require them to. And by the way, those are the organizations that are we find are the most innovative. And they're also going to be the most resilient so that should in the future there be a reason why we have to make a pause, I don't anticipate that, they will be able to continue providing their services.
And one point that I just want to make one point of order, when it comes to these these programs, because of the handcuffs that we put on the resource partners, we do not get back the names and contact information that we can use to verify who the clients are. And so we don't know what the numbers are. People have said a million people are served. Well, if you look at the resource partners on our data, it's 733,000. But we know that many actually go to multiple resource partners.
So we estimate we're actually about a half a million. So about a percent are clients of the resource partners, but actually less than a percent are actually getting counseled.
We're thankful for those that they're serving, but it's a very, very small percentage of all entrepreneurs.
Shaun Fuller
No, and and thank you to to you for the work that you've done in fixing all those problems that you inherited and to Administrator Leffler as well. One of the problems that you inherited, there were communities like mine in Appalachia that were completely ignored, small businesses that were completely destroyed by the Biden administration and their policies. And one of the things that you've done with your leadership of OED is ensuring that small businesses, particularly in Appalachia and underserved areas like mine, have access to counseling, training, and technical assistance. Can you tell us a little bit about that work and how you have overcome those problems that you inherited?
Paul Fitzpatrick
Congressman, thank you. Yes, I would say the prior administration had a a did not equally treat rural America. If you look at where the dispersion of where the the resource partners are that they located, you know, you have certain, you know, in Los Angeles, you you go a couple blocks and you hit a Women's Business Center. There's clearly not equal dispersion. And so this under this administration, President Trump, Administrator Leffler are committed to small businesses and entrepreneurs and every American in in rural communities.
And and you're right, the Biden administration energy policies really were energy suicide and have decimated Appalachia. And so we are committed and we know you have a service center, Small Business Development Center service center in your district. And we have every every confidence that that the Georgia network is doing a good job, but we're happy to work with you should you need any help with that service center up there.
No, and thank you so much for that. We we love our service center in Rome. I see Ms. Habib in the audience. I think the last time I saw you was in Rome. So thank you so much for your work.
And Mr. Chairman, I yield back my time.
Speaker 30
Gentleman yields back. I now recognize Dr. Morrison from the great state of Minnesota for five minutes.
Kelly Morrison
Thank you, Chairman Williams and Ranking Member Velázquez for holding this hearing. Thank you, Associate Administrator Fitzpatrick, for being here today. Not to beat a dead horse, but this is an issue that the small business community is really struggling with. The number one thing that I'm hearing about from small business owners in my district is the difficulty of navigating the uncertainty created by the President's tariffs. Many small business owners are facing shrinking profit margins, disrupted supply chains, and severe planning uncertainty because of these tariffs, jeopardizing the future of their businesses.
The President's fiscal year 2027 budget proposing eliminating 15 of the 16 entrepreneurial development programs, including the STEP program, which we've discussed some this morning, which assists small businesses in entering or expanding into international markets. One of the consequences of the President's tariffs have been retaliatory tariffs against the United States from other countries, causing even more uncertainty for small businesses interested in participating in foreign trade. Throughout last year, as the President placed tariffs on Canadian cars, aluminum, steel, and lumber, Canada responded with retaliatory tariffs against the United States, restricting exports to our neighbors to the north for Minnesotan small businesses. Now we wait to see how Canada will respond following the President's new 50 percent tariff on Canadian goods. Given the administration's interest in increasing US exports and supposedly balancing trade deficits, I have to question the decision to eliminate the STEP program at a time when small businesses need more assistance navigating trade uncertainty, not less.
So how is the Office of Entrepreneurial Development helping small businesses in the international marketplace navigate retaliatory tariffs?
Paul Fitzpatrick
Congresswoman, thank you for the question. As I've said, we support the administration's policies fighting for fair trade, which is fighting for small business.
We have seen as we go around the country businesses that are adding shifts. They're getting contracts they haven't had before. I met with a business in Wisconsin that normally...
Speaker 29
Mr. Fitzpatrick, I'm sorry to interrupt you, but how does your office plan to continue to help small businesses increase their exports? How are you planning to help small businesses increase their exports amidst retaliatory tariffs if the STEP program goes away?
Paul Fitzpatrick
Congresswoman, thank you for the question. We have limited resources and we support we will follow the law. We will disperse the funds as Congress appropriates them to us. And so if they go to the STEP program, we will certainly manage that program.
Speaker 29
Okay, well, thank you for starting to answer the question. I'm going to move on. I was honored to co-lead the Native American Entrepreneurial Opportunity Act, legislation that codifies the Office of Native American Affairs into federal law and establishes an assistant administrator role that reports directly to the Small Business Administrator to oversee its operations. This bipartisan bill, we've also touched on it this morning, unanimously passed the House in June, indicating cross-party support for ensuring Native American entrepreneurs have access to the SBA's entrepreneurial development lending and contracting programs. I thought it was interesting to see that under the SBA's recently announced reorganization plan, the Office of Native American Affairs was relocated to the Office of Entrepreneurial Development.
Will the Office of Native American Affairs have the same level of authority, staffing, and access to senior leadership at the SBA under this reorganization?
Paul Fitzpatrick
Congresswoman, thank you for the question. Really, you have two things going on here. When you look at the Office of Native American Affairs, and we're certainly committed to those programs and that office, what we do is two pieces. One, it has a grant function. And as we've said, what we're trying to do is pull the grant functions together so those staff can share and serve other programs.
So you're not going to have dedicated staff just doing programs for the Office of Native American Affairs or STEP or others so that we have greater efficiency, just fewer taxpayer dollars on just frankly paperwork, and we can surge and cross-train staff. But two, we're a small agency and I would say that...
Speaker 29
Excuse me, sir, I'm going to reclaim my time here. Native American-owned small businesses create jobs in tribal communities and strengthen local economies, often in rural areas. Just like my House colleagues from both sides of the aisle, I want to make sure that SBA is fully committed to helping Native American entrepreneurs succeed. So who is leading the office? I have just a couple of just very straightforward questions.
Who is leading the office?
Paul Fitzpatrick
Congresswoman, thank you for the question. We're currently recruiting for leadership of that and it is fully integrated.
Speaker 29
How many SBA employees are dedicated to the office before and after the reorganization?
Paul Fitzpatrick
Congresswoman, thank you for the question. There are no headcount impacts from this reorganization.
Speaker 40
Okay, so we don't have a number. How is your office helping Native American entrepreneurs overcome barriers to accessing capital, counseling, and contracting?
Speaker 5
Congresswoman, we're actually about to release a new grant opportunity for workforce development in tribal colleges.
Thank you, Mr. Chair, I yield back.
Mark Alford
Gentlelady yields back and now recognize Mr. Alford from the great state of Missouri for five minutes.
Thank you, Administrator, Associate Administrator Fitzpatrick, good to see you again. Well, thank you, Chair, and thank you, Ranking Member Velázquez. Just a couple of weeks ago, I was sitting where the chairman is and we had a special roundtable with the Kauffman Foundation of Kansas City and you were on the panel. I appreciate your hard work at the SBA. As chair of the Oversight Subcommittee, I was really disturbed with the SBA's recent discovery of roughly $340 million in unpaid grant obligations that you basically inherited from the previous administration.
This discovery demonstrates why strong oversight, modern financial systems, and accountability are just as important as funding these programs. Sir, how far back does this backlog go?
Paul Fitzpatrick
Congressman, thank you for the question and that was great to be here on that panel. When we arrived, just for example, just in the Women's Business Center program, I got with their team and I said, "Okay, what are the payments and how far do they go back?" That program, they went back five years and that was, you know, we had just been here a couple weeks. And that was at least $12 million.
And so that was just that one program. So there were about fifteen hundred payments in that three hundred forty million dollars, so I don't know the details, but I have to assume four or five years.
Speaker 42
Is more being discovered as you dig through this balance sheet, basically?
Yes, sir. Yes.
Paul Fitzpatrick
Well, we're committed to getting them out the door once we make sure we can verify that this is a qualifying program, that we have all the paperwork, the obligation was appropriate, that we can verify that this organization is doing what they're supposed to do. But I would say some of the delayed payments, some of the old payments are the program has not submitted, they have not complied with what we've asked them to do. Maybe they're missing a quarterly report, or maybe their submission, their request for reimbursement is lacking either minor information or maybe substantial. And every time what happens is you have to then follow up with them. So that's fifteen hundred in many cases follow-ups with organizations.
Not every one of them requires that, but we're finding some are perfectly fine and appropriate, but some are not. We're having to dig to make sure they are.
Mark Alford
I'm really encouraged by the operation there now, especially the juxtaposition of the previous administration, what Administrator Lefler and yourself have done to, number one, to get people back to work, number two, to try to right-size the organization, and number three, I think, to get more the SBA out in the heartland of America, including our district. I also appreciate that this committee has continued advancing bipartisan reforms, including my AI for Main Street Act, which would allow Small Business Development Centers to help Main Street businesses responsibly evaluate and adopt artificial intelligence tools. Mr. Fitzpatrick, how important is it that the SBA's counseling network is equipped to help small businesses understand these tools and implement them so that they can grow their workforce and compete with the big guys?
Paul Fitzpatrick
Congressman, thank you for the question. I do think it's very important. That's one of the reasons why, for example, SCORE is working to make sure their mentors are up to speed, because some of them are not. But I would say the SBDC network is committed. They received a grant from corporation, from Google, in fact, to develop a curriculum to train, it's a train-the-trainer curriculum, to train their counselors.
They've got a couple of thousand counselors, I believe two thousand have been trained, if I'm not mistaken, to a base level. About five hundred are fully certified, they've been through all five classes. And what that means is you're going to start seeing thousands of small business owners trained on AI. Now, again, this is going to be base level, help them understand it, but it's just very early, sir, in the program, but we're starting to hear some success stories of companies applying and using AI. So we do think that's going to be a critical service that resource partners provide and others out there in the community.
Mark Alford
There's a lot of fear out there that AI is going to take jobs away. Is it your estimation that it's actually going to help businesses grow and therefore really increase workforce in some small businesses?
Paul Fitzpatrick
Congressman, thank you for the question. I don't claim to be an AI expert, but what we are seeing is small businesses driving efficiency, which so that then they're putting their time into others. Maybe it's developing, it's R and D, it's sales, it's fixing their operations in other ways or supply chains. And so in many ways, especially in marketing, for example, it's dramatically increasing their reach in marketing. That's usually where small businesses first start.
So we see it as a positive.
All right, we're out of time. I yield back. Thank you.
Speaker 35
Gentleman yields back. I now recognize Mr. Osesky from the great state of Maryland for five minutes.
Johnny Olszewski
Thank you, Chairman Williams, and to Ranking Member Velázquez, Associate Administrator Fitzpatrick, thank you all for being here today. I appreciate your willingness to represent the Small Business Administration and the Office of Entrepreneurial Development before Congress. America's more than 36 million small businesses are the backbone of our economy. They create jobs, they strengthen our community, they drive innovation. Programs like the Small Business Development Centers, Women's Business Centers, SCORE, and the State Trade Expansion Program ensure entrepreneurs have access to the counseling, mentorship, and the export assistance that they need to succeed.
That's why I'm deeply concerned about this administration's handling of these programs. Specifically, SCORE and STEP recipients have reached out to my office to discuss how they have faced significant delays in receiving the resources Congress already approved. These delays are not just administrative, they have real-world consequences. SCORE chapters have been forced to reduce staffing and limit the free mentoring and counseling services that thousands of entrepreneurs have come to depend on each year. At a time when small businesses are already navigating higher operating costs, inflation, rising energy prices, and uncertainty created by this administration's new tariffs, reducing access to one of the nation's most successful small business mentoring networks is exactly the wrong approach.
The delays to STEP are equally troubling. For export-driven states like Maryland, STEP funding helps small businesses reach new international markets, diversify their customer base, and compete globally. Maryland's economy is built not only on federal contracting and technology, but also on advanced manufacturing, life sciences, ag, and our ports. Small businesses across my state rely on export assistance to participate in trade missions, attend international trade shows, and connect with overseas buyers. When STEP grants are delayed, businesses don't simply postpone these opportunities, they lose them altogether.
Trade missions are canceled, international contracts are missed, and small businesses are left at a competitive disadvantage while their foreign competitors continue to move forward. All of this is especially frustrating because Congress has already made the determination on a bipartisan and bicameral basis that these programs should exist and be funded. Which leaves the head-scratching question: why has it taken so long for these grant recipients to receive their payments? Congress appropriated these funds, yet resource partners report months-long delays in reimbursement for work already completed. They deserve better than canceled trade shows, trade missions, training, and other services for small businesses.
So, I guess I'll start with asking the question: why were these grants delayed to states?
Paul Fitzpatrick
Congressman, thank you for the question. We inherited a system that was broken and there were no controls, it was inconsistent between programs. And so we owed it to the taxpayers to build. We had to build a system that was integrated, the grant system to the finance system. And as we've said before, as Secretary Bessant said, it's better to prevent fraud, waste, fraud, and abuse than try to claw funds back.
But we and we are working very fast to get the funds out. And I would say we just, just in the last weeks, we actually obligated about eight million dollars to STEP. And so these programs are coming back on. We didn't want to make a pause. This was necessary and we appreciate there's impact.
We know there's impact. But we're working very hard and very fast to resume obligations and payments.
Johnny Olszewski
Well, if fraud was such a concern, do you have documentation of where that was eligible, what those system changes were? Is there a public reporting of that? Because in this role, I've yet to see anything shared with this committee or with me about why, what systems were of concern, what fraud concerns might be out there. And in fact, I think just sort of on the communication point, I think part of the challenge too is that there was really a lack of communication with your partners about the delays and even why you were doing it. So I think as people are trying to plan and work, can you speak to why these delays and these changes weren't communicated to partner organizations and businesses?
Paul Fitzpatrick
Congressman, thank you for the question. Different programs have different communication levels. We have, for example, every two weeks we've got, or every month actually, the SBDC program has a call with the network directors. Every other week they have a call, we have a call with the association, the board. Women's Business Centers have office hours weekly.
So we're communicating with these organizations. The STEP, we work very closely with actually SIDO, their association. What when I say when you look at fraud, if you look at what SBA's had to do system-wide, we sent 562,000 loans to Treasury and DOJ worth 22.2 billion dollars that the Biden administration had flagged for fraud but didn't do anything about. So it's understandable that we, I mean these are smaller dollars we're talking about in our office, but we have to make sure there's not fraud. I didn't say there was fraud.
I just want to make sure we have a system that would prevent fraud.
Well, as we head in the new year, I hope that you can provide more flexibility to grantees, but I'll follow up with additional questions as my time has expired. I yield back. Thanks.
Johnny Olszewski
The gentleman now recognizes Mr. Bresnahan from Pennsylvania, the great state of Pennsylvania, for five minutes.
Robert Bresnahan
Well, thank you, Mr. Chairman, Ranking Member, and to Mr. Fitzpatrick for being here today through the arduous Small Business Committee hearing. The Office of Entrepreneurial Development is the SBA's front door for entrepreneurs and small businesses across the country. Whether it's providing safety training resources for manufacturing businesses in Carbondale or technical assistance for a restaurant in Pittston to strengthen its online presence, OED programs give small businesses the tools they need to succeed. I've met with many business owners in Northeastern Pennsylvania who rely on the Small Business Development Centers at Wilkes University and my alma mater, the University of Scranton. So my first question is, where do you see OED's highest priorities in the next few years and where could Congress be helpful to ensure your office has the tools and resources to make that happen?
Paul Fitzpatrick
Congressman, thank you for the question. Actually, it's appropriate. Within the last, I think it was about six weeks, I did a visit in Eastern Pennsylvania, roughly the eastern half, and visited many, many Women's Business Centers, SBDCs, all through those networks. And what was exciting is we had resource partners that are working hard, but the great part about it is what we saw as ecosystems. This if you look at the EDP budget, 330 million dollars, we're serving under 1% of all entrepreneurs as far as counseling.
So we have a role, but what I saw in Eastern Pennsylvania was this ecosystem of state-funded, local municipally-funded, you had universities, you had our role in the public-private partnerships, you had Chambers of Commerce, you had private equity. These ecosystems were really, really strong and we were only one partner at the table.
And so one of my objectives would be to try to figure out how did that happen, how can we help replicate it, because it's not the federal government's dollars making all the difference. There were great people providing great services and advice and counseling to these heroic small businesses. So that would be one priority. I would say to help the nation re-industrialize, I think manufacturing, food supply, as I've mentioned, these are core priorities of the administration. So that, those would be priorities to the extent we can encourage the resource partners to provide those kind of services.
Robert Bresnahan
Well, I appreciate that. And something that we really prioritize in Northeastern Pennsylvania, Pennsylvania, Eastern, Northeast, we're the little sliver up there, paradise. But we had heard a lot of concerns relative to the State Trade Expansion Program or the STEP program, which moved under OED following the June 2026 reorganization. Can you provide an update on the STEP following that transition and do you believe OED has the personnel and resources needed to administer the STEP alongside its existing responsibilities?
Paul Fitzpatrick
Congressman, thank you for the question. Yes, yes, we do. And yes, as I've said, what we're trying to do is have like functions work together. So our program managers who are making, working on SBDC program, for example, can bring their insights and their tools and techniques and their ideas to the STEP team who are sitting right next door and we're in similar meetings. And we've already seen that, for example, the SCORE program benefited from that.
It was really not up to the same standard. It wasn't our team, the prior Biden administration didn't team, didn't hold them to the same standard, but our SBDC team helped them get up to the standard. And so we'll do the same with the STEP program.
Robert Bresnahan
I know there was a period of backlog or where the program was essentially on a small hiatus. Is there anything that Congress or this committee could be doing to prevent future backlogs or logjams in the administration of those programs? I mean, these are programs that our small business community and entrepreneurs really depend on. So I want to make sure that we're doing every single thing within our power to provide you the resources to make sure those kinds of frustrations don't happen again.
Paul Fitzpatrick
Congressman, thank you for the question. We, I think added complexity or added mandates would actually hinder our efforts to drive efficiency. So we've got a professional team and Administrator Lefler has brought in a great professional team of, frankly, I would say mostly business people. My colleagues are remarkably successful business people and they're helping to bring efficiency and productivity, improved outcomes. And so I think we're in good place.
But we are always happy to work with Congress, provide technical assistance on any ideas and develop ideas.
LaMonica McIver
The gentleman yields back. And now recognize Ms. MacIver from the great state of New Jersey for five minutes.
Thank you so much, Chairman, and thank you to the ranking member for convening today's hearing, and thank you to Administrator Fitzpatrick for appearing before this committee. America's entrepreneurs battle against odds that would break most people. And they do it for their families, their communities, and the promise of a fair shot. For decades, the SBA's entrepreneurial development programs have been a major help to them. One of the few tools that actually help level the playing field for entrepreneurs.
Let's be clear, Administrator. This administration is not just neglecting entrepreneurs, it is actively trying to destroy the very programs that give working people a shot at building something that's their own. That is why this week I introduced the Small Business Development Centers Improvement Act of 2026 to defend and strengthen one of the last remaining tools for equal economic opportunity. In New Jersey's 10th, our New Jersey Small Business Development Center at Rutgers University has helped countless entrepreneurs.
These are real people, real jobs, and real communities on the line. Small business owners are being squeezed from every direction right now. Congress should be fighting to expand resources to them and not gut them. And also the President and your department, your agency, should be doing the same. Administrator Fitzpatrick, do you support the administration's proposal to eliminate funding for the Small Business Development Center program?
Paul Fitzpatrick
Congresswoman, thank you for the question, and we support the President's budget that's making the hard decisions...
LaMonica McIver
Once again, do you support, 'cause I know you're gonna like do this whole thing and I don't really have that much time to play around like this. Do you support the elimination specifically about the Small Business Development Center program?
Paul Fitzpatrick
Congresswoman, we will administer the funds that Congress appropriates and we'll follow the law.
LaMonica McIver
So I'm gonna take that that's a yes, because you keep telling me what you support of the President and I'm specifically asking you about programs within your agency. What do you have to say to the more than 307,000 entrepreneurs that launched over 17,000 new businesses and helped small businesses access more than 6 billion in capital last year because of this program? What do you say to them when you're supporting the President's budget that includes eliminating this program? What do you say to them?
Paul Fitzpatrick
Congresswoman, I would say that they are heroic and we both agree that there's very few people as heroic as small business owners. And I would say when they wake up, they have a challenge. Very few of them say, "I hope the federal government comes and helps me." They are heroes and they're fighting overcoming challenges every day.
LaMonica McIver
Thank you, thank you, Mr. Administrator, I'm going to reclaim my time. Being heroic is not enough. Heroic doesn't pay the bills necessarily. It doesn't keep businesses open, it doesn't create new business owners. That's not enough at all.
I think as your role, can you publicly support reauthorizing, do you publicly support reauthorizing and fully funding the SBDC program?
LaMonica McIver
So you don't have the audacity as the administrator to say to the President, "This is a great program, we should support this." Can you not do that as an administrator, as a leader?
LaMonica McIver
Once again, that means you can't, which means that you're more interested in serving the President's agenda than really helping the American people. So thank you for clearing that up. With that, I am going to go ahead and yield back, because I've heard very clearly from the administrator he supports whatever the President wants to do despite what is good and right for American businesses. Thank you.
Speaker 45
The gentlelady yields back. I now recognize Mr. Reed, Mr. Wied from the great state of Wisconsin for five minutes.
Tony Wied
Thank you, Mr. Chairman, thank you, Associate Administrator Fitzpatrick, for being here today. It is refreshing to hear that you are focused on driving efficiency and you are putting business people in this agency. It is refreshing and appreciate the better outcomes that you're getting for small business owners. As you mentioned, SBA conducted a reconciliation of grant payments and found the backlog of approximately 340 million dollars in unpaid grants that were inherited from the Biden administration. We've observed similar issue at the Department of Transportation where there was over 3,200 unobligated grants announced by the Biden administration.
We've been able to chip away at that, the Department of Transportation has been able to chip away at that backlog over the last year and a half. Administrator Leffler even pointed to a 4 million dollar grant during the Biden administration that was given to the Chinese Mutual Aid Association. How does this happen? And sir, what are you doing to ensure that this doesn't happen in the future?
Paul Fitzpatrick
And we're trying to root it out. And what that is, that was actually four million dollars going to the Illinois SBDC. And Illinois, like Minnesota, is one of the state-hosted SBDCs. And as we were evaluating Illinois, which we had concerns about the state, obviously we had found the Binational Institute of Human Development, we came across this Chinese Mutual Aid Association, which is clearly violating the terms. I don't have with me the exact amount that they were getting of the four million.
Congressman, thank you for the question, and these are the kind when we have massive programs, these are the kinds of things that can happen.
But for example, they were saying they could serve anybody in all 50 states. That's a violation of their agreement. They were saying that they were the only Asian-led SBDC. That's a violation, that's violation of the executive orders. And so this is a part of the challenge with these programs.
We do have a lead center, service center model within the SBDC program. And so we do approve the overall budget that the host puts in, the lead center. And we see the budgets. But frankly, some of them, like Illinois, were trying to hide in the service centers really DEI programs. And so we're having to go, our team is going through all their websites, all their documents.
And so it's very complicated, but we're doing it, we're on it.
Tony Wied
Well, thank you for that great work. It's obviously easier to prevent these types of issues than it is to go in and try to fix the bad policies of the Biden administration. And so thank you again for your efforts. Why was it determined, and maybe this is part of what you're doing to correct all of these problems from the Biden administration, that grant managers should move from the OED to the Office of Chief Financial Chair? Is that going to be helpful?
Paul Fitzpatrick
Yes, Congressman, thank you for the question. Yes, the grants managers are the people with the warrants. They actually, they sign on the line for how much money that is approved. It's clearly a financial function. And my understanding is many years ago there was, and there still is, an Office of Grants Management.
They all used to be housed in the CFO's office. But because that was not efficiently run, individual program offices were allowed to hire their own grant managers. So really all we're doing is bringing it back to where it was. But that is an inherently financial function and you want them sitting under the leadership of Nathan Davis, our CFO, who is a three-decade executive. But they work very, very closely with our program managers.
The other thing is we actually drive efficiency. As opposed to having a grant manager that's assigned to only one program, they can serve multiple programs. So again, they're cross-trained so we can surge staff to where the need is.
Tony Wied
Unlike the Biden administration, we are focused now on being good stewards of the taxpayer dollar. Sir, what can we do as a committee to maximize the impact of every taxpayer dollar given to the OED?
Paul Fitzpatrick
Congressman, thank you. When it comes to, we are happy to provide technical assistance. I think what we don't want is lots of new ideas that Congress thinks up to meet, to serve a very small population. And I think we need to keep it broad and serve all Americans equally. But our team, again, like I said, we're happy to develop and work with you on legislation you're developing and our Office of Legislative Affairs is happy to work with you.
Speaker 5
Gentleman yields back. And I recognize Mr. Jack from the great state of Georgia for five minutes.
Jack
Thank you, Mr. Chairman. And Mr. Fitzpatrick, thank you for testifying. As you may know, I represent Georgia's third congressional district and was very proud to bring Administrator Lefler to my district twice within the last year and looking forward for her potentially coming to visit again in 2026. A question I have with respect to OED and the oversight therefrom, what changes have you made to strengthen internal oversight within OED?
Paul Fitzpatrick
Congressman, thank you for the question. We have actually made major system upgrades and built a whole really an integrated system for our grant solutions system. We've connected it, now it's connected to our financial system. We have simplified the documents, we have common labels and our teams using similar processes so that we have greater transparency and greater integration between the grants and the our financial system so that now we have oversight, we have proper controls, and we can see when problems happen sooner. We're not going to wait years before finding it out and having to rectify the problem.
Jack
One of the priorities our chairman laid before us last year is let's do our best to cut regulations and reduce duplicative behavior within government to make it easier for small businesses to thrive. So I'm curious, could you share with this committee what you have done to eliminate duplicative programs and what steps have are you continuing to take to identify those that could be eliminated?
Paul Fitzpatrick
Congressman, thank you. What we've been doing at at on the the excuse me, regulatory and oversight level, for example, is simplifying the burdens on our resource partners so so more dollars can actually go to counseling and training. For example, we inherited a system where our field team, again, the Office of Entrepreneurial Development, we don't have staff in the field. SBA has staff in the field. The field team does does what we call field reviews annually.
And when we got here, we found that the field team was asking the resource partners to produce documents to them that the resource partners had already produced and supplied to our program managers. So those are the kinds of things. Is that going to make or break the organization? No. But we're making small decisions, process decisions like that to free up funds.
We're also what we're doing is we've created a new Empower to Grow Manufacturing in America workforce development program. And that's probably the most significant new program we've rolled out under Administrator Lefler supporting the president's priorities in reindustrializing America. So that's where we're taking funds and reprogramming funds that were going to inefficient programs to put it into something that's actually going to make a difference for small businesses.
Jack
One of our proudest accomplishments this Congress was passing and enacting the Working Families Tax Credit, HR 1. Could you share with us, I mean you're the closest to this and obviously your administration's working with small businesses every day, just how impactful the Working Families Tax Credit has been for small businesses and the the benefits it's given to American citizens across the country.
Paul Fitzpatrick
Yes, Congressman, thank you. We we have been as you know, Administrator Lefler from Georgia, she's traveling tirelessly and meeting with small businesses. And she went around the country finding out what were their needs, what were their problems. It's capital, it's skilled labor. And they were so excited to see what was what was going on, what we could do.
And and they are diving in, they're making a difference. And what they said is leave more money in our pockets. And so she's now hearing after the Working Family Tax Cuts, I I built this building. She actually was in a plant where they they they put sticker big posters on the CNC machine saying this machine was paid for by the Working Family Tax Cuts. And they have buildings named after it.
And and so she's seeing tangible results of making the immediate expensing and the 20% for small businesses permanent. And so we're seeing that every day when when we're traveling the country.
Jack
And with the remainder of this Congress, are there any other priorities you have for us to to do what we can to best help small businesses? Is there anything else coming up that you think would be helpful for us to do?
Paul Fitzpatrick
We again support the President's policies. We want safe communities, we want lower taxes, lower regulations, we want fair trade, and we want healthy capital markets. So anything the Congress can do to support that, we would support.
Jack
Well, I appreciate your testimony and as you noted, one of the things we're going to be talking about a lot this late July, August, and September as we soon leave to go back to our districts is just how impactful these tax cuts have been. I worked in President Trump's first administration and helped pass the Tax Cuts and Jobs Act of 2017 as a staffer, and I saw the resultant impact just a year later. The economy was absolutely roaring as it is continuing to do today. So I'm excited to do what we can to accentuate exactly what we've done and accomplished. And I appreciate and applaud your work to serve the Small Business Administration, and I appreciate the Chairman's efforts to convene this hearing.
So with that, I yield back.
Speaker 5
Gentleman yields back. I'd like to thank Associate Administrator Fitzpatrick for his testimony and for 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 there is no further business, without objection, the committee is now adjourned.