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Chairman Williams Pens SBA Administrator on New Privacy Infringement Rule

WASHINGTON, D.C. – Today, Congressman Roger Williams (R-TX), Chairman of the House Committee on Small Business, issued the following statement after penning a letter to Administrator Guzman of the Small Business Administration (SBA) and Associate Administrator Purdy of the Office of Small Business Development Centers (SBDC) concerning privacy intrusions on small businesses.

“Entrepreneurs should not be fearful that utilizing resource partners from the SBA will allow for any government agency to request confidential information about their business. Unfortunately, this rule implemented by Biden’s SBA will do just that and is a step in the wrong direction when it comes to Americans’ privacy,” said Chairman Williams. “This new rule would give the SBA Administrator the ability to give out personal information of small business owners who utilized a SBDC when any government agency requests it. It is paramount that business owners have the right to privacy as they begin their entrepreneurial journeys, and our Committee looks forward to getting more information about these changes.”

Read the full letter here.

Read excerpts from the letter below:

“The Committee on Small Business (Committee) is investigating the Small Business Administration’s (SBA) proposed changes to Small Business Development Center’s (SBDC) client privacy rules. In particular, the Committee is interested recent rule changes which will allow the SBA to disclose personally identifiable information (PII) from small businesses utilizing SBDCs to federal or state agencies and remove the existing provision enabling small businesses to opt out of providing SBA this information. The Committee seeks to better understand the rationale behind these rule changes and determine whether small business data will be adequately protected.

“The Small Business Act states that “a SBDC, consortium of SBDCs, or contractor or agent of a SBDC may not disclose the name, address, or telephone number of any individual or small business concern receiving assistance under this section without the consent of such individual or small business concern.” The Small Business Act allows for three exceptions— disclosure by court order, financial audit of an SBDC, or client surveys conducted by the SBA.

“However, the SBA’s proposed rule released on December 13, 2022, expands these exceptions to allow the Administrator discretion to release this information to federal and state agencies without consent of the small business. The proposed rule states the SBA can release the information to federal agencies if “the Administrator considers such a disclosure to be necessary for the purpose of conducting a financial audit of a center, not including those required under § 130.830, as determined on a case-by-case basis when formal requests are made by a Federal or state agency.” Though these agency requests must justify and document the need for individual client contact and/or Program activity data, the determination of whether the provided justification is valid remains solely up to the discretion of the Administrator.

“Additionally, the Committee is extremely concerned about this change in conjunction with another proposed change in which small businesses who utilize SBDCs will no longer be allowed to opt out of sharing their information with the SBA. SBDCs are required to collect the information on Form 641 from each small business or prospective small business that receives one-on-one counseling or advising. The current Form 641 has an opt out option which will not be on the new form. We are concerned that businesses will not understand or have any way to prevent the Administrator from sharing all their information with any other government agency that requests the data.”