Small Business Administrator Isabella Casillas Guzman on COVID recovery and the four-day workweek

Small businesses were already working to come back from the turbulence of the pandemic, but with a growing labor shortage and inflation on top of it all, it's a confusing economic reality. President Biden’s Small Business Administrator Isabella Casillas Guzman visited Boston on Monday and joined GBH’s Morning Edition hosts Paris Alston and Jeremy Siegel to talk about her role in supporting small businesses. This transcript has been lightly edited.

Jeremy Siegel: So first off, what brings you to Boston?

Isabella Casillas Guzman: Well, I'm here to both visit with Whip Katherine Clark and celebrate with the Black Economic Council of Massachusetts having a roundtable to discuss some issues around small business access to capital. But in addition, launching another session of our Small Business Digital Alliance with TriNet. So we're really excited to be here and explore some of the small business issues here in Boston so the SBA can respond.

Paris Alston: And you're here in a really pertinent location for small business economy — 45.4% of our state's employees have jobs that are in small businesses. What support has been given? I mean, we know there were the pandemic relief funds. So tell us more about that. What's been the impact ever since 2020? And is that still available for a huge portion of our economy and our workforce as we still feel the effects of the pandemic, but we have all these other things on top of it?

Casillas Guzman: The SBA scaled dramatically to support those small businesses, to help them survive during the pandemic. And the American Rescue Plan continued that support with President Biden's commitment to making sure we could recover. You know, it was nearly $15 billion in support in Massachusetts, specifically, through all those great COVID relief programs. While those COVID relief programs have closed out, the SBA remains an incredible, affordable capital source for so many small businesses so they can grow and take advantage of some of the opportunities.

Siegel: So as part of the pandemic relief, there were loans that were available for businesses, and loans end up needing to be repaid. What is the state of money coming back to the federal government from people who needed it, who needed help during the pandemic? I imagine it must be really difficult for some small businesses that really struggled to then have it be time to give back money that was given to them as support. So are you seeing businesses pay it back? Is there any support available for businesses that took out large loans, that had access to large loans over the pandemic?

Casillas Guzman: Yes, that's right. I mean, the SBA is always stepping in for disaster relief overall, including during the pandemic with those EIDL — Economic Injury Disaster Loans. We are continuing to service that portfolio and work individually with borrowers if they are facing challenges on their loans. You know, the important thing is that they're communicating with us and working with us. We are their lender, in this instance, directly. And so we've set up our customer service to be responsive.

Clearly, though, as you mentioned, there's tightening credit around. The SBA is the lender that is credit elsewhere to our small businesses, at a time when we're seeing growth opportunities for our small businesses with these historic investments in America and infrastructure, the clean energy economy. We want them to have capital to grow. And so that's what we're focused on in the Biden-Harris administration, is making sure they have that growth capital.

Alston: And with that, administrator, we should mention that the Office of the Inspector General is looking into the management of repayment of those loans, including more than 70,000 potentially fraudulent PPP loans totaling more than $4.6 billion, as well as some other funding. How is the SBA responding to that probe? What's the plan there, and what's the long-term impact for business owners and taxpayers?

Casillas Guzman: Well, President Biden from day one had a commitment to making sure that we could control for fraud, waste and abuse in our programs. And so as a result, we completely focused on making sure that we were not only having speed, but certainty as well, and implementing a strong fraud risk management control system. And across the programs, we've referred tens of thousands of loans to the Inspector General for further investigation, because we had gone through an exhaustive process of identifying fraud through the portfolio. We continue to support the IG, and in fact, the President has requested an expansion of their budget because there was fraud in the program that needs to be investigated. And I think what's important to note is that SBA has changed its policies to ensure that we are controlling for fraud, doing speed and certainty at the same time.

Siegel: Let's talk a little bit more about Massachusetts and small businesses in Massachusetts, specifically. GBH has done some great reporting, our investigative reporters, on contracts from government projects that go to minority-owned businesses. And we've seen shockingly low numbers, a small percentage of public contracts, going to minority-owned businesses, roughly 5% statewide. And some significant disparities in many cities including Boston. What needs to and can be done at a federal level to help elevate businesses from historically marginalized groups, historically underrepresented owners in the field?

Casillas Guzman: Well, that's been a priority of the Biden-Harris administration from day one. The president signed an executive order on equity and that applied to our small business programs as well, with a commitment to delivering contracts at the federal level to small disadvantaged businesses, which includes our minority program contractors. And so that 15% goal by 2025 that he's inserted at the federal level means tens of billions of dollars more to small businesses. SBA also published a disparity study focused on making sure that we emphasize which communities need better support to get into federal contracting.

The bottom line is that agencies need innovation and they need these small businesses to deliver on their missions. And we need all of our great small businesses. We saw a decline in small business contracting. We want to reverse that. And that includes with the changing face of entrepreneurship, where women and people of color are starting businesses.

Alston: And administrator, How does that line up with something like Amazon, this huge e-commerce giant that so many of us rely on, for better or worse, but is also driving business away from the small business owners and those who are local?

Casillas Guzman: The federal budget, of course, is massive. We are the largest marketplace in the world. And so making sure that small businesses have a participation in federal contracting is really key. So the SBA not only offers capital and bonding, but also technical assistance so that small businesses can compete. We need them to compete with larger firms and get into the marketplace. And so that's what we're focused on doing.

Siegel: Before we let you go, something we've been talking about a lot are studies on the four-day workweek. As someone who is overseeing so many small businesses in the U.S. —

Alston: This is our shameless plug to try and make it happen.

Siegel: I'm curious, as someone who works with small businesses: Are you interested in the idea of doing four-day work weeks for businesses across the country?

Casillas Guzman: Well, I grew up in small business. My father had a chain of veterinary hospitals. And you wear that hat of a small business owner 24/7, pretty much. It's a really challenging job. But obviously, I think whatever works for our small businesses — some of them, of course, are in the service industry, are restaurants, there's no four-day workweek for them. So, clearly, we want to make sure that all industries have the support they need, the workforce that they need, to be able to deliver those products and services that we all love and depend on: Where we eat, where we entertain, the products that we are dependent on.

Siegel: So if it works for them, maybe?

Casillas Guzman: If it works for them.