Assembly Standing Committee on Jobs, Economic Development, and the Economy

Public comment will be taken at the end of the hearing in-person. However, if you cannot attend in person, you may submit your comments via email to assemblybudget@assembly.ca.gov or jetty@assembly.ca.gov. In 2022, the Joint Committee was updated by the state treasurer and IBANK as they were applying for the federal SSBCI program.

The federal SSBCI program is designed to catalyze private capital in the form of loans and investments in small businesses, especially in historically underserved communities and among entrepreneurs who may have otherwise lacked the support to pursue business ambitions. Today, our first panel will update the committees on the SSBCI program as both entities continue to implement and meet the federal requirements under the program.

Additionally, we will receive an update from the California Office of Small Business Advocate CalOSBA, and on a new part of the program, SSBCI technical assistant, and how they plan to implement it. Our second panel will provide a viewpoint from those working with small businesses directly on the ground. The goal of today's hearing is to learn more about how the Legislature can partner with CalOSBA, IBANK, and the state treasurer to increase awareness about the capital lending available for small businesses, especially those in underserved communities.

That's a lot of acronyms and we speak languages when we are under different umbrellas, so we don't expect everybody to know what CalOSBA, IBANK, and other of these are. But as you come up here, please do your best to explain it. This partnership serves to promote economic growth and ensures fiscal responsibility in how we use our state resources. Additionally, our aim is to bring transparency to the process and regular reporting back to the Legislature as these entities continue to be implemented with these programs.

Without saying too much more, I will tell you one of my goals as Chair of this Committee is to really find out who are these funds going to. So I'll just make it very simple. Who has access to these funds, who applies and how are they being used? With that, I'm going to move to our first panel, but before I do, I want to offer the opportunity to our co-Chair Assembly Member Villapudua for any opening comments.

Thank you. Can you hear me? Yeah. Thank you, Assembly Quirk-Silva, for your partnership on the Joint Hearing today. I look forward to hearing the update on the state's Small Business Credit Initiative on how we will help small businesses access credit through upcoming technical assistance funding. I'm interested in the important role of legislative partnership, transparency, reporting and engaging the Legislature through each step. Our communities are hungry for this information and ready to be part and take part of these opportunities.

Thank you to all the partners and stakeholders who are taking part of making this happen. And thank you to the panelists that are here today with us. And we're hoping to hear some really good information. Just like my colleague says, we would love want to know who's doing this job. How do we get this to our communities? Right? Because they are hungry for this. And I know there's a lot of people out there that are working very hard for this, and we thank them. We applaud them. But we also want to make sure from our point how we can do a better job. How can we partner up even better? So thank you with that.

Thank you. And we're going to go ahead and begin. We're going to invite panel one up. And with that, we will be beginning with the LAO, followed by IBANK and the treasurer's office, and then CalOSBA. We're going to have a quiz after this of who can say what LAO is. Welcome, and please introduce yourself as you begin.

Thank you. Madam Chair, I'm Brian Euler with the Legislative Analyst Office, and I'm here to briefly provide some background for your discussion today on the state Small Business Credit Initiative, or SSBCI. I've prepared a handout that hopefully you all have in front of you. That's mostly for your reference. I'll just be sort of speaking from that loosely. So SSBCI generally is a federally funded program that provides flexible funding to states to develop lending assistance programs for small businesses.

And so thinking about starting with fundamentally, what are the motivations for lending assistance programs for small businesses? Part of it comes down to concerns about it being more difficult for small businesses to access credit than larger businesses. This could be because they have less credit history, they have less established business models, or they may have fewer assets that they can pledge in support of loans. Also, banks or other lenders may see smaller loans as less profitable than larger ones.

Another concern that these programs attempt to address are historical disparities in access to credit among small business owners, in particular, black and Hispanic Latino business owners facing disproportionate challenges to access credit. So in this area of small business lending assistance, the federal government does play a key role in administering the most widely used small business lending assistance programs and also in providing a majority of the funding for state level small business lending assistance programs.

And one of those key federally funded programs is the subject of today's hearing, SSBCI. The program was created in 2010, at which time California received an allocation of $168,000,000. Those funds have since all been expended, but they do continue to be recycled, and that's when the original loans that were supported are paid off. Those funds become freed up and they can be used again for those purposes.

More recently, the federal government made a second allocation round of allocation in 2022, and California received $1.2 billion, or is set to receive $1.2 billion. Those payments will come in three tranches, the first of which we've already received $357,000,000, and about 60% of that has been expended. The state will receive its next payment of 400 million when we have spent at least 80% of that first, 357,000,000. So within SSBCI, states have a choice of implementing generally five types of lending assistance programs.

And there's some information on those five types on page two of my handout. I won't go through the details too much, but you have that there for reference, kind of a general description of them. In short, the five types, and you'll probably hear more about them today, are loan guarantee programs, loan participation programs, collateral support, capital access programs, and venture capital funds. So again, there's a brief description for your reference there on page two of the handout of those kinds of programs.

California and its implementation of SSBCI has four of those types of programs currently in place and is working towards offering all five. To implement those programs, the state generally splits the funding 50/50 between two state agencies. The first is IBANK within GO-Biz, and the second is the California Pollution Control Financing Authority with the state treasurer's office. IBANK administers two programs, a loan guarantee program and a smaller venture capital fund program.

The Pollution Control Authority administers a capital access program and a collateral support program and is working towards standing up a loan participation program as well. You'll be hearing a lot more details about those particular programs from my other panelists who administer them, so I won't go into too much detail on those. I did just want to leave you with a few kind of suggested questions or topics that you explore with the panelists today.

The first is the issue of what information is both collected and reported about the businesses and the types of business owners that are benefiting from this program. There are some federal rules around goals for specifically at least 49% of the funding being allocated to so-called socioeconomically disadvantaged individuals based on federal definitions. And so one question is whether or not the current program administrators are facing any key challenges in meeting those objectives.

But also it's worth exploring whether or not there's additional reporting that the programs need to do to really provide the information the Legislature is looking for about these programs. It seems like some of the voluntary reporting that's required by federal law may not be getting all the information that you would necessarily be looking for.

One final question that I think is worth exploring is what are the best and most appropriate uses of the so-called recycled funds, the funds that become freed up over time as the loans are paid off, and especially as we get outside the window of time when the funds have to necessarily be spent under federal rules, and the state might have more flexibility to craft a program that is more in line with its priorities. So with that, we'll take questions from the Committee at the appropriate time.

Thank you. And we'll go ahead and wait for questions till we have all of our panelists. Next we have Clint Kellum.

Thank you. Good afternoon. I'm Clint Kellum. I'm the Chief Deputy Executive Director of the California Infrastructure and Economic Development Bank. Or we go by IBANK for short, since that's somewhat of a long name. IBANK is part of the governor's Office of Business and Economic Development, and we serve as the state's only general purpose financing authority. Our mission is to provide financial assistance that supports infrastructure and economic development in California.

We have three main priorities along which we operate, creating jobs, reaching underserved communities, and addressing climate change. And SSBCI is one of the key components of that work. The LAO spoke about the first iteration of SSBCI. We call that SSBCI 1.0. We're proud of our results in that opportunity. Of the total number of loans provided nationwide, there was about 21,000, and California issued nearly half of those loans.

Of the jobs created and retained nationwide, there was more than 240,000, and we were responsible for one third, almost 40%. And when it comes to transactions supporting women or minority owned businesses, we had nearly 62% of our transactions with those communities. Looking forward here to the most recent iteration of SSBCI, which we call SSBCI 2.0. freeze. So if you can oblige us with that acronym, I appreciate it.

IBANK is ministering two of the current capital programs, the Small Business Loan Guarantee Program and the expanding Venture Capital Access Program. There's also a separate TA allocation that's being provided in SSBCI and that'll be discussed later in the panel. I'm proud to say that again, California is leading in deployment of SSBCI 2.0. The US Treasury's most recent report shows that California deployed $161,000,000 of capital funds as the end of September. The next closest state was a little less than 60 million behind us.

Our long standing program that we've utilized SSBCI for in the past and has been around the state for a long time is our loan guarantee program. It's been around since 1968 and it became part of IBANK in 2013. It's not a lending program, it's not capital going out the door. But it supports lending to small businesses by being a risk mitigation tool to the lenders.

This makes them more comfortable or more likely to making a loan that they otherwise wouldn't to a business that may struggle to access capital. Our loan guarantee program provides up to an 80% guarantee on loans made by a lender, and if the borrower defaults on the loan, the lender can get repaid up to 80% of the outstanding principal. As of the end of December, our loan guarantee program had approved $181,000,000 in loan guarantees with SSBCI 2.0 funds.

Our data shows that more than 80% of our borrowers benefiting from 2.0 loan guarantees are in underrepresented groups and 80% is going to small businesses with fewer than 10 employees. With SSBCI 2.0, we have also created a new program, Expanding Venture Capital Access. This is a unique opportunity for us to catalyze a more inclusive venture capital ecosystem.

We're utilizing $200 million of our SSBCI funds to invest in underrepresented venture fund managers, entrepreneurs, geographic areas of California that receive little venture capital funding or funds focusing on climate equity or climate justice. In 2013, our Venture Capital Program closed its first investment of $4.1 million into Unshackled Ventures, which is founded by immigrant entrepreneurs who invest in visionary immigrant founders. In addition to Unshackled, IBANK has closed one other fund is in the process of closing one more, and there are many more on the horizon.

In addition to the programs we operate, it's worth highlighting the close collaboration we're doing with our state partners here today. We have been very intentional in ensuring ongoing coordination, communication and outreach with CPCFA and the California Office of Small Business Advocate, or CalOSBA. This collaboration ensures consistency and continuity across our small business programs that benefit our partners, stakeholders, and most importantly, the small businesses we support.

We are heavily focused on enrolling mission driven lenders like CDFIs and MDIs who exist to serve those traditionally left behind. In 2019, we had 28 CDFIs and MDIs as lenders in our program. Today that number is 52, an 86% increase. Looking ahead, California is rapidly approaching encumbrance of the first 80% of our SSBCI funds, which means we'll be eligible for our second transfer funds in the coming months.

Our goal for all the SSBCI capital funds is to build permanent, economically sustainable small business financing opportunities that can continue to recycle and grow long into the future. Thank you.

Thank you. Next we have Shela Tobias-Daniel, Executive Director of California Pollution Control Financing Authority.

Thank you, Madam Chair. Thank you for having us this evening. This afternoon we're happy to be here to talk about SSBCI. I'm Shela Tobias-Daniel, Executive Director of the California Pollution Control Financing Authority, one of the 14 boards, commissions and authorities of the Treasurer's Office. But we also administer the California Capital Access Program. But we're going to go by CPCFA today because that acronym would just be too long. So we're going to try to shorten that for you.

As you've already heard LAO and our partner IBANK explain, there are multiple programs within California's SSBCI effort. My partner from IBANK has talked a little bit about theirs. We partnered with IBANK for the US treasury application on the strength of two different credit enhancement programs, our California Capital Access Program, or CalCAP for small business established in 1994, and our CalCAP Collateral Support Program established in 2013. Our CalCAP for Small Business Program, we use a loan loss reserve model where we combine loans for coverage.

Each participating financial institution has a loan loss reserve account established for them upon enrollment of a loan and contributions from multiple loans enrolled by that lender are combined in the loan loss reserve. This program can cover up to 100% of claim amount in the event of a default of a loan. Our CalCAP Collateral Support Program now, this program does not combine loans. Each loan enrolled by a participating financial institution is assigned its own unique collateral support account to hold the cash pledge.

Regardless if a lender has 10 or 1000 loans in CalCAP for collateral support, each loan will have its own collateral support account. If the lender has a claim, they can receive up to 100% of the claim amount subject to the collateral support account balance. So we've made some changes to both those programs. We listened to our lenders from 1.0 to make the transition to 2.0, and there were some changes we made. So for our CalCAP for Small Business, that's that loan loss reserve model.

We removed the periodic recapture to appeal to lenders and to bring more lenders back into the program. Some left after 1.0 because they did not like that recapture feature. We removed that to bring them back. We increased our primary contribution matching amount to the maximum allowed by SSBCI guidelines to appeal to lenders as it increases the amount available for claims. So the lender will contribute up to 3.5%. The borrower, upon the lender's discretion, can contribute up to 3.5%.

Our program will come in and match those combined with 7%, so it can be up to 14%. On top of that, we have state funds that we will use for severely affected communities, like the communities just affected down in Southern California by the floods. We can come in with an additional 3.5% of state funds to make it 17 and a half.

So we do our best to try to make those loan loss reserve accounts substantial so that we really give them a good incentive to use that program for loans that they might not otherwise be comfortable making to those borrowers. On our collateral support side, we have reduced the minimum loan amount from 50,000 to 25,000. Heard from a lot of our lenders that that will be more useful.

And we've simplified and increased the main cash pledge percentage to 40% for all loans eligible for collateral support to appeal to lenders as it simplifies and may increase the amount available for a claim. This replaced a multi tiered system that provided 40% for loans under 250,000 and so on. We increased the maximum cash pledge to 10 million, so the maximum loan for that program is 20 million. We will pledge up to half of it, 10 million.

So that's very popular with a lot of our manufacturing small businesses. So this replaced a maximum of 2.5 million and the full cash pledge now available until enrollment matures. We used to sweep 25% of it annually over four years, but now we leave the whole amount there until the end of the period, the five year period. And this has been a very popular program with our lenders.

They like that change, the expanded additional cash pledge of 10% from state funds to include both severely affected communities and socially economic disadvantaged individual communities. We are going to add a third program. This is a loan participation program. We looked at our landscape of lenders. We were mostly working with community development financial institutions or CDFIs and credit unions. We wanted to bring in community banks, those folks that are right in those communities sitting across from a table talking to that borrower.

We want to bring them into our lender network. So we are designing a loan participation program that would primarily work with those community banks. There are opportunities to partner with CDFIs and credit unions as well, but this will be a statewide loan participation program serving all 58 counties for California. So we are currently in the process of establishing our regulations, the contract, and the RFP to go out for that program. We are also looking at another loan participation program that will target LA Metro.

They have a two mile corridor around their new transit line from Little Tokyo going out to the airport, and there are tons of SETI businesses around that corridor. And they have an economic development program where they're trying to help those businesses in that community. They have come to us asking us if there may be an opportunity to partner with them for our loan participation program, to provide loans for that effort. And we are currently in talks with them to do that.

In terms of outreach, we're team California. It's a collaborative effort. We work with our partners at IBANK, our partners at CalOSBA, to reach the different technical assistance providers, make sure that they're educated on our program. We seek opportunities for innovation and collaboration with the different technical assistance providers. Wherever we can appear to speak to folks about SSBCI and our CalCAP programs, we're there. Today I'd like to extend the invitation to all of you for your districts and your district offices and your leaders.

I'd be happy if you'd have us come down, present, talk to the folks in your communities about our SSBCI, find out how we can best partner to get our programs open to all of your folks. So thank you for that today.

Thank you. And we'll have our last panelist on this first panel, and that will be Tara Lynn Gray, Director of California Office of Small Business Advocate, CalOSBA. And I think I said your name wrong. Was it Shayla?

Shela.

Shela. Okay, Tara. Tara Lynn.

Thank you and good afternoon, Chair Quirk-Silva, Chair Villapudua, and Committee Members. Thank you for the opportunity to present before the Assembly Budget Subcommitee on State Administration and the Assembly Jobs, Economic Development, and Economy Committee. I am Tara Lynn Gray. I serve as the Director of California's Office of the Small Business Advocate known as CalOSBA.

And yes, we say every letter of that name. As the Committee background paper and CalOSBA's State of Diverse Business in California Executive Summary note California boasts an impressive 4 million plus small businesses, with approximately 1.9 million being minority owned. These diverse businesses constitute about 46% of all businesses in the state and contribute nearly $193,000,000,000 in economic output, which is more than annual Gross Domestic Product of 18 US states. They generate nearly $29 billion in tax revenue supporting 2.56 million jobs.

I'm thrilled to be here today to talk about CalOSBA and the success that we intend making California competitive for the US Treasury's first of its kind SSBCI Technical Assistance for Capital Readiness Grant Program. California secured 25.3 million last August. This was roughly 44% of the total available funds nationwide. This program is designed to complement the SSBCI capital programs that you just heard about.

While access to capital is a key component for small business stability, resiliency, and growth, particularly for historically underserved small businesses who do not have access to capital that helps them start and grow their businesses, and even when they have access to capital, they often face significant barriers and their loan applications are usually declined due to insufficient credit, debt to income ratio, missing documents, and a general lack of capital preparedness.

The technical assistance program that we will be running will provide vital aid to help small businesses with a focus on socially and economically disadvantaged individual owned businesses. We call that SETI for short, very small businesses. We call those VSBs for short and small manufacturing enterprises. We call those SMEs. This program will help small businesses become capital ready by preparing them to take on loans or investment and steward capital for small business success.

CalOSBA is putting these federal funds to work by augmenting the state's existing network of small business development centers to enhance their technical assistance efforts as well as our community based organizations.

CalOSBA issued a solicitation that was significantly overscribed to select approximately 33 providers to fund key roles to provide services that A, increase awareness and readiness for entrepreneurs and small businesses applying for capital, B, result in successful acquisition of capital as well as supportive services post issuance of a loan, and support the equitable coverage of small businesses across the state's vast geographic regions, and lastly, to increase legal, accounting, and financial management skills.

Given that many small businesses have already had touch points with their local small business development centers and community based organizations, there's trust and credibility that exists in this network. CalOSBA will leverage this network to conduct outreach and engagement on the SSBCI programs, and the selected providers will form a mesh network that will centralize communication and information sharing. If you would refer to slide two in your handout, that is an example of our network design.

Simultaneously, CalOSBA will roll out an information sharing platform so that small business customers who are going through their journey, their data will be shared confidentially amongst those that are participating in our technical assistance program. We feel that this will help save time and money for the small businesses while building trust in the network through transparency and simplicity.

The program will also create a specific journey map for our small businesses, that is on slide four in your handout, and this journey tracks where and how small businesses will navigate the capital access network while tracking and reporting key data that is required by U. S. Treasury for reporting and compliance purposes.

CalOSBA has issued notices of intent to selected providers and I'm pleased to report that 21 of the 33 leaders of the proposed awardees represent ethnic populations that have historically faced barriers to accessing capital, which include Latino and Hispanic, black and African American, Native American, Asian, and Middle Eastern populations. Two centers specialize in working with immigrant entrepreneurs and three are led by LGBTQ executives.

The collective reach of the 33 prospective awardees is inclusive geographically as well addresses the needs of both rural and metropolitan areas from the southern border to the Inland Empire, Orange County, Los Angeles County, Kern County, the Central Coast, Central San Joaquin Valley, North San Joaquin Valley, North State, Redwood Coast, Sacramento, the eastern Sierras and the Bay Area. Lastly, the proposed awardees have expertise in working with underserved communities, particularly those within the SETI population.

Through Us Treasury's support, CalOSBA is creating a first of its kind, innovative, technology powered social solution that brings the key stakeholders across the small business ecosystem to work together to meet an ambitious goal of enabling 40,000 small businesses to access one or multiple loan products made available by IBANK or CPCFA through SSBCI 2.0 funds. Again, thank you for the opportunity to present.

Thank you. I think what we're going to do is open it up to questions from either our Committee Members or our Chair.

Thank you to the chair. So a lot of great information today. Thank you. I'm very thankful, too, because of making these audible changes. Right. That's my question to you guys for the last two rounds. What would you say that you guys have learned.

Sure. Hi. I'll go first.

Do you want to pull the mic just a little closer to you?

Yes. What have we learned? Well, I mean, I think as it relates to maybe some of the key targets in SSBCI 2.0 that we have to deploy funds here. These aren't grant funds, these are lending funds. So they're not quite as desirable. Not everyone's running out the door to access them. And if we don't meet our deployment targets, then the Federal Government would retain those and distribute those to other states.

So one thing we've done as it relates to a difference in our program now, in our loan guarantee program now from the past, is we increased the amount we'll guarantee on a loan so that that will help us deploy funds quicker. I would say also what we've realized over the last few years, and I think through the pandemic, is really trying to work closer with the mission driven lenders like CDFIs and MDIs.

And we've been really trying to focus on our processes to increase those, to be that touch point with the underserved communities. And we're happy with the results to date. We won't stop there. We'll kind of continue to have meetings and roundtables and webinars to explain our program and inform those lenders about the benefits of utilizing our program. And I think what we are continuing to endeavor on is trying to create a more functional way for our small businesses to access our programs.

Both of our programs, we're sort of the back end. The lender is the interface with the small business. So if that small business comes to us, we can't provide them the loan. They have to go to the lender. And so we're actually looking at some it solutions there to try to make it a more streamlined process for them to access the lenders.

And through that, we'll be able to handle volume a little bit better and I think go into some more nontraditional communities at scale and hopefully get a little bit more involvement than we have to date. So those are some of the things I would say off the top.

And I appreciate the fact that the word that we're using is trust. Right. Because I think that our community banks or our local community banks play a big factor on this. So I appreciate that we're going to be adding them as part of the stakeholders of this. So appreciate that very much.

Assembly Member Ward.

Thank you for this overview here today. Encouraged to know about the work that you're doing, to be able to facilitate some of the federal resources and make sure they're getting out into our communities, to our businesses, even the most. And I'm wondering through this second round, certainly learning off of the lessons of the first round, how are you measuring success? What kind of metrics are you looking for in forms of how the funds are being used?

I'm kind of curious if you've been able to measure anything like a return on investment for some of these infusions of support to a small business. What is the economic output that we're getting in the form of either the productivity of those businesses or other indirect support to local communities? Maybe as a first question there.

Well, I know that US treasury is particularly focused on that leverage ratio. What they want, the goal is for every dollar from SSBCI, they wanted to generate $10 in private equity investment. So that is the goal. And that is the number one measurement for our application with IBank. IBank was the lead application to applicant, to us treasury. We partnered with them for that.

We had to spell out how we plan to achieve that one to 10 leverage ratio and how each of our programs performed in 1.0 and our plans to ramp that up for 2.0. So that's the number one metric. There are a number of robust data sets, data metrics that we have to meet and report on for 2.0. The targets for the SETI community. That's one large target that US treasury has established for us. Targets for very small businesses. Those are the measures of success to make sure that we reach those folks that may have not been able to benefit traditionally from capital access programs.

So if I'm hearing you said this is being able to help some small businesses that otherwise may not have an avenue to be able to qualify for or be able to have access to additional private capital.

Right.

Fantastic. And so do you feel like we've been meeting those goals so far?

Absolutely. In 1.0, that wasn't a specified target. The SETI target is new, but our programs reached upwards of 61% in 1.0, especially that small loan loss reserve program. The small business borrowers in that SETI demographic tend to really gravitate towards that program because that's our micro dollar program. And anything from that small landscapist business of one person to the food truck businesses they like that program. And I think that that's why that program is so perfect for those steady small business demographic businesses.

Fantastic. And I saw, yeah, our default rate, at least from the 1.0 program, was incredibly low, less than 1%. So definitely some success for those businesses that are accessing this capital. I'm wondering, you'd mentioned, I think, from the treasurer's office, and I saw some of the data that was here that we're looking at sort of the equitable distribution and access for different sectors and maybe different parts of the State of this as well.

And I know this is just data that I got right now from the CalCAP program, but about three quarters of that is going specifically to transportation and warehousing. And the lion's share of that is locations and businesses within the Central Valley.

And I know that's just one of the many programs that we have here, but are we not doing a decent job of reaching other areas of the state or other sectors within the state, or what more could we be doing to be able to facilitate messaging in local communities?

I can explain what you're seeing there, because we're at the beginning, as Clint stated, we're only one third of the way through the first tranche, but we've expended 60% of the funds, which we're really proud of and us treasury is really happy with us for. But I can explain that because we're early in the program, and we recently had for the CalCAP program, another one of our programs with the California Air Resources Board. That program sunset, it was our low emissions trucking loan program.

So that program, sunset, a major participating financial institution, Murphy bank, that is primarily serving that Fresno area, they changed their business model from using that car program to using that California capital access program for those trucking businesses.

Great for them. I don't want, I'm happy to get more funds into Central Valley.

It's kind of businesses, you see that in the Fresno area.

So they were just better, kind of aware and better positioned and ready to pivot and use this program.

So it's at the beginning and we're ramping up in all the other areas. We're trying to catch up with Fresno in all the other areas, and we're hoping that our loan participation program will help us do that.

Thank you. Last question is, do you see these programs, at least from 1.0 and maybe projections for 2.0 as being oversubscribed? What's the level of need that's out there?

Yeah. As it relates to the credit support ones, for example, it's really sort of racing to deployment so we can ensure that those funds are locked up and available to California and be able to recycle. And so we continue to sort of maintain the economic environment where lending is happening. If something were to go awry there, obviously that could reduce our output in the future deployment. But everything to date has been relatively good.

We're not in 2021 with that sort of pacing, but we're doing pretty well overall. And so I think there's plenty of activity. We're confident going in for our second tranche. The way it works in the tranching is once you initiate the contract, you have three years in which you have to expend, transfer, obligate the funds. And we're going to do that well within our first three year window, and we expect to achieve the third tranche well before that's due as well.

Going back to your question about geographic diversity, we do have annual reporting requirements to the Legislature, and in our annual report, we do show our loan guarantee distribution across the state. And I haven't really seen anything in there that shows anything you wouldn't expect. Los Angeles, Orange County, San Diego, some of the bigger counties are the bigger sort of ones receiving the funds. And so it sort of represents the overall geographic distribution. Haven't really noticed that overall across our programs.

Great. Thank you for the responses. Thank you for your work facilitating this to our communities.

Thank you, madam. Thank you for that very informal information you had. I want to get back. You had said earlier that unfortunately, the small businesses, you can't get in front of them or you can assist them. It has to go through a community bank. Right. My understanding. So how do we know that these small businesses actually are being informed about some of these programs?

Because I'm hearing some of the great things for the first time, and I know quite a few small businesses out there that would absolutely be able to utilize and benefit off of this. And then my next question is, if they don't qualify, what is the next step like, what else is there? I think we mentioned a little bit about that earlier, but are they informed of other things? And then once they're qualified again, do they come back again and you provide that technical assistance so that way they can receive the loans? How does that work?

So maybe I'll go highlight 1.0. We are looking for technology solutions where we can connect our small businesses directly to our lenders. And then really the small business doesn't need to know whether it's capital access or loan guarantee or collateral support that's really for the lender to determine. We want to know the lenders that have these enhancements in their program and then be able to sort of push them over their risk tolerance to lend to somebody who they wouldn't otherwise.

And so that'll be one way we can go directly to the small businesses in the future. I actually think Tara should take an opportunity to speak, because I really do think the small business technical assistance centers are really the conduit to our small businesses in all their needs, including capital.

Thank you, Clint, and an excellent question about the outreach. Thank you. And if I may just kind of set the backdrop really quickly in terms of return on investment here on this programming. Our small businesses provide two thirds of all net new jobs in our economy, 50% right. At all of the private sector jobs. And that's despite the fact that 81% of them, of the 4.1 million small businesses in our state have no employees, another 17% of them have one to 19 employees.

So the vast majority of our small businesses have very few employees, yet they are the job creation engine for the state. So that's the real opportunity in this program, is to get the growth capital that our small businesses need to them. So to address the outreach component, we have created a mesh network.

And the reason for the design of the mesh network is that we have found most of the small businesses in our communities across the state have very, very loose connections to the systems that really drive industry and commerce. And so what we are trying to do is to gather those in a network that makes it easier to intersect with small businesses. So they find a provider, literally at a community barbecue, a church, their local technical assistance center.

Hear about a webinar, get exposed at Department of General Services certification program. I mean, you name it, there are a ton of intersections, and we have lots of programming at the state. They're not necessarily all pulled together. So we've designed this network to get as many players, including capital providers, who are attempting to do outreach, who are attempting to do technical assistance on their own and pulling them together in one network so that we can have a comprehensive, unified approach, unified messaging, and unified data collection.

Yeah, no, that's fantastic. I think unified is exactly what we're looking at, because especially in your immigrant communities or limited english speaking communities, many of us do become business owners. And this information, especially once it's translated in different languages, unless it's the simple language and not the more professional spoken language, they're not going to understand it, and it's going to become wrong information. Right. And then you've got businesses that are not even going to engage or even want to take advantage.

I mean, this is an opportunity for them to grow, as you had mentioned earlier. And so I really like hearing the fact that we're trying to pull everybody together to be able to be unified. I also saw in one of these that the information is translated in 40 different languages. I'm not quite sure.

Yes, that's our program. We have more than 1000 counselors across the state that are providing services in 40 different languages. And I'd also like to point out that the staff at CAL-OSBA, that's grown significantly. We have six members of our 22 member team that speak in a language in addition to English. And so we are ourselves attempting to go beyond the minimum in terms of meeting language access needs across the state.

That's wonderful. And then I also saw in here somewhere where it's broken down as, and I think we mentioned it a bit, where it was broken down as Asian, black, Latino or whatnot. I'm wondering if you can also get me information on teasing out the API community a little bit more because we're always lumped into one, as you know. And I'd like to see the difference in the southeast Asian Chinese community, Japanese community, because we're considered a monolith. Right. But we're so different, especially when it comes to things like just, it just speaks volume when you break it down a little bit more so that you can understand our API communities.

Yes, I did a lot of work in Fresno before coming here, and I understand the distinction, especially for southeast Asian community members. And I would like to say that we have accounted for that in this network design.

Perfect. Thank you. Have no other questions.

Thank you. Thank you all for your comments. I do have some questions. I'm going to go ahead and start with, with our LAO. One of his questions that I'll repeat is, with the recycled funds, what are some of the opportunities there and how are those being used?

So from SSBCI 1.0, we've maintained those funds to continue as loan guarantees. So we leverage our program up to five to one. We don't want to go over that cap. That gives the banks comfort that if they do go into default, we'll be able to pay that. And so we've continued that. As of September 30 last year, we were at a leverage ratio just over four, and that allowed for outstanding loans of about $700 million.

So we're really committed to keeping the funds and then to the small business financing arena and figuring out where those opportunities exist. As it relates to 2.0., those funds have to be maintained within that programmatic structure until September 30, 2030. And at that point we would continue them with the same sort of focus on addressing financing gaps in the small business community.

For CALCAP. At the end of 1.0, those funds went back into the program to sustain the program for a state CALCAP program, we continue to make loans through CALCap and fund those programs. And actually when I spoke earlier about how we have the ability to add an additional 3.5% for severely affected community and some SETI groups, that's because of those state dollars that went back into those dollars. That became state dollars and went back into that program. And that program was maintained and still operating from 1.0.

I was just asked, what type of funds are we talking about, how much?

So we received 84 million in the original allocation and I don't know of that amount, what's remaining. So we also pooled that together with prior existing state funds and some state funds we received over the last few years. That trust account is 123,000,000. That is being leveraged up to $700 million in loans to date. The other thing that I wanted to note here, as it relates to recycled funds, the federal program has restrictions.

And so our state funds play a big role on still being able to do financings that aren't allowed under SSBCI funds. So there are certain types of refinancing, business purchases, those types of things where the financing wouldn't happen if we didn't have the state funds available.

Thank you. Another question. I want to go all the way back to your graphic on page three. Related to, I think it's Cherlin. And you start, we don't have it up on the screen here, but it's taking the person, which is kind of how I started the hearing, which is that individual that decides in the State of California, they want to start some type of business, whether it's a micro business or a larger business, and they need to navigate this.

So my first question when I look at this graphic, it says maybe they're getting some information from a local church, a nonprofit, somebody who directs them. But what if that person doesn't have those networks and they're just on their own? And their very first step is, well, I think I'm going to go to small business association, get on a website. When is their first contact to actually talk to somebody? Not the website, but to actually engage with somebody.

So the graphic that you have in front of you is specific to the SSBCI journey map. There is actually a much more comprehensive and multi step journey map that would really map the journey from beginning startup, legal formation of a small business through where this map picks up. In my mind. There's really steps 1, 2 and 3 before you ever get to access to capital. This would be step four in a broader beginning to end entrepreneurship journey map. But I think your greater question is, if I'm a person that wants to start a business, where do I go? Right?

And I think my question is, who do I talk to? Not a website, who do I talk to? Because people get very frustrated if they have to navigate something and there's nobody to talk to. So when is their first step that they can talk to somebody before they're going through five steps and not getting an answer back?

It's like if we call our, I'm just going to say an organization and they put you on hold and then they put you on hold and you can't get an answer. When does an individual, whether it's a single mom with the baby on her hip, when can they talk to somebody to actually say, this is what I'd like to do, and then somebody says, I'm going to navigate with you.

It really depends on their actions, right? If they get the idea. The reality is, in this day and age, folks consult a search engine first. And if they consult a search engine, whether it's on their phone, a computer, they are most likely going to be driven to a resource. And there are numbers. Our SBDCs, our small business technical assistance centers, they are all very well advertised and known in their communities.

And that's the real reason for a distributed model, is because it takes that technical assistance to the community rather than asking the community to reach up to the state to get their assistance. I can't say that there is a business advisor on every corner and that that mom with a baby on her hip is going to walk past somebody and say, hey, I want to open a small business.

But I can say that with more than 1000 counselors across the state and in communities where we know that there is entrepreneurship activity happening, the likelihood that they will find their way to an SBDC or community based organization is pretty good. Word of mouth is out there. Folks know that there is help, available areas where we could do better. We should be partnering with legislative offices, right?

We should be holding convenings with your constituencies in your neighborhoods and have a little bit more one on one there. I think several of our centers have good relationships, but it would help us to make that systematic.

You did a great job answering that, and I think that's exactly what I'm trying to get at. This is my 10th year in the California State Assembly. I was the chair of Jobs Committee a good handful of years ago, and I don't feel like those connections are as easily available as being noted. I know that we do get individuals that will call our office and maybe some offices across the state have better relationships, but we interface with our Chamber of Commerce, other groups, and this navigation is not as easily. So the other thing that I would say is we know that the younger generation are not navigating through traditional types of chamber of commerces. They're not doing that. They're not going to galas, they're not going to networking lunches.

They're sometimes running two businesses and are doing the restaurant and maybe the food truck. So language is another issue. But my biggest question is if you can't get somebody live on the phone, you're going to get a hang up. When you get a hang up, sometimes people stop. That just doesn't mean they don't pursue it in other ways, but they may not be pursuing this. So I'm not going to dwell on that. But just that's something that is very concerning to me, especially individuals that speak second languages, not being able to navigate websites and so to we'll move on. But I do want to.

Can I add to that?

Yes.

Yeah. Just to add, I heard both of my colleagues mention that, and I do have to say thanks, Ms. Gray, for sometimes it's our responsibility too, right? To make sure that what else can we do? What else can we do in our community? We rely a lot on our district office, our folks there. And I know that you and I have partnered up on a webinar that's been very helpful for our community.

But sometimes we got to be reminded for us to continue to do that because we're all kind of running 90 miles an hour up here. But we need to make sure that it's our responsibility, but keep us tuned up so that we're making sure that we're getting this out to our district offices.

If I could just make a comment, too. I'm sort of somewhat new to this space, but having talked about it and trying to understand it from this perspective at the macro level, I do think what's going on across those thousand providers is very grassroots and it's happening, and it's happening within those communities that need their specificity of what's unique to those communities.

But I do think sometimes the challenge is how do you aggregate that up in a small sentence or two that's satisfactory in a hearing and that doesn't always translate. But we have seen sort of those things come to fruition and sort of that trust element of putting those things to work. I think the meshneck works a way of strengthening across those thousand providers and making sure where there's gaps or needs and consistency, the state's able to do that. So it's certainly a balance.

Right, of like, if you want to have that unique local culture in the things that are happening there, you sort of lose some of that continuity of all one message at the top level. And so it's a balancing act between the two is what I've seen.

I'm sorry. Are your organizations using social media to put out need a loan, starting a business? Any of those types of graphics that you are putting out?

Yes, we do. I think all of us, we're out there on all the social media platforms talking about what we're doing with SSBCI. We take every opportunity we can to put that information out there.

We do have a pretty robust social media program, and we will, as soon as our providers are official, we will be launching that.

Thank you. I think we're ready for.

Yeah. Okay. Thank you. Thank you all. We're moving on to second. Okay. Our second panel conversation will discuss the SSBCIs impacting on the economic growth and small businesses. Outreach panelists are, if you can come up, Mr. Sanford Livingston, CEO of Northern California Financial Development Corporation. Bianca Bloomquist, California policy director and Northern California outreach director, Small Business Majority.

You guys can get started.

Madam Chair, Members, Committee. My name is Sanford Livingston. I am the President and CEO of Nor-Cal Northern California Financial Development Corp. And we're in Oakland. And I'm also representing all seven FDCs as the Vice President of the FDC Association. And it's great to listen to what's happening. I'm extremely passionate about how we're going to be helping many of the small businesses in California, folks that haven't had access to capital.

I came from a large bank, did 20 years there, and some of the things that I've seen and heard here is quite remarkable because it doesn't get out in the general public. You think about banks, and I think I have a contract with the Infrastructure Bank of California. I'm one of seven FDCs, Financial Development Corps, that actually work with the state of California to be able to offer the State Guarantee Program.

So a lot of what Clint was saying, we use his guidance from the IBank to actually deploy those guarantees and collect the information via SEDI forms of that nature. And to be quite honest with you, what we've done is looked around like, I heard you asking some great questions about how we all work together. Well, I look at it more like a Justice League of small business helpers. Everybody has their thing. So I make a little joke here. I say we have a sea monster.

We look at the Justice League, we call Aquaman. That's his thing. So, you know, I don't ask him how you breathe underwater and how you talk to fish. That's his thing. And so when you look at the ecosystem here, for the small business, we offer the guarantee. We help lenders look at a situation and be able to say, hey, this is a great deal. If we just had collateral that we could provide, we could offer this particular loan. And that's where we come in.

And there are some other specifics about banking. You should understand that if you don't offer that synthetic collateral, in the behind scenes, when they're going through their compliance and regulation and all that stuff, and they don't have that collateral, that deal gets an additional bink, right? Because then it looks more risky because it doesn't have the collateral sufficient enough to get the proper classification. The system is institutionalized. It was not my fault, it doesn't have the collateral.

But when you look and pull it back, what I want us to be able to look at, and all of us should also have the analytics behind how these operations work so that we can provide intelligently how we're going to help these businesses. The system, we know the system. But how do we get around that to make sure we offer things that make sense for everybody, for everybody in the Justice League, right?

Because we have these lenders out there and they have an issue of being profitable and not having issues around risk. But then we pull back. I know I talk a little differently, but I'm going to tell you the real story here. So you all asked me to come up here and talk to you, so here I am. So you look at the risk, right? You look at this thing and you say, let's look at the analytics. I heard the gentleman here, he was, Chris.

He said, well, you know, the default ratio is less than 1%. Dog on right it is. That should tell us something, too. We should add to this discussion is that the risk isn't what it appears to be, but nobody's talking about that. So we're thinking about a lot of these programs that we're big cooking up. That's why I don't like to call them programs. I like to call them products. Because when you sell a product or something, it solves a problem.

And the problem that we're solving is stereotypical viewpoints about people that borrow money. And when you look at the results, it don't add up. So I don't like to talk about it like, oh, we got to disadvantage it. Yeah, it's the way the system is set up.

And I like what you folks are doing. Because if we pull all of this together, I was listening to Tara Lynn and some of the things that she was talking about, and we definitely provide ourselves, makes ourselves available to many of the things that she has in terms of getting to speak to many of the small businesses that have issues around gap financing for working capital. Because DGS, which is a part of California, pays somebody 30 or 90 or 120 days later.

So how do we overcome that? We overcome that by providing guarantees to those very businesses that we do business with here in California to make sure they have the capital. And that's what we do. So I wanted to make sure I give some clarification. Clint spoke about the dynamics of how it works.

We're the feet on the street that get it done, and we offer the guarantee across the boundaries of California. Southern California, Northern California, all seven of us get together and we talk about best practices. We'll be meeting in April to talk about how we can take the ideas that you have about these businesses and get that information to the lenders as well as the borrowers, so they understand how these businesses are allocated to get the funding to them. And I want to keep talking about this.

So the SSBCI money is definitely important because it gives a larger capacity for us to give more of these loans out to the folks that deserve them and then find a way of collecting the data to show the complexity of how it's done, but also the power and the results that are second to none. And with the SSBCI money, we've been able to offer even more. We go up to 5 million, where it was at 2.5.

And when it first started, maybe 10 years ago, at the first SSBCI, it was only half a million guarantee. Now we're up to five. And now we have to educate many of our users, which is our lending folks, which are credit unions, CDFIs, regional banks, and even start to look at some of these other banks that said, oh, it's too expensive to help with these small businesses. Well, no, it's not. With the innovation that's come along, with AI.

When you were talking about getting that phone click that no one's picking up, where there is so much innovation coming down the pike that now you can have AI languages that answers those questions and gives you phone numbers to call where people will pick up. So I wanted to make sure I spoke a little bit about those things, and if you have questions about how we operate, but I just wanted to give a little different viewpoint that sometimes doesn't get heard. Thank you.

Well, I'm very thankful for your statement. Because I think from us, when we get these phone calls, they're not here to say, hey, God, you're doing a great job. It's usually people that are angry, upset, especially in our district offices, right. They're upset about things, and we don't want to pass the buck to another number for them to call. So my question to you would be, what changes would you make?

What changes would I make? Well, not so much a change, but I would say that word is kind of funky. I like amend what you're doing because there's some great things that are happening. And if we want to keep doing great things, I think to have Committee discussions, to have smaller group discussions, to discuss success points, to discuss best practices, to figure out if someone is getting a phone call and they don't understand how to categorize the help.

One of the things that we do at Nor-Cal is we categorize the lenders. There's some lenders that like gas stations, there's some lenders that like restaurants. And so sometimes they get mismatched. So someone will go to somewhere where that lender, that's not their strong suit, but there's no way to tell who to go to because none of this stuff is categorized anywhere where you can reach it.

And I think that when we talked about, we got enough people lending, guaranteeing, talking, SBDC, you got technical assistance, but we need to talk to each other to find out the best practices and how to... Just case in point, we do deals, right? And 90% of them come from lenders. So they say, Sanford, it's a great deal. If we can get a guarantee, we can do this thing. Okay? Boom, we set it up and we do that.

However, what if they come and they say, hey, man, we can't help them. We redirect them to another organization that can help them lend. And so that's what happens. And people see that. Then we need to work with each other, like a justice League on behalf of the small business, and reach out and answer each other's phone call. How about that?

That's great. Yeah. Because that's building trust, right?

Yes.

Any other questions?

I have a question. I'm sorry, Mr. Chair. So, can you clarify for me? So we talked about how Clint and Shela and Tara, they don't work directly with the community. They go through another entity that works with the small business. So are you that entity that they work with? Yes.

Yes, we're open to... Our core competency is the guarantee program. But we live in the community, and we work with the community, and we belong to various boards in the community, and we like to make ourselves available. If you're having an event where folks need to understand how they can get funds, and they may not know that a guarantee is the way that they're going to get access to funds, we're there to speak to that. So they understand how we fit into the spectrum of how funds are granted to small businesses. So, yes, we are available.

So you're the one that educates the community about the programs that they have. Because they can be out there putting this on social media and saying they have this. But as a small business, I can't go directly to Clint, Shela and Tara, I have to go through you for you to access their programs for me to be able to take advantage of it. Am I understanding that correctly?

That could be one way, but you got to remember, so I'll lay it out so that you can get the full scope. 80 to 85, even 90% of our businesses come from lenders. However, our door is open where we deal with businesses that come directly to us. And then also, if many of the other providers in this ecosystem are speaking directly to borrowers, we speak directly to them.

Like with the alliance groups and some other groups, we make ourselves available to be able to talk to them and let them know how they should be providing information. So if they were to go to, say, Tara Lynn and her group and stuff like that, we have checklists, also, that we've gotten at tables like this.

When I say, well, Sanford, when you go and you meet with folks, do understand we need the tax forms, we need this, we need that, and we need to understand, they need a business plan. We offer the same types of advice for folks so that when they do get to a lender, they can speak lender language, which is... There's a barrier sometimes when the folks go in and I offer to you, do you have your debt service coverage? Do you know your debt service coverage?

You'd be like, what the hell are you talking about? So what we do is we say, hey, the guarantee program has a debt service coverage benchmark of 1.25. And this is what that means. We all have to have, it's almost like football, right? Everybody know they got, they play, I'm a wide receiver.

It's a little too soon to talk about football here because of what just happened.

I know. I'm sorry, but I bring it up because if there's a fumble, you don't say, well, I'm not picking up the ball because I'm a center, I'm a tackle. That's not my job. If there's a fumble on the play, we have the responsibility of helping get that fumble. And if there's a small business owner that needs help, my job might be guarantees, but I need to pick up the ball and make sure they get where they got to go so they can get the money they need for their business.

Perfect. Thank you. Now we have Ms. Blomquist.

Thank you so much. And for the record, this is my business card that I give to small business owners. And it has my cell phone number on it, my personal cell, so that I pick up every time I get an unknown number, which is not always so fun, but oftentimes it is a small business owner who needs help. Thank you, Chair Quirk-Silva and Chairman Villapudua. Members of the Committee, I'm Bianca Blomquist. I'm Policy Director for Small Business Majority.

We're a nonprofit organization that advocates with small business owners nationwide and right here in California. The average size of a business in our network has approximately four employees. And why that's important is because these businesses typically don't have a dedicated HR department. They don't typically have access to the sophisticated legal resources to help them navigate the myriad of options and help them also avoid predatory lending, which is a key component of our work.

I'd like to flag for my testimony today, I will be talking about the opportunities presented by SSBCI 2.0, but I'd also like to take the opportunity to explain how Small Business Majority is leveraging its network of partners to reach California's smallest businesses. I will be referring to them as VSBs, very small businesses, and SEDI for socially, economically, and disadvantaged individuals. The groundbreaking State of Diverse Small Business Report that was commissioned under CalOSBA reminds us that 45% of small business owners in California are diverse.

They support over two and a half million jobs, and they generate almost $200 billion in economic output. However, disparities in capital access persist, especially with startups with diverse leadership teams and minority small business owners with low credit risk. California needs to incentivize lending institutions and promote innovative TA. Unfortunately, as we've already uncovered today, too many entrepreneurs are unaware of our amazing small business development centers, women's business centers, SCORE chapters, and very small community based organizations. So we partner with Chamber organizations.

The statewide Ethnic Chambers are close partners of ours, but also the very small Chambers that usually only have one person working there to help their members navigate their options. These Chambers target the smallest and most diverse business owners in regions like the north state, San Joaquin Valley, and the Inland Empire. For instance, Vernette, a business owner in Stockton, typifies the challenges faced by micro entrepreneurs. As the sole manager of a childcare facility, she lacked resources for licensing, payroll, and certifications.

We connected Vernette with the Central Valley Women's Entrepreneurship Center in Modesto so she could receive one on one TA to enhance her business plan, get capital ready, and identify funding opportunities. Therefore, we recommend California continue to build on its successes in dismantling barriers to entrepreneurship, and SSBCI capital and TA Dollars should actively support California's modern and diverse entrepreneurs. Initiatives like the California Dream Fund, the Covid-19 Relief Grant, the street vendors legislation that was passed last year, the micro-enterprise home kitchen operations.

These are proven concepts for fostering diverse entrepreneurship. The Norcal SBDC Network, of which I'm on the advisory board, hailed the Dream Fund as perhaps the most successful program for brand new entrepreneurs, showcasing its effectiveness in catalyzing diverse TA providers across the state. Today, the over $25 million TA Grant Program under Cal OSBA emphasizes a competitive process to fund culturally specific TA programs to reach VSBs and SEDI entrepreneurs. Second, we recommend equitable distribution of the SSBCI dollars through public private partnerships.

Public private partnerships were essential to the success of the biggest small business grant program in history, the $4 billion Covid-19 Relief Grant Program. The CRG leveraged hundreds of local and statewide organizations, including Small Business Majority in the Nor-Cal FDC, as well as CAMEO, who we partnered with to host convenings, I think you were there Sanford, to improve efficiency and leveraging technology to decrease costs, increase lending among CDFIs to VSBs and SEDI populations.

And third, California should continue to innovate its lending programs to align with leverage ratio requirements and De-risk capital, which we've learned so much about today already, what the amazing folks at CPCFA are doing and IBank are doing to remain flexible in their lending programs. Through ARPA, California's total funding increased to 1.2 billion, creating an obviously larger pool of money for lending and investing.

But unfortunately, many states, during SSBCI 1.0 weren't able to meet those ratio requirements, and some state officials have expressed concerns about meeting those same leverage ratio for the current program. One successful example of de-risk capital includes the California Rebuilding Fund, which leveraged government backed capital and private equity to create a standardized special purpose vehicle we pitched to facilitate small dollar loans exactly to VSBs and SEDI populations. During COVID we worked closely with CAMEO.

We pitched large and small CDFIs and FDCs to enroll in the fund and underwrite the loans. We secured millions of dollars from Santa Clara County as well as San Francisco County also to invest in the SPV. This collaboration is a great example of de-risking capital as we awarded almost $1 billion in capital to VSBs and study groups during this time.

Appreciate the Legislature's initiative in calling this hearing, providing an opportunity to showcase Small Business Majority and its vast partner network collaborative, and I won't read the rest, but I appreciate your time and I look forward to your questions.

Thank you. None? I'm glad that you mentioned that someone reached out in Stockton, right? And then you connected them to Modesto. How are you locating these small business clients?

We do education, so we probably engage in about 100 webinars a year, reaching, and presentations, in person presentations when appropriate. We partner with those Chamber organizations that I mentioned, also the SBDCs and the CDFIs. But I think what's been alluded to is it's difficult for these organizations to market themselves. We almost see ourselves as a marketing extension of these amazing TA resource providers, letting small business owners know about the opportunities that they can access when they reach out.

That's great. We have several Chambers in our district, and I work well with them, but not everyone can belong to a Chamber. Right, because you have to pay fees. So I think that there's folks that just won't do that, and I think it's important for us to continue to try to reach out to them. Thank you for bringing up that story today.

Yeah. I'd also like to flag that the Chamber organizations, as you mentioned, are not the only ones. We also work with merchant district associations. I've gotten up at many 6:00 AM BNI meetings. And then, of course, I'm really good at asking my younger team members to help me with the social media. But we provide social media platforms for folks to access if, oftentimes Zoom can be cumbersome, especially for folks in the Hispanic community who are also accessing from their phone and not their computer. So those are just other organizations that we actively reach out to.

Thank you.

Thank you both for your presentation. I really liked what you were saying related to lender language. I think that's like a key note that's coming up here for me. Because as I started the hearing, we're talking different languages. You probably use 20 acronyms in your presentation, and to you, it's just a language because you live and breathe it. But remembering that the average person does not. Their goal is to make money to support their families. That's it.

To make enough money for housing, for food, and to support their family. So all of the acronyms don't mean anything to them, whether it's CAMEO or women's business or Chamber. But they're not going to be competitive if they don't have the lender's language. Like you're saying, if they go not equipped with either the paperwork that they need to come in ready. And you also mentioned a checklist, I believe. You can ask my team. I love checklists. I'm a former elementary teacher. I love checklists.

Something like that is a tool. Because if somebody knows what they need, it still may take them three or six months to get those materials ready. They're not going to do it overnight. But they know the game plan, as you said, with football, they know where they need to get to.

And that's why, I'm sorry if, I apologize if I was getting a little too aggressive on who picks up the phone, but because we have to speak their language, and that's the whole thing is we have to meet them where they are. And it could be somebody who just needs the $10,000 for a food truck. Maybe it's not 10,000 anymore, but that initial. But they still have many steps to take.

And until they can check off that list and know exactly what's required, they're not going to have success in the lending world. So this has been very valuable. I appreciate it. I know that you are working tirelessly to get those small businesses up and off the ground in California. We see success in those. I will take you up, Tara Lynn, on...

I really do think that if every one of our legislative offices had a presentation, and you don't have to make it individually, but just a presentation that their teams can know about, we could do a small business kind of exercise in our offices that would go a long way. I know that there used to be Mary Jo. Remind me her name.

I know she passed away, but she used to bring business together in our districts and talk about some of these things that were concerns even of actual business owners. That's a step away from what we're talking about because they're already owning a business. But I still think there's a lot that we can do to coalesce this relationship between state and local, but mainly the individual who wants to open a business in California. But I appreciate you being here.

Amen. Thank you.

Thank you.

And I just want to say one thing we do, just to show you the collaborative effort we have. Every deal that we do, we do a 641 to make sure that they have access to the SBDC tools and advice for everyone that we do. And for you, Carlos and Madam Chair. So here's the thing. We want to make sure that you're not just getting phone calls of anger. Right? We need to find a way of sharing with you celebratory information of things that do work. Balance it out.

Testimonies. We love testimonies.

We got a ton of them. You should be getting a quarterly report about where we've disseminated, what we're doing. That way you can see and we can pull people together so we can enhance those successes and build on them. What you think about, you bring about. I don't want you thinking about anger all the time and all this kind of stuff because that's what you'll bring about. But we are doing a great job of moving these funds.

I don't know why California is the only group that has the kind of ecosystem that we have. Because we got all our money back for the first SSBCI, and we were redeploying again. Many states don't have that, their money's evaporated. So I think we're doing something great. Let's just continue to build on that.

Sanford, you're hired. No, I mean, I really do. Ending on a positive note. Knowing those testimonies, not only through the state, but in our own district, even if it's five, that we can say, well, we were able to help. I mean, I have a women owned business that we celebrated last year at Business of the Year, Zombee Donuts in Fullerton. A woman and her mother and her daughter. And they've, I think, celebrating nine years now, even going through the pandemic.

So I use them all the time. I can't tell you if they had support from any of the state loans, but I'm sure there are some in our district. So us knowing, as the Legislator, even a handful of those could really give the public the snapshot that we're looking for. And then we'll get some little cheerleading.

You call us and we'll be there for each and every district. You just call us and we'll be there.

All right, well, with that, we're going to end our panel testimony and go to public comment. And we're just going to have 1 minute on public testimony here.

Good afternoon. Good information today. Yolanda Benson, representing the California Association of Financial Development Corporations. As you've heard, they're the boots on the ground actually speaking to the businesses. There are seven of them, as was mentioned, their names don't always have financial development corporation in them, so you wouldn't know. So some of them are also SBDC. So you're getting the whole thing with some of them. Some are Women's Business Centers.

As well as doing the Small Business Loan Guarantee Program, they do things like PTAC, ensuring that the defense contracts are going to small businesses as well. So you do have a great organization within the FCDs because they are kind of that whole Justice League system. But we are so excited because of what's happening at the FDC so far. Just Sanford alone, I don't know that he shared this. He's already turned out 100 million out of what needs to go out. He is working hard. There are many FDCs who are working just as hard. So we want to make sure that you know that it's all about job creation, job retention, and ensuring growth in our economy.

Thank you. Wait a minute.

Good afternoon, Madam Chair and Mr. Chair.

Please introduce yourself, sir.

My name is Jim Frazier. I am the Director of Public Policy for the Arc of California, United Cerebral Palsy, California. I'm here to speak to, what about us? The 42,000 providers in California who are employers, who are business owners? I have not seen any mention of the nonprofit sector in this meeting. These are good people that deserve to be supported. They go out and do something that none of us want to do. They provide services to people with developmental disabilities, and they need your help.

We've lost 7000 providers since 2012 to 2019. Had nothing to do with the pandemic. It has to do with the rate structure that's going out through that the state of California pays to the providers to be able to do this work. We talk about expanding programs, capital, all of these things. Now, I've gone on the GO-Biz website, but I can't find a portal that adapts to the people that I represent. So I would like the Committee to take it under consideration about how to support the nonprofit sector, but also the providers that do the work for the developmentally disabled. Thank you so much.

Thank you. Nice to see you. Seeing no one else, we will end our hearing today, and we thank all of who came and joined us and all of our panelists. Thank you so much.