Hearings to examine proposed budget estimates for fiscal year 2026 for the Department of Energy.

Senate Subcommittee on Energy and Water Development

2025-05-21

Source: Congress.gov

Summary

This meeting of the Financial Services and General Government Subcommittee welcomed the Administrator of the Small Business Administration (SBA), Kelly Loeffler, to discuss the President's fiscal year 2026 discretionary budget request and the agency's recent reforms[ 00:18:33 ] . The session involved opening statements from Chairman Hagerty and Ranking Member Reed, followed by questions to Administrator Loeffler regarding the SBA's operations, budget, and impact on small businesses[ 00:18:33 ] .

Themes

SBA Budget, Restructuring, and Efficiency

The Administrator outlined a budget strategy focusing on streamlining services, eliminating waste, and ensuring measurable results for taxpayers[ 00:30:31 ]

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. She highlighted efforts to return the agency to pre-pandemic staffing levels and shift resources to field offices, cutting over $3 billion in wasteful contracts. This reorganization aims to improve accountability and deliver capital to job creators, claiming an 80% increase in loan approvals in the first 100 days compared to the previous administration. Concerns were raised, however, that workforce reductions could undermine the agency's ability to function[ 00:34:32 ]

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Impact of Tariffs on Small Businesses

Ranking Member Reed expressed significant concern about the uncertainty and increased costs created by President Trump's tariff regime, citing examples of businesses struggling with tight margins. Senator Murray also shared stories of small businesses importing goods like green tea that face closure due to tariffs, questioning the SBA's immediate support for these businesses. Administrator Loeffler defended the tariffs as part of a fair trade agenda, emphasizing long-term benefits for American workers and industry, and promoting initiatives like the "Make Onshoring Great Again" portal[ 00:37:40 ]

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Support for Manufacturing and Economic Growth

Chairman Hagerty applauded the SBA's "Made in America Manufacturing Initiative" and inquired about proposed legislation to increase manufacturing loan limits from $5 million to $10 million at zero cost to taxpayers[ 00:30:58 ]

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. The Administrator emphasized the importance of tax cuts, immediate expensing, and deregulation in stimulating investment and job creation in manufacturing[ 00:33:03 ]

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. She highlighted record manufacturing loan approvals in the first 100 days of the administration and the focus on developing a skilled workforce for new-collar jobs.

SBA Program Reforms and Controversies

The Administrator detailed reforms, including reinstating lender fees, restoring underwriting standards, and implementing identity verification protocols. She also mentioned depoliticizing the agency by eliminating DEI mandates, terminating the Green Lender Initiative, and withdrawing from voter registration schemes. Senator Mullin praised these actions, asserting that loans should be based on merit rather than political ideas[ 00:45:21 ]

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. Ranking Member Reed questioned the involvement of "Doge" team members and their partisan affiliations.

Disaster Relief Efforts

Chairman Hagerty thanked the SBA for its critical work in helping Tennesseans recover from Hurricane Helene[ 00:21:36 ]

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. Senator Van Hollen sought and received assurance from Administrator Loeffler that the SBA would expedite disaster relief for Western Maryland following severe floods, noting that SBA declarations can be made independently of FEMA declarations. The Administrator stated that the SBA has put out more disaster loans in the first 100 days than in the entire previous year.

Veterans Programs

Ranking Member Reed expressed concern over proposed budget cuts eliminating 15 of 16 entrepreneurial development programs, specifically the SBA Veterans Outreach Program, which he deemed unacceptable. He questioned why the SBA was cutting aid to veterans, citing a potential 46% decrease in dedicated funding[ 01:16:17 ]

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. Administrator Loeffler countered that the administration is increasing veteran outreach, integrating services with Small Business Development Centers (SBDCs), and addressing previous "social engineering" that had crowded out veteran programs.

Potential Transfer of Student Loan Portfolio

Senators Van Hollen and Reed questioned the possibility of transferring the $1.6 trillion student loan portfolio, with 43 million borrowers, from the Department of Education to the SBA[ 01:12:01 ]

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. The Administrator acknowledged the discussion but stated no final decision had been made, adding that such a move would require congressional action. Concerns were raised about the SBA's capacity to manage such a large portfolio, especially with concurrent workforce reductions[ 01:15:29 ]

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SCORE Program

Senator Coons advocated for the SCORE program, emphasizing its efficiency, reliance on 10,000 volunteers, and significant return on investment in new federal tax revenue. He asked for an update on its funding and how it fits into the agency's mission. The Administrator acknowledged the value of resource partners like SCORE but stressed the need to unify and streamline services within budget constraints, leveraging SBDCs for direct access and avoiding overlapping services[ 00:50:14 ]

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Paid Family Leave Tax Credit

Senator Fischer inquired about increasing awareness for a tax credit for employers offering paid family and medical leave, which is set to expire this year. She requested the SBA's commitment to diligently carry out outreach and technical assistance if authority and funding are provided. Administrator Loeffler welcomed the conversation, noting the SBA's refocused field organization and SBDCs as excellent conduits for supporting this initiative[ 00:55:48 ]

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Support for Native-Owned Businesses

Senator Fischer sought commitment from the Administrator to continue working on ensuring that SBA tribal efforts, particularly through the 8(a) contract program for native-owned companies, are protected and promoted despite the executive order eliminating DEI programs. Administrator Loeffler affirmed her commitment, stating she looks forward to further discussion and visiting the Senator's state to learn more about the issues[ 00:56:43 ]

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Tone of the Meeting

The meeting had a mixed tone, characterized by partisan division and underlying tension, particularly during exchanges between the Ranking Member and the Administrator. While opening statements expressed a desire for bipartisan cooperation, discussions quickly revealed stark disagreements on policy, budget priorities, and the impact of the administration's actions on small businesses[ 00:18:58 ] . The Administrator maintained a confident and assertive posture, defending the administration's reforms as necessary to correct past inefficiencies and political agendas. Some senators, however, voiced skepticism and concern about the real-world consequences for small businesses and veterans' programs[ 00:36:00 ]

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Participants

Transcript

Thank you.
Greetings for agencies under the jurisdiction of the Financial Services and General Government Subcommittee.  Today we welcome the Administrator of the Small Business Administration, my friend and former colleague Kelly Loeffler.  Thank you very much for being here.  I'd like to also extend a warm welcome to Senator Reid as the new ranking member of the Subcommittee.  I look forward to working with you Senator Reid in a productive and bipartisan manner to address the important issues that face our nation.   Small businesses employ 61.7 million people, nearly 46.4% of the U.S.  workforce, and generate a comparable share of U.S.  economic activity.  To thrive, these businesses must constantly innovate, remain agile, and manage their resources carefully.  Failure to do so can mean failure to survive.  In contrast, some federal agencies seem to expand regardless of physical constraints, often without making difficult tradeoffs that small businesses have to confront every day.   Administrator Loeffler brings with her a distinguished career in business.  She understands what it takes to succeed and the challenges that entrepreneurs face.  I trust she'll apply her vast experience to ensure the SBA operates efficiently and uses taxpayer dollars wisely.  The Small Business Administration's initial budget request proposes total funding of $600 million in 2026 to manage its operations, its grants, and its loan programs.  This direct appropriation supports a massive lending portfolio as well.   In the current fiscal year, the SBA will guarantee approximately $72 billion in business loans.  This includes $35 billion under the 7 loan program, which is SBA's flagship tool.  It's estimated to back over 50,000 loans through private lenders with SBA guarantees.  The 504 loan program, focused on real estate and equipment, will provide another $16 billion.  The Small Business Investment Company program will support $6 billion in private investment capital for small businesses.   Finally, the Secondary Markets Guarantee Program will provide a $15 billion backstop to help lenders securitize SBA-backed loans and maintain liquidity.
Since most manufacturers in the United States are small businesses, the SBA is uniquely positioned to assist them in rebuilding their domestic supply chains.  In addition to business lending, the SBA also plays a critical role in disaster recovery, and I want to thank the SBA for their critical work in helping Tennesseans recover from Hurricane Helene in East Tennessee.   Disaster loans help individuals and businesses rebuild physical assets and recover lost income.  Applicants must be located in federally declared disaster areas and meet credit criteria and repayment standards.  These programs collectively represent an important source of credit, helping both entrepreneurs and disaster survivors.  Thank you again, Administrator Loeffler, for testifying today.  I look forward to hearing how you plan to manage your portfolio efficiently and responsibly.  And now, I'd like to turn to Senator Reid for his opening statement.
Well, thank you very much, Mr. Chairman, and thank you for holding this hearing.  It is our first hearing, as you noted, and I look forward to working together as we advance the 2026 bill on a productive and very bipartisan basis.  Thank you.   And welcome, Administrator Loeffler and colleague Loeffler, thank you for your service.  You are here on behalf of the Small Business Administration and we look forward to your testimony.  As we all know, small businesses make up nearly 44% of America's GDP.  In total, there are 34.8 million small businesses in the United States, which employ nearly half of American workers.   In my home state of Rhode Island, there are over 100,000 small businesses employing the majority of Rhode Island workers.  But the uncertainty created by President Trump's tariff regime is putting many of these businesses at risk.  Indeed, where margins are tight, disruptive tariffs can sink a small business.  And despite the recent 90-day timeout on some of these tariffs, Yale University researchers say that our nation's tariffs are currently at their highest level since the Great Depression.   These blanket taxes, and tariffs are taxes, are also raising costs directly or indirectly on every good that small business needs.  Indeed, I recently heard from Mills Coffee Roasting Company, a coffee roaster located in Providence that was founded in the 1890s.   The president's blanket 10% tariff will increase Mills Coffee's cost by around $400,000 this year.  That's a big number for a small business.  And coffee can only be grown in certain climates, meaning there is almost no domestic alternative to the coffee beans they import.  In other words, despite the president's claims, his tariffs on Mills Coffee simply punish an American company that provided jobs for over 150 years   without bringing the production of their imports, coffee beans, back to the United States.
As the President's on and off again tariffs royal supply chains and small business finances, the question is, what is the small business doing to meet the moment?

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