House Small Business Committee hears testimony on CCP‑linked threats to U.S. small businesses

Chairman Williams opened the House Small Business Committee’s hearing titled “Defending Main Street: Combating the CCP Threats to American Small Businesses,” saying the committee would examine how CCP‑linked investments, intellectual‑property theft and supply‑chain dependence are putting U.S. entrepreneurs at risk. "Welcome to today's hearing titled Defending Main Street: Combating the CCP Threats to American Small Businesses," he said.

The hearing paired personal testimony from entrepreneurs with expert analysis. Ranking Member Ms. Velasquez warned against policies that single out people by ethnicity, invoking the WWII internment of Japanese Americans and the Civil Liberties Act of 1988 as cautionary precedent. "Each family was given a week to register with the government, liquidate their homes and businesses," she said, urging the committee to avoid ethnic profiling while defending national security.

Entrepreneur Sean Murphy recounted his company Bison Blockchain’s experience: he said investors who presented as international backers later proved to be PRC‑linked, replaced local operators with personnel from China and pursued aggressive litigation that included a $110 million countersuit he described as "lawfare." Murphy said a presidential CFIUS divestment order and federal court prejudgment remedies ultimately enabled a settlement and recovery of funds.

Experts described the problem as multi‑faceted. Mr. Pacholski, a systems‑planning and defense supply‑chain expert, framed the issue as both economic and national‑security related and outlined a TRUST (trusted resilient U.S. tracks) approach emphasizing vetted supplier lists, streamlined due diligence grants and coordination with SBA offices. Tom Lyons of the 2430 Group described PRC activity as ‘‘gray‑zone economic subversion’’ that combines cyber intrusions, insider threats and state‑backed programs to displace U.S. firms. "If this is war," Lyons said, "the government must subsidize counterintelligence the same way we fund national defense."

Dr. Raj Doshi summarized China’s industrial strategy and scale, saying Beijing spends roughly $400 billion a year on industrial policy and has packaged benefits for small firms through programs such as Made in China 2025 and the Little Giants designation. He argued the U.S. should restore and reauthorize programs that support early‑stage R&D and technical assistance — specifically SBIR/STTR and the Manufacturing Extension Partnership — and consider packaging SBA tools to give small firms coordinated access to capital and technical services.

Members repeatedly pressed witnesses for concrete steps. Recommendations included expanding SBA funding for hybrid and larger equity options for critical technologies, creating vetted lists of trusted investors and suppliers, strengthening beneficial‑ownership transparency (for example via the Corporate Transparency Act and related enforcement), increasing funding for agency inspector generals and expanding threat briefs and subsidized cybersecurity offerings through SBA and CISA. Witnesses also urged clearer, faster federal pathways for entrepreneurs facing predatory litigation and cross‑border disputes.

The panel identified practical obstacles: many small firms lack time and resources to conduct thorough due diligence; state privacy laws in some states can limit background checks; and CFIUS is largely reactive, meaning preventive, point‑of‑decision support for entrepreneurs is needed. Multiple witnesses asked the committee to ensure federal programs are coordinated so small firms can access non‑dilutive capital, technical assistance and rapid legal or enforcement advocacy when foreign actors exploit marketplace or legal mechanisms.

The hearing concluded with Chairman Williams thanking the witnesses and adjourning the committee. Members have five legislative days to submit additional materials and written questions for the record.