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SBA Assistance to Small Business Startups:
Client Experiences and Program Impact

Robert Jay Dilger
Senior Specialist in American National Government
March 3, 2015
Congressional Research Service
7-5700
www.crs.gov
R43083

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SBA Assistance to Small Business Startups: Client Experiences and Program Impact

Summary
The Small Business Administration (SBA) administers several programs to support small
businesses, including loan guaranty and venture capital programs to enhance small business
access to capital; contracting programs to increase small business opportunities in federal
contracting; direct loan programs for businesses, homeowners, and renters to assist their recovery
from natural disasters; and small business management and technical assistance training programs
to assist business formation and expansion.
Congressional interest in these programs, and the SBA’s assistance provided to small business
startups in particular (defined as new businesses that meet the SBA’s criteria as small), has
increased in recent years, primarily because these programs are viewed by many as a means to
stimulate economic activity, create jobs, and assist in the national economic recovery.
Economists generally do not view job creation as a justification for providing federal assistance to
small businesses. They argue that in the long term such assistance will likely reallocate jobs
within the economy, not increase them. In their view, jobs arise primarily from the size of the
labor force, which depends largely on population, demographics, and factors that affect the choice
of home versus market production (e.g., the entry of women in the workforce). However,
economic theory does suggest that increased federal spending on small business assistance
programs may result in additional jobs in the short term.
Congressional interest in assistance to business startups is derived primarily from economic
research suggesting that startups play a very important role in job creation. That research suggests
that business startups create many new jobs, but have a more limited effect on net job creation
over time because fewer than half of all startups remain in business after five years. However,
that research also suggests that the influence of small business startups on net job creation varies
by firm size. Startups with fewer than 20 employees tend to have a negligible effect on net job
creation over time whereas startups with 20-499 employees tend to have a positive employment
effect, as do surviving younger businesses of all sizes (in operation for one year to five years).
This report examines small business startups’ experiences with the SBA’s management and
technical assistance training programs, focusing on Small Business Development Centers
(SBDCs), Women Business Centers (WBCs), and SCORE (Service Corps of Retired Executives);
the 7(a), 504/CDC, and Microloan lending programs; and the Small Business Investment
Company (SBIC) venture capital program. Although data collected by the SBA concerning these
programs’ impact on economic activity and job creation are somewhat limited and subject to
methodological challenges concerning their validity as reliable performance measures, most small
business owners who have participated in these programs report in surveys sponsored by the SBA
that the programs were useful. Given the data limitations, however, it is difficult to determine the
cost effectiveness of these programs.
Two recent SBA initiatives designed to assist small business startups are also discussed: the
SBA’s growth accelerators initiative, which targets entrepreneurs looking to “start and scale their
business” helping them access “seed capital, mentors, and networking opportunities for customers
and partners,” and the SBA’s $1 billion early stage debenture SBIC initiative.

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Contents
The SBA’s Missions ......................................................................................................................... 1
Small Business Startups and Job Creation ....................................................................................... 2
Report Overview .............................................................................................................................. 3
SBA Management and Technical Assistance Training Programs .................................................... 4
SBDCs, WBCs, and SCORE ..................................................................................................... 5
Program Performance ................................................................................................................ 6
Extent of SBA Management and Technical Training Assistance, By
Developmental Stage ....................................................................................................... 7
Impact of the SBA’s Management and Technical Training Assistance, by
Developmental Stage ....................................................................................................... 7
The SBA’s Growth Accelerators Initiative .............................................................................. 10
SBA Lending Programs ................................................................................................................. 11
The SBA’s 7(a), 504/CDC, and Microloan Programs .............................................................. 12
7(a) Loan Guaranty Program ............................................................................................. 12
504 Certified Development Company Loan Guaranty Program ....................................... 12
The Microloan Program .................................................................................................... 14
Program Performance .............................................................................................................. 14
Extent of SBA Lending Assistance, By Developmental Stage .......................................... 15
Impact of the SBA’s Lending Assistance on Job Creation and Retention, by
Developmental Stage ..................................................................................................... 15
SBA Venture Capital Programs ...................................................................................................... 17
The SBIC Program .................................................................................................................. 18
Early Stage Debenture SBICs ........................................................................................... 19
Program Performance .............................................................................................................. 20
Extent of SBIC Financial Assistance, by Developmental Stage ....................................... 20
Concluding Observations ............................................................................................................... 21

Tables
Table 1. SBA Management and Technical Assistance Training Programs’ Clients,
Percentage by Client Business Development Stage, 2011 ............................................................ 7
Table 2. Usefulness of SBA Management and Technical Assistance Training Programs,
Percentage by Client Business Development Stage, 2011 ............................................................ 8
Table 3. Percentage of Businesses That Changed Their Management Practices/Strategies
As a Result of the SBA Management and Technical Assistance Training Received, by
Client Business Development Stage, 2011 ................................................................................... 8
Table 4. Percentage of Businesses That Retained Current Staff As a Result of the SBA
Management and Training Technical Assistance Received, by Client Business
Development Stage, 2011 ............................................................................................................. 9
Table 5. Percentage of Businesses That Hired New Staff As a Result of the SBA
Management and Training Technical Assistance Received, by Client Business
Development Stage, 2011 ............................................................................................................. 9
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Table 6. Percentage of Businesses That Experienced an Increase in Their Profit Margin
As a Result of the SBA Management and Training Technical Assistance Received, by
Client Business Development Stage, 2011 ................................................................................. 10
Table 7. 7(a), 504/CDC and Microloan Loan Disbursements, by Development Stage,
FY2012-FY2014 ......................................................................................................................... 15
Table 8. 7(a), 504/CDC, and Microloan Programs, Reported Number of Jobs Supported
by Development Stage, FY2012-FY2014 .................................................................................. 17
Table 9. SBIC Program, Number and Amount of Financings by Development Stage,
FY2012-FY2014 ......................................................................................................................... 21

Contacts
Author Contact Information........................................................................................................... 22

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The SBA’s Missions
The Small Business Administration (SBA) administers several programs to support small
businesses, including the 7(a) and 504/CDC loan guaranty programs and Microloan lending
program to enhance small business access to capital; the Small Business Investment Company
(SBIC) program to enhance small business access to venture capital; contracting programs to
increase small business opportunities in federal contracting; direct loan programs for businesses,
homeowners, and renters to assist their recovery from natural disasters; and small business
management and technical assistance training programs to assist business formation and
expansion.1 Congressional interest in these programs, and the SBA’s assistance to small business
startups in particular (defined as new businesses that meet the SBA’s criteria as small), has
increased in recent years, primarily because these programs are viewed by many as a means to
stimulate economic activity, create jobs, and assist in the national economic recovery.
The Small Business Act specifies four missions for the SBA:
It is the declared policy of the Congress that the Government should aid, counsel, assist, and
protect, insofar as is possible, the interests of small-business concerns in order to preserve
free competitive enterprise, to insure that a fair proportion of the total purchases and
contracts or subcontracts for property and services for the Government (including but not
limited to contracts or subcontracts for maintenance, repair, and construction) be placed with
small-business enterprises, to insure that a fair proportion of the total sales of Government
property be made to such enterprises, and to maintain and strengthen the overall economy of
the Nation.2
As part of its mission to maintain and strengthen the overall economy of the nation, the SBA has
always been interested in promoting job creation and job retention.3 For example, the SBA
currently gathers data from its clients concerning the number of jobs either created or retained as
a result of the assistance they receive from the SBA. The SBA refers to these self-reported data as
the number of “jobs supported.” The SBA also regularly sponsors research on the role of small
businesses in job creation and retention, and considers that research when designing its programs.
Economists generally do not view job creation as a justification for providing federal assistance to
small businesses. They argue that in the long term such assistance will likely reallocate jobs

1 U.S. Small Business Administration (SBA), “Fiscal Year 2016 Congressional Budget Justification and FY2014
Annual Performance Report,” pp. 3, 4, at https://www.sba.gov/sites/default/files/1-
FY%202016%20CBJ%20FY%202014%20APR.PDF. For further analysis of the SBA’s loan guaranty programs, see
CRS Report R41146, Small Business Administration 7(a) Loan Guaranty Program, by Robert Jay Dilger; and CRS
Report R41184, Small Business Administration 504/CDC Loan Guaranty Program, by Robert Jay Dilger. For further
analysis of the SBA’s Small Business Investment Company program, see CRS Report R41456, SBA Small Business
Investment Company Program
, by Robert Jay Dilger. For further analysis of the New Markets Venture Capital
program, see CRS Report R42565, SBA New Markets Venture Capital Program, by Robert Jay Dilger. For further
analysis of the SBA’s disaster loan programs, see CRS Report R41309, The SBA Disaster Loan Program: Overview
and Possible Issues for Congress
, by Bruce R. Lindsay. For further analysis of the SBA’s contracting programs, see
CRS Report R40744, The “8(a) Program” for Small Businesses Owned and Controlled by the Socially and
Economically Disadvantaged: Legal Requirements and Issues
, by Kate M. Manuel, and CRS Report R41268, Small
Business Administration HUBZone Program
, by Robert Jay Dilger.
2 15 U.S.C. §631; P.L. 83-163, the Small Business Act of 1953 (as amended).
3 U.S. Senate, Select Committee on Small Business, Citation of Statement by Wendell B. Barnes, SBA Administrator,
Annual Report, 83rd Cong., 2nd sess., March 25, 1954, H.Rept. 83-1092 (Washington: GPO, 1954), p. 60.
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within the economy, not increase them. In their view, jobs arise primarily from the size of the
labor force, which depends largely on population, demographics, and factors that affect the choice
of home versus market production (e.g., the entry of women in the workforce). However,
economic research does suggest that increased federal spending on small business assistance
programs may result in additional jobs in the short term.4
Small Business Startups and Job Creation
The SBA’s interest, and congressional interest, in providing assistance to small business startups
is derived primarily from economic research indicating that startups play an important role in job
creation.5 That research suggests that startups create many, and in some years almost all, net jobs
in the national economy. For example, from March 2010 to March 2011 (the latest data
available), 534,907 new employer firms were formed (startups) in the United States, about 9.3%
of all employer firms (5,684,424).6 Startups created 2,619,013 jobs during that time frame while
non-startups lost 1,194,153 jobs (non-startups created 12,367,780 new jobs and lost 13,561,933
jobs through either firm contractions or deaths).7
Although there is a consensus that startups have an important role in job creation and retention,
economic research suggests that startups have a more limited effect on net job creation over time
because fewer than half of all startups are still in business after five years. That research also
suggests that the influence of startups on net job creation varies by firm size. Startups with fewer
than 20 employees tend to have a negligible effect on net job creation over time whereas startups
with 20-499 employees tend to have a positive employment effect, as do surviving younger
businesses of all sizes (in operation for one year to five years).8

4 For further information concerning economic research and small business assistance, see CRS Report R41392, Small
Business and the Expiration of the 2001 Tax Rate Reductions: Economic Issues
, by Jane G. Gravelle and Sean Lowry;
CRS Report RL32254, Small Business Tax Benefits: Current Law and Main Arguments For and Against Them, by
Gary Guenther; and CRS Report R41523, Small Business Administration and Job Creation, by Robert Jay Dilger. For
an economic argument to repeal the SBA, see Veronique de Rugy, Why the Small Business Administration’s Loan
Programs Should Be Abolished
, American Enterprise Institute for Public Policy Research, AEI Working Paper #126,
April 13, 2006, at http://www.aei.org/files/2006/04/13/20060414_wp126.pdf.
5 Charles Brown, James Hamilton, and James Medoff, Employers Large and Small (Cambridge: Harvard University
Press, 1990); Zoltan Acs, William Parsons, and Spencer Tracy, “High-Impact Firms: Gazelles Revisited,” SBA, Office
of Advocacy, June 2008, at http://www.massmac.org/newsline/0902/high_impact_firms.pdf; Dane Stangler and Robert
E. Litan, “Where Will The Jobs Come From?” Kaufman Foundation Research Series: Firm Formation and Economic
Growth, November 2009, at http://www.kauffman.org/uploadedfiles/where_will_the_jobs_come_from.pdf; and Dane
Stangler and Paul Kedrosky, “Neutralism and Entrepreneurship: The Structural Dynamics of Startups, Young Firms,
and Job Creation,” Kaufman Foundation Research Series: Firm Formation and Economic Growth, September 2010, at
http://www.kauffman.org/uploadedfiles/firm-formation-neutralism.pdf.
6 SBA, “Statistics of U.S. Businesses, U.S. Dynamic Data, U.S. Data: Employer Firm Births and Deaths by
Employment Size of Firm, 1989-2011,” at https://www.sba.gov/advocacy/firm-size-data; and U.S. Bureau of the
Census, “Statistics of U.S. Businesses: Latest SUSB Annual Data, 2011, U.S. & States Totals,” June 2014, at
http://www.census.gov/econ/susb/.
7 SBA, “Statistics of U.S. Businesses, U.S. Dynamic Data, U.S. Data: Employer Firm Births and Deaths by
Employment Size of Firm, 1989-2011,” at https://www.sba.gov/advocacy/firm-size-data.
8 Zoltan Acs, William Parsons, and Spencer Tracy, “High-Impact Firms: Gazelles Revisited,” SBA, Office of
Advocacy, June 2008, at http://www.massmac.org/newsline/0902/high_impact_firms.pdf; Dane Stangler and Robert E.
Litan, “Where Will The Jobs Come From?” Kaufman Foundation Research Series: Firm Formation and Economic
Growth, November 2009, at http://www.kauffman.org/uploadedFiles/where_will_the_jobs_come_from.pdf; John
Haltiwanger, Ron S. Jarmin, and Javier Miranda, “Who Creates Jobs? Small vs. Large vs. Young,” Cambridge, MA:
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Given the relatively high rate of firm deaths among startups, providing SBA assistance to
startups, especially in the form of a SBA guaranteed loan or venture capital investment, is
generally viewed as a relatively “high risk-high reward” endeavor, with advocates focusing on the
possibility of job creation and opponents focusing on the risk of default. For example, opponents
point to the SBA’s experiences with its SBIC Participating Securities program as an example of
the risk in providing venture capital to startups. The SBIC Participating Securities program was
established in 1994, with congressional authorization, to encourage the formation of participating
securities SBICs that would make equity investments in startup and early stage small businesses.9
The SBA created the program to fill a perceived investment gap created by the SBIC debenture
program’s focus on investments in mid- and later-stage small businesses.10 The SBA stopped
issuing new commitments for participation securities on October 1, 2004, following relatively
major losses (exceeding $2.7 billion in losses on investments of just over $6.0 billion) in the
program following the burst of the “technology stock market bubble” from 2000 to 2002.11 The
SBA’s action began a process to end the program, which continues today.
Report Overview
This report examines startups’ experiences with the SBA’s management and technical assistance
training programs, focusing on Small Business Development Centers (SBDCs), Women Business
Centers (WBCs), and SCORE (Service Corps of Retired Executives); the 7(a), 504/CDC, and
Microloan lending programs; and the SBIC venture capital program. Two recent SBA initiatives
designed to assist startups are also discussed: the SBA’s growth accelerators initiative and the
SBA’s $1 billion early stage debenture SBIC initiative.
With some notable exceptions, such as the Microloan lending program, the SBA’s $1 billion early
stage debenture SBIC initiative, and SBA’s growth accelerators initiative, these programs are
designed to assist small businesses at all developmental stages, as opposed to targeting startups
for special attention. Nonetheless, all of these programs provide assistance to startups, and report
both outcome data (e.g., the number of small businesses receiving training and the number and
amount of loans and venture capital provided) and performance data (e.g., the usefulness of the
training and the number of jobs supported by the loan) based on the age of the business. As a
result, the experiences of startups can be compared with the experiences of older firms both

(...continued)
National Bureau of Economic Research, Working Paper 16300, August 2010, at http://www.nber.org/papers/w16300;
and Ian Hathaway, “Small Business and Job Creation: The Unconventional Wisdom,” Bloomberg Government,
October 31, 2011.
9 P.L. 102-366, the Small Business Credit and Business Opportunity Enhancement Act of 1992 (Title IV, the Small
Business Equity Enhancement Act of 1992). For further information and analysis of the SBIC program, see CRS
Report R41456, SBA Small Business Investment Company Program, by Robert Jay Dilger.
10 Debenture SBICs are required to pay interest and SBA annual charges semi-annually on their debentures through
maturity. As a result, although debenture SBICs make a broad range of equity investments, they generally invest in
later-stage and mezzanine companies which demonstrate an ability to make early and regular payments on the
investment. Participating securities SBICs were not required to make these semi-annual payments to encourage
investments in firms, such as startups, which had not yet established an ability to make early and regular payments on
the investment.
11 U.S. Congress, House Committee on Small Business, Proposed Legislative Remedy for the Participating Securities
Program
, 109th Cong., 1st sess., July 27, 2005, Serial No. 109-27 (Washington: GPO, 2005), p. 3; and SBA, Office of
Inspector General, “The SBIC Program: At Significant Risk For Losses,” May 24, 2004, at https://www.sba.gov/sites/
default/files/oig/oig_4-21.pdf.
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within and across the SBA’s programs. For example, as will be shown, the SBA programs that
specifically target startups for special attention provide a relatively larger share of its assistance to
startups than other SBA programs.
Although the data collected by the SBA concerning these programs’ impact on economic activity
and job creation are somewhat limited and subject to methodological challenges concerning their
validity as reliable performance measures, most small business owners who have participated in
these programs report in surveys sponsored by the SBA that the programs were useful. Given the
data limitations, however, it is difficult to determine the cost effectiveness of these programs.
SBA Management and Technical Assistance
Training Programs

The SBA has provided management and technical assistance training “to small-business concerns,
by advising and counseling on matters in connection with government procurement and on
policies, principles and practices of good management” since it began operations in 1953.12
Initially, the SBA provided its own management and technical assistance training programs. Over
time, the SBA has relied increasingly on third parties to provide that training. The SBA reports
that more than 1 million aspiring entrepreneurs and small business owners receive training from
an SBA-supported resource partner each year.13
The SBA has argued that its support of management and technical assistance training for small
businesses has contributed “to the long-term success of these businesses and their ability to grow
and create jobs.”14 It currently provides financial support to about “14,000 resource partners,”
including 63 lead SBDCs and more than 900 SBDC local outreach locations, 106 WBCs, and 320
chapters of the mentoring program, SCORE.15
The SBDC, WBC, and SCORE programs are the SBA’s three largest management and technical
assistance training programs.16 These programs provide training assistance to small businesses as
all stages of development, and do not target their assistance exclusively at startups.
All three of these programs provide assistance to small businesses, as defined by the SBA’s size
standards and regulations.17 However, there are some differences in the small businesses that tend

12 U.S. Congress, Senate Committee on Banking and Currency, Extension of the Small Business Act of 1953, report to
accompany S. 2127, 84th Cong., 1st sess., July 22, 1955, S.Rept. 84-1350 (Washington: GPO, 1955), p. 17.
13 SBA, “FY2016 Congressional Budget Justification and FY2014 Annual Performance Report,” pp. 4, 7, 13, 129, at
https://www.sba.gov/sites/default/files/1-FY%202016%20CBJ%20FY%202014%20APR.PDF.
14 SBA, “Fiscal Year 2011 Congressional Budget Justification and FY2009 Annual Performance Report,” p. 4, at
https://www.sba.gov/sites/default/files/aboutsbaarticle/Congressional_Budget_Justification.pdf.
15 SBA, “FY2016 Congressional Budget Justification and FY2014 Annual Performance Report,” p. 55, at
https://www.sba.gov/sites/default/files/1-FY%202016%20CBJ%20FY%202014%20APR.PDF; SBA, “Women’s
Business Centers Directory,” at https://www.sba.gov/tools/local-assistance/wbc; and SCORE, “About SCORE,” at
https://www.score.org/about-score.
16 For further information and analysis concerning the SBA’s management and technical assistance training programs,
see CRS Report R41352, Small Business Management and Technical Assistance Training Programs, by Robert Jay
Dilger.
17 For further information and analysis concerning the SBA’s size standards, see CRS Report R40860, Small Business
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to seek their services. For example, SBDC clients tend to be somewhat larger, both in terms of
annual revenue and employment, than SCORE and WBC clients.18 Also, as expected given their
mission, WBCs’ clients are more likely to be female than SBDC and SCORE clients.19
SBDCs, WBCs, and SCORE
SBDCs are “hosted by leading universities, colleges, and state economic development agencies”
to deliver management and technical assistance training “to small businesses and nascent
entrepreneurs (pre-venture) in order to promote growth, expansion, innovation, increased
productivity and management improvement.”20 These services are delivered, in most instances, on
a non-fee, one-on-one confidential counseling basis and are administered by 63 lead service
centers, with at least one located in each state (four in Texas and six in California), the District of
Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, and American Samoa.21 These lead
centers manage more than 900 service centers located throughout the United States and the
territories.22 In FY2014, SBDCs provided technical assistance training services to 291,336 clients
and counseling services to 194,121 clients.23 In addition, 13,415 new businesses were formed
with assistance from SBDC counselors in FY2014.24
WBCs are private, nonprofit organizations that provide financial, management, and marketing
assistance to small businesses, including startup businesses, owned and controlled by women.
Since its inception, the program has targeted the needs of socially and economically
disadvantaged women.25 In FY2014, WBCs provided technical assistance training services to
119,351 clients and counseling services to 20,686 clients.26 They also assisted in the formation of
708 new businesses in FY2013.27

(...continued)
Size Standards: A Historical Analysis of Contemporary Issues, by Robert Jay Dilger.
18 In 2012, SBDC clients had average revenue of $762,962 and, on average, 10.05 employees; SCORE clients had
average revenue of $465,828 and, on average, 5.56 employees; and WBC clients had average revenue of $192,734 and,
on average, 4.67 employees. See SBA, Office of Entrepreneurial Development, “Impact Study of Entrepreneurial
Dynamics: Office of Entrepreneurial Development Resource Partners’ Face-to-Face Counseling,” September 2013, p.
26, at https://www.sba.gov/sites/default/files/files/OED_ImpactReport_09302013_Final.pdf.
19 In 2012, 82% of the businesses served by WBCs were owned by a female compared to 47% of the businesses served
by SBDCs and 47% of the businesses served by SCORE. See SBA, Office of Entrepreneurial Development, “Impact
Study of Entrepreneurial Dynamics: Office of Entrepreneurial Development Resource Partners’ Face-to-Face
Counseling,” September 2013, p. 17, at https://www.sba.gov/sites/default/files/files/
OED_ImpactReport_09302013_Final.pdf.
20 SBA, “Small Business Development Center Fy/Cy 2011 Program Announcement for Renewal of the Cooperative
Agreement for Current Recipient Organizations,” p. 3, at https://www.sba.gov/sites/default/files/files/
2011%20Program%20Announcement.pdf.
21 Ibid.
22 Association of Small Business Development Centers, “About Us,” Burke, Virginia, at http://americassbdc.org/about-
us/; and SBA, “FY2016 Congressional Budget Justification and FY2014 Annual Performance Report,” pp. 7, 55-58, at
https://www.sba.gov/sites/default/files/1-FY%202016%20CBJ%20FY%202014%20APR.PDF.
23 SBA, “FY2016 Congressional Budget Justification and FY2014 Annual Performance Report,” p. 58, at
https://www.sba.gov/sites/default/files/1-FY%202016%20CBJ%20FY%202014%20APR.PDF.
24 Ibid.
25 U.S. Congress, House Committee on Small Business, Review of Women’s Business Center Program, 106th Cong.,
February 11, 1999, Serial No. 106-2 (Washington: GPO, 1999), p. 4.
26 SBA, “FY2016 Congressional Budget Justification and FY2014 Annual Performance Report,” p. 60, at
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SCORE is a national volunteer organization which provides management and technical assistance
training to small business owners and prospective owners.28 In FY2014, SCORE’s volunteer
network of business professionals provided technical assistance training services to 277,971
clients and counseling services to 164,403 clients.29 They also assisted in the formation of 5,339
new businesses in FY2014.30
Program Performance
In addition to compiling program output data, such as the number of clients served, since 2003
the SBA’s Office of Entrepreneurial Development has commissioned an annual “multi-year time
series study to assess the impact of the programs it offers to small businesses.”31 The survey asks
questions about several aspects of the client’s experiences with these programs, including the
impact of the programs on their staffing decisions and management practices. The survey is sent
each year to a stratified random sample of clients participating in the SBDC, WBC, and SCORE
programs. The survey responses are published by the SBA and include the responses of nascent
clients (individuals who have taken one or more steps to start a business), startup clients
(individuals who have been in business one year or less), and in-business clients (individuals who
have been in business more than one year and their business was classified as small by the SBA).
The 2012 survey was released in February 2013. There were 8,263 SBDC client respondents
(19% response rate), 7,217 SCORE client respondents (16% response rate), and 340 WBC client
respondents (15% response rate).
The survey data reported in Table 1 through Table 6 indicate that (1) these programs assisted
small businesses at all stages of development, (2) most of the respondents reported that the
assistance they received was useful, and (3) most of the respondents reported that the assistance
they received resulted in them changing their management practices or strategies. However,
relatively few of the respondents reported that the assistance they received resulted in them hiring
new staff, retaining staff, or increasing their profit margin.
A statistical analysis of the survey data conducted by the survey’s authors suggested that clients
receiving three or more hours of counseling, female clients, startups, and clients owning relatively
large small businesses were more likely, at a statistically significant level, than clients receiving
less than three hours of counseling, male clients, non-startups, and clients owning relatively

(...continued)
https://www.sba.gov/sites/default/files/1-FY%202016%20CBJ%20FY%202014%20APR.PDF.
27 Ibid.
28 U.S. Congress, Senate Select Committee on Small Business and House Select Committee on Small Business, 1966
Federal Handbook for Small Business: A Survey of Small Business Programs in the Federal Government Agencies
,
committee print, 89th Cong., 3rd sess., January 31, 1966 (Washington: GPO, 1966), p. 5; and U.S. Congress, House
Committee on Small Business, Subcommittee on Rural Development, Entrepreneurship, and Trade, Subcommittee
Hearing on Legislative Initiatives to Modernize SBA’s Entrepreneurial Development Programs
, 111th Cong., 1st sess.,
April 2, 2009 (Washington: GPO, 2009), p. 6.
29 SBA, “FY2016 Congressional Budget Justification and FY2014 Annual Performance Report,” p. 61, at
https://www.sba.gov/sites/default/files/1-FY%202016%20CBJ%20FY%202014%20APR.PDF.
30 Ibid.
31 SBA, Office of Entrepreneurial Development, “Impact Study of Entrepreneurial Development Resources,”
September 10, 2009, p. 2, at https://www.sba.gov/sites/default/files/2009%20ED%20Impact%20Report.pdf.
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smaller businesses to report positive results concerning the financial impact of the assistance they
received.32
Extent of SBA Management and Technical Training Assistance, By
Developmental Stage

As shown in Table 1, the survey indicated that SBDCs, WBCs, and SCORE served businesses at
all three stages of development, with 44% of SBDC clients being either a nascent (25%) or
startup (19%) client; 55% of SCORE clients being either a nascent (33%) or startup (22%) client;
and 47% of WBC clients being either a nascent (32%) or startup (15%) client.
Table 1. SBA Management and Technical Assistance Training Programs’ Clients,
Percentage by Client Business Development Stage, 2011
SBA Resource Partner
Nascent
Startup
In-Business
Total
Small Business Development
25% 19% 56%
100%
Centers
SCORE
33%
22%
45%
100%
Women Business Centers
32%
15%
53%
100%
Source: U.S. Small Business Administration (SBA), Office of Entrepreneurial Development, “Impact Study of
Entrepreneurial Dynamics: Office of Entrepreneurial Development Resource Partners’ Face-to-Face Counseling,”
September 2012, pp. 5, 9, at https://www.sba.gov/sites/default/files/files/SBA_Converted_2012_d.pdf.
Notes: The survey’s authors defined nascent clients as individuals who have taken one or more steps to start a
business; startup clients as individuals who have been in business one year or less; and in-business clients as
individuals who have been in business more than one year and their business was classified as small by the SBA.
Impact of the SBA’s Management and Technical Training Assistance, by
Developmental Stage

The survey asked SBA management and training assistance participants if they thought that the
information they received from counselors was extremely useful, useful, no opinion, somewhat
useful, or not useful. As shown in Table 2, most of the SBDC, WBC, and SCORE clients that
responded to the survey, including both nascent and startup clients, rated the usefulness of the
information provided during their face-to-face management and technical assistance training as
either extremely useful or useful.

32 SBA, Office of Entrepreneurial Development, “Impact Study of Entrepreneurial Dynamics: Office of Entrepreneurial
Development Resource Partners’ Face-to-Face Counseling,” September 2012, p. 70, at https://www.sba.gov/sites/
default/files/files/SBA_Converted_2012_d.pdf.
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Table 2. Usefulness of SBA Management and Technical Assistance Training Programs,
Percentage by Client Business Development Stage, 2011
(percentage responding extremely useful or useful)
SBA Resource Partner
Nascent
Startup
In-Business
Overall
Small Business Development
81% 81% 76%
79%
Centers
SCORE
76%
72%
71%
73%
Women Business Centers
75%
84%
78%
79%
Source: SBA, Office of Entrepreneurial Development, “Impact Study of Entrepreneurial Dynamics: Office of
Entrepreneurial Development Resource Partners’ Face-to-Face Counseling,” September 2012, pp. 38, 50, 62, at
https://www.sba.gov/sites/default/files/files/SBA_Converted_2012_d.pdf.
Notes: The survey’s authors defined nascent clients as individuals who have taken one or more steps to start a
business; startup clients as individuals who have been in business one year or less; and in-business clients as
individuals who have been in business more than one year and their business was classified as small by the SBA.
The survey also asked SBA management and training assistance participants if they had changed
their management practices or strategies as a result of the SBA management and technical
assistance training they received. As shown in Table 3, more than half of SBDC and SCORE
startup clients that responded to the survey reported that they had changed their management
practices or strategies as a result of the SBA management and technical assistance training they
received, slightly less than the percentages reported by in-business clients. In comparison, three-
quarters of WBC startup clients that responded to the survey reported that they changed their
management practices or strategies as a result of the assistance they received, somewhat higher
than the percentage reported by in-business clients.
Table 3. Percentage of Businesses That Changed Their Management
Practices/Strategies As a Result of the SBA Management and Technical Assistance
Training Received, by Client Business Development Stage, 2011
(percentage responding yes)
SBA Resource Partner
Startup
In-Business
Smal Business Development Centers
56%
60%
SCORE
57%
61%
Women Business Centers
75%
59%
Source: SBA, Office of Entrepreneurial Development, “Impact Study of Entrepreneurial Dynamics: Office of
Entrepreneurial Development Resource Partners’ Face-to-Face Counseling,” September 2012, pp. 40, 52, 64, at
https://www.sba.gov/sites/default/files/files/SBA_Converted_2012_d.pdf.
Notes: The survey’s authors defined startup clients as individuals who have been in business one year or less;
and in-business clients as individuals who have been in business more than one year and their business was
classified as small by the SBA.
As shown in Table 4, 14% of SBDC startup clients, 11% of SCORE startup clients, and 12% of
WBC startup clients of survey respondents reported that they agreed or strongly agreed with the
statement that the management and technical assistance training they received enabled them to
retain current staff, somewhat less than the percentages reported by in-business clients.
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Table 4. Percentage of Businesses That Retained Current Staff As a Result of the
SBA Management and Training Technical Assistance Received, by Client Business
Development Stage, 2011
(percentage responding agree or strongly agree)
SBA Resource Partner
Startup
In-Business
Smal Business Development Centers
14%
26%
SCORE
11%
19%
Women Business Centers
12%
22%
Source: SBA, Office of Entrepreneurial Development, “Impact Study of Entrepreneurial Dynamics: Office of
Entrepreneurial Development Resource Partners’ Face-to-Face Counseling,” September 2012, pp. 42, 54, 66, at
https://www.sba.gov/sites/default/files/files/SBA_Converted_2012_d.pdf.
Notes: The survey’s authors defined startup clients as individuals who have been in business one year or less;
and in-business clients as individuals who have been in business more than one year and their business was
classified as small by the SBA.
As shown in Table 5, 13% of SBDC startup clients, 10% of SCORE startup clients, and 10% of
WBC startup clients that responded to the survey reported that they either agreed or strongly
agreed with the statement that the SBA management and technical assistance training they
received enabled them to hire new staff, somewhat less than the percentages reported by in-
business clients.
Table 5. Percentage of Businesses That Hired New Staff As a Result of the SBA
Management and Training Technical Assistance Received, by Client Business
Development Stage, 2011
(percentage responding agree or strongly agree)
SBA Resource Partner
Startup
In-Business
Smal Business Development Centers
13%
20%
SCORE
10%
16%
Women Business Centers
10%
15%
Source: SBA, Office of Entrepreneurial Development, “Impact Study of Entrepreneurial Dynamics: Office of
Entrepreneurial Development Resource Partners’ Face-to-Face Counseling,” September 2012, pp. 42, 54, 66, at
https://www.sba.gov/sites/default/files/files/SBA_Converted_2012_d.pdf.
Notes: The survey’s authors defined startup clients as individuals who have been in business one year or less;
and in-business clients as individuals who have been in business more than one year and their business was
classified as small by the SBA.
As shown in Table 6, 30% of SBDC startup clients, 24% of SCORE startup clients, and 31% of
WBC startup clients that responded to the survey reported that they either agreed or strongly
agreed with the statement that the SBA management and technical assistance training they
received had a positive impact on their profit margin, somewhat less than the percentages
reported by in-business clients.
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Table 6. Percentage of Businesses That Experienced an Increase in Their Profit
Margin As a Result of the SBA Management and Training Technical Assistance
Received, by Client Business Development Stage, 2011
(percentage responding agree or strongly agree)
SBA Resource Partner
Startup
In-Business
Smal Business Development Centers
30%
32%
SCORE
24%
28%
Women Business Centers
31%
34%
Source: SBA, Office of Entrepreneurial Development, “Impact Study of Entrepreneurial Dynamics: Office of
Entrepreneurial Development Resource Partners’ Face-to-Face Counseling,” September 2012, pp. 42, 54, 66, at
https://www.sba.gov/sites/default/files/files/SBA_Converted_2012_d.pdf.
Notes: The survey’s authors defined startup clients as individuals who have been in business one year or less;
and in-business clients as individuals who have been in business more than one year and their business was
classified as small by the SBA.
The SBA’s Growth Accelerators Initiative
Growth accelerators are organizations that help entrepreneurs start and scale their business.
Accelerators are typically run by experienced entrepreneurs and help small businesses, especially
startups, “access seed capital, mentors, and networking opportunities” and provide “targeted
advice on revenue growth, job growth, and sourcing outside funding.”33 In 2012, the SBA hosted
four regional events (Northeast, Midwest, South, and Mid-Atlantic), which were attended by
representatives “from over 100 universities and accelerators to discuss working with high-growth
entrepreneurs.”34 These meetings “culminated in a White House event co-hosted by the SBA and
the Department of Commerce which will help formalize the network of universities and
accelerators, provide a series of ‘train the trainer’ events on various government programs that
benefit high-growth entrepreneurs, and provide a playbook of best practices on engaging
universities on innovation and entrepreneurship.”35
The Obama Administration requested $5 million, and Congress recommended an appropriation of
$2.5 million, for the SBA’s growth accelerator initiative for FY2014. The Administration
proposed to use the funding to provide matching grants to universities and private-sector
accelerators “to start a new accelerator program (based on successful models) or scale an existing
program.”36 The Administration also indicated that it planned to request funding for five years
($25 million in total funding) and feature a required 4:1 private-sector match.37 However, because
it received half of its budget request ($2.5 million), the SBA decided to reconsider the program’s

33 SBA, “FY2016 Congressional Budget Justification and FY2014 Annual Performance Report,” p. 81, at
https://www.sba.gov/sites/default/files/1-FY%202016%20CBJ%20FY%202014%20APR.PDF.
34 SBA, “FY2014 Congressional Budget Justification and FY2012 Annual Performance Report,” p. 59, at
http://www.sba.gov/sites/default/files/files/1-FY%202014%20CBJ%20FY%202012%20APR.PDF.
35 Ibid., pp. 59-60.
36 Ibid., p. 60.
37 Ibid.
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requirements. As part of that reconsideration, the SBA decided to drop the 4:1 private-sector
match in an effort to enable the program to have a larger effect.38
On May 12, 2014, the SBA announced the availability of 50 growth accelerator grants of $50,000
each. It received more than 800 applications by the August 2, 2014 deadline. The 50 awards were
announced in September 2014.39
Congress recommended that the program receive $4.0 million for FY2015.40 Congress also
directed the SBA in its explanatory statement accompanying P.L. 113-235, the Consolidated and
Further Continuing Appropriations Act, 2015, to “require $4 of matching funds for every $1
awarded under the growth accelerators program.”41
SBA Lending Programs
The SBA’s business lending programs are designed to encourage lenders to provide loans to small
businesses “that might not otherwise obtain financing on reasonable terms and conditions.”42
Historically, the SBA’s lending programs have been justified on the grounds that small businesses
can be at a disadvantage, compared with other businesses, when trying to obtain access to
sufficient capital and credit.43 As an economist explained,
Growing firms need resources, but many small firms may have a hard time obtaining loans
because they are young and have little credit history. Lenders may also be reluctant to lend to
small firms with innovative products because it might be difficult to collect enough reliable
information to correctly estimate the risk for such products. If it’s true that the lending
process leaves worthy projects unfunded, some suggest that it would be good to fix this
“market failure” with government programs aimed at improving small businesses’ access to
credit.44

38 SBA, Office of Congressional and Legislative Affairs, “Correspondence with the author,” May 6, 2014.
39 SBA, “SBA Launches Accelerator Competition to Award $2.5 million for Small Business Startups,” May 12, 2014,
at https://www.sba.gov/content/sba-launches-accelerator-competition-award-25-million-small-business-startups-0;
SBA, “More than 800 Small Business Startups Compete for 50 Cash Prizes in SBA’s Growth Accelerator
Competition,” August 4, 2014, at https://www.sba.gov/content/more-800-small-business-startups-compete-50-cash-
prizes-sbas-growth-accelerator-competition; and SBA, “SBA Spurs Economic Growth, Announces 50 Awards to
Accelerators,” September 4, 2014, at https://www.sba.gov/content/sba-spurs-economic-growth-announces-50-awards-
accelerators.
40 Rep. Harold Rogers, “Explanatory Statement Submitted by Mr. Rogers of Kentucky, Chairman of the House
Committee on Appropriations Regarding the House Amendment to the Senate Amendment on H.R. 83,” Congressional
Record, vol. 160, part 151 (December 11, 2014), p. H9740.
41 Ibid., p. H9741.
42 SBA, Fiscal Year 2010 Congressional Budget Justification, p. 30, at https://www.sba.gov/sites/default/files/
aboutsbaarticle/Congressional_Budget_Justification_2010.pdf.
43 Proponents of providing federal funding for the SBA’s loan guarantee programs also argue that small business can
promote competitive markets. See P.L. 83-163, §2(a), as amended; and 15 U.S.C. §631a.
44 Veronique de Rugy, Why the Small Business Administration’s Loan Programs Should Be Abolished, American
Enterprise Institute for Public Policy Research, AEI Working Paper #126, April 13, 2006, at http://www.aei.org/files/
2006/04/13/20060414_wp126.pdf. Also, see U.S. Government Accountability Office, Small Business Administration:
7(a) Loan Program Needs Additional Performance Measures
, GAO-08-226T, November 1, 2007, pp. 3, 9-11, at
http://www.gao.gov/new.items/d08226t.pdf.
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In FY2014, the SBA enhanced small business access to capital by approving nearly $23.4 billion
in loans to small businesses. The SBA’s two largest loan guaranty programs are the 7(a) loan
guaranty program ($19.2 billion approved in FY2014) and the 504/CDC loan guaranty program
($4.2 billion approved in FY2014). In addition, the SBA’s Microloan program, which includes
startups among its targeted audiences, provides direct loans to 180 qualified non-profit
intermediary Microloan lenders to provide “microloans” of up to $50,000 to small business
owners, entrepreneurs, and non-profit child care centers. The Microloan program provided $55.7
million in loans to small businesses in FY2014.45
The SBA’s 7(a), 504/CDC, and Microloan Programs
7(a) Loan Guaranty Program46
The SBA’s 7(a) loan guaranty program is considered the agency’s flagship loan guaranty
program.47 It is named from Section 7(a) of the Small Business Act of 1953 (P.L. 83-163, as
amended), which authorizes the SBA to provide business loans to American small businesses.
The SBA provides participating, certified lenders a guaranty of repayment in the case of a default
of up to 85% of qualified loan amounts of $150,000 or less and up to 75% of qualified loan
amounts exceeding $150,000 to the program’s loan limit of $5 million.
Proceeds from 7(a) loans may be used to establish a new business or to assist in the operation,
acquisition, or expansion of an existing business. Specific uses include to acquire land (by
purchase or lease); improve a site (e.g., grading, streets, parking lots, and landscaping); purchase,
convert, expand, or renovate one or more existing buildings; construct one or more new
buildings; acquire (by purchase or lease) and install fixed assets; purchase inventory, supplies,
and raw materials; finance working capital; and refinance certain outstanding debts.48
504 Certified Development Company Loan Guaranty Program49
The SBA’s 504 Certified Development Company (504/CDC) loan guaranty program provides
long-term fixed rate financing for major fixed assets, such as land, buildings, equipment, and
machinery. A 504/CDC loan cannot be used for working capital or inventory. It is named from
Section 504 of the Small Business Investment Act of 1958 (P.L. 85-699, as amended), which
authorized the sale of debentures pursuant to Section 503 of the act, which previously authorized
the program.50

45 SBA, “Microloan Nationwide Loan Report, October 1, 2013 through September 30, 2014,” November 17, 2014.
46 For further information and analysis concerning the SBA’s 7(a) program, see CRS Report R41146, Small Business
Administration 7(a) Loan Guaranty Program
, by Robert Jay Dilger.
47 U.S. Congress, House Committee on Small Business, Subcommittee on Finance and Tax, Subcommittee Hearing on
Improving the SBA’s Access to Capital Programs for Our Nation’s Small Business
, 110th Cong., 2nd sess., March 5,
2008, H.Hrg. 110-76 (Washington: GPO, 2008), p. 2.
48 13 C.F.R. §120.120.
49 For further information and analysis of the SBA’s 504/CDC program, see CRS Report R41184, Small Business
Administration 504/CDC Loan Guaranty Program
, by Robert Jay Dilger.
50 The 504/CDC program was preceded by a 501 state development company program (1958-1982), a 502 local
development company program (1958-1995), and a 503/CDC program (1980-1986). The 504/CDC program started in
1986. There are a small number of for-profit CDCs that participated in these predecessor programs that have been
(continued...)
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The 504/CDC program is administered through non-profit CDCs. Of the total project costs, a
third-party lender must provide at least 50% of the financing, the CDC provides up to 40% of the
financing backed by a 100% SBA-guaranteed debenture, and the applicant provides at least 10%
of the financing.
The SBA’s debenture is backed with the full faith and credit of the United States and is sold to
underwriters who form debenture pools. Investors purchase interests in the debenture pools and
receive certificates representing ownership of all or part of the pool. The SBA and CDCs use
various agents to facilitate the sale and service of the certificates and the orderly flow of funds
among the parties.51 After a 504/CDC loan is approved and disbursed, accounting for the loan is
set up at the Central Servicing Agent (CSA, currently Wells Fargo Corporate Trust Services), not
the SBA. The SBA guarantees the timely payment of the debenture. If the small business is
behind in its loan payments, the SBA pays the difference to the investor on every semi-annual due
date.
The 504/CDC program is somewhat unique in that borrowers must meet one of two specified
economic development objectives. First, borrowers, other than small manufacturers, must create
or retain at least one job for every $65,000 of project debenture. Borrowers who are small
manufacturers must create or retain one job per $100,000 of project debenture. The jobs created
do not have to be at the project facility, but 75% of the jobs must be created in the community
where the project is located. Using job retention to satisfy this requirement is allowed only if the
CDC “can reasonably show that jobs would be lost to the community if the project was not
done.”52
Second, if the borrower does not meet the job creation or retention requirement, the borrower can
retain eligibility by meeting any one of 5 community development goals or 10 public policy
goals, provided the CDC meets its required job opportunity average of at least one job
opportunity created or retained for every $65,000 in project debenture, or for every $75,000 in
project debenture for projects located in special geographic areas (Alaska, Hawaii, state-
designated enterprise zones, empowerment zones, enterprise communities, and labor surplus
areas). Loans to small manufacturers are excluded from the calculation of this average.53

(...continued)
grandfathered into the current 504/CDC program. See SBA, “SOP 50 10 5(G): Lender and Development Company
Loan Programs,” (effective October 1, 2014), p. 43, at https://www.sba.gov/sites/default/files/sops/
SOP%2050%2010%205%20G%20FINALWEB%20VERSION%20-%20CLEAN%20Eff,%2010-1-2014.pdf.
51 13 C.F.R. §120.801. 504/CDC debentures are normally sold and proceeds disbursed on the Wednesday after the
second Sunday of each month. See SBA, “SOP 50 10 5(G): Lender and Development Company Loan Programs,”
(effective October 1, 2014), p. 310, at https://www.sba.gov/sites/default/files/sops/
SOP%2050%2010%205%20G%20FINALWEB%20VERSION%20-%20CLEAN%20Eff,%2010-1-2014.pdf.
52 SBA, “SOP 50 10 5(G): Lender and Development Company Loan Programs,” (effective October 1, 2014), p. 267, at
https://www.sba.gov/sites/default/files/sops/SOP%2050%2010%205%20G%20FINALWEB%20VERSION%20-
%20CLEAN%20Eff,%2010-1-2014.pdf.
53 A job opportunity is defined as a full time (or equivalent) permanent job created within two years of receipt of
504/CDC funds, or retained in the community because of a 504/CDC loan. See ibid., pp. 50, 231, 267, 269.
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The Microloan Program54
The SBA’s Microloan program was authorized in 1991 (P.L. 102-140, the Departments of
Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1992) as a
five-year demonstration program to address the perceived disadvantages faced by very small
businesses in gaining access to capital. The program became operational in 1992, and it was made
permanent, subject to reauthorization, in 1997 (P.L. 105-135, the Small Business Reauthorization
Act of 1997). Its stated purpose is
to assist women, low-income, veteran ... and minority entrepreneurs and business owners and
other individuals possessing the capability to operate successful business concerns; to assist
small business concerns in those areas suffering from a lack of credit due to economic
downturns; ... to make loans to eligible intermediaries to enable such intermediaries to
provide small-scale loans, particularly loans in amounts averaging not more than $10,000, to
start-up, newly established, or growing small business concerns for working capital or the
acquisition of materials, supplies, or equipment; [and] to make grants to eligible
intermediaries that, together with non-Federal matching funds, will enable such
intermediaries to provide intensive marketing, management, and technical assistance to
microloan borrowers.55
The maximum Microloan amount is $50,000 and no borrower may owe an intermediary more
than $50,000 at any one time.56 Microloan proceeds may be used only for working capital and
acquisition of materials, supplies, furniture, fixtures, and equipment. Loans cannot be made to
acquire land or property, and must be repaid within six years.57 Within these parameters, loan
terms vary depending on the loan’s size, the planned use of funds, the requirements of the
intermediary lender, and the needs of the small business borrower. Interest rates are negotiated
between the borrower and the intermediary (within statutory limits), and typically range from 7%
to 9%.58 Each intermediary establishes its own lending and credit requirements. However,
borrowers are generally required to provide some type of collateral, and a personal guarantee to
repay the loan. The SBA does not review the loan for creditworthiness.59
Program Performance
The SBA maintains a relatively extensive output database for its business lending programs (e.g.,
number and amount of loans approved and disbursed by program and by year; number and
amount of loans approved and disbursed by program and by year to various demographic groups,
including startups; number and amount of loans approved and disbursed by program by state;
amount of loan purchases and recoveries by program and by year). It also asks borrowers to
report information concerning the impact the loans have on job creation and retention.

54 For further information and analysis concerning the SBA’s Microloan program, see CRS Report R41057, Small
Business Administration Microloan Program
, by Robert Jay Dilger.
55 15 U.S.C. §636 7(m)(1)(A).
56 13 C.F.R §120.707. P.L. 111-240, the Small Business Jobs Act of 2010, increased the loan limit for borrowers from
$35,000 to $50,000.
57 Ibid.
58 In FY2014, Microloan borrowers were charged, on average, an interest rate of 7.54%. U.S Small Business
Administration, “Microloan Nationwide Loan Report, October 1, 2013 through September 30, 2014,” November 17,
2014.
59 SBA, “Microloan Program,” at https://www.sba.gov/content/microloan-program.
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As will be shown, these data suggest that the SBA provides lending support to small businesses at
all stages of development, but to varying degrees, with the Microloan program providing a
relatively higher share of its lending to startups than the 7(a) and 504/CDC programs. The data
also suggest that these programs have a generally positive impact on job creation and retention,
but, as will be discussed, the data are self-reported and subject to methodological limitations.
Extent of SBA Lending Assistance, By Developmental Stage
As shown in Table 7, from FY2012 through FY2014, as expected given their missions, the
Microloan program provided a greater percentage of its loan proceeds to startups (37.5%, 40.7%
and 34.4% of total loan disbursements) than the 7(a) program (27.3%, 27.5%, and 29.8% of total
loan disbursements) and the 504/CDC program (10.4%, 10.1%, and 13.7% of total loan
disbursements).
Table 7. 7(a), 504/CDC and Microloan Loan Disbursements, by Development Stage,
FY2012-FY2014
Development Stage
FY2012
FY2013
FY2014
7(a) Startup
$3,660,772,944
$4,205,880,276
$5,100,011,629
(27.3%)
(27.5%)
(29.8%)
7(a) In-Business
$9,735,775,373
$11,072,571,692
$12,026,610,206
(72.7%)
(72.5%)
(70.2%)
Total 7(a)
$13,396,548,317
$15,278,451,968
$17,126,621,835
(100.0%)
(100.0%)
(100.0%)
504/CDC Startup
$501,526,000
$521,951,000
$537,052,000
(10.4%)
(10.1%)
(13.7%)
504/CDC In-Business
$4,284,938,205
$4,658,793,000
$3,380,109,000
(89.5)
(89.9%)
(86.3%)
504/CDC Total
$4,786,464,205
$5,180,744,000
$3,917,161,000
(100.0%)
(100.0%)
(100.0%)
Microloan Startup
$16,766,240
$20,851,860
$19,178,999
(37.5%)
(40.7%)
(34.4%)
Microloan In-Business
$27,947,887
$30,352,085
$36,509,347
(62.5%)
(59.2%)
(65.6%)
Microloan Total
$44,714,127
$51,203,945
$55,688,346
(100.0%)
(100.0%)
(100.0%)
Source: SBA, “Microloan Nationwide Loan Report,” various fiscal years; and U.S. Small Business Administration,
“Correspondence with the author,” March 2, 2015.
Notes: Startup borrowers are individuals who have been in business one year or less. In-business borrowers are
individuals who have been in business more than one year and their business was classified as small by the SBA.
Impact of the SBA’s Lending Assistance on Job Creation and Retention, by
Developmental Stage

Unlike its management and technical assistance training programs, the SBA does not survey SBA
loan recipients after the loans are issued to determine the loan’s impact on the borrowers’ staffing
decisions or on the business’s subsequent economic activities (sales, profits, etc.).
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However, 7(a) loan guaranty program application forms require borrowers to include information
concerning the number of employees at the time of application and the number of jobs to be
created or retained as a result of the loan. Jobs “created” means the number of full-time (or
equivalent) employees that the small business expects to hire as a result of the loan. Jobs
“retained” means the number of full-time (or equivalent) employees on the payroll of the business
at the time of application that will be lost if the loan is not approved.60 Lenders transmit the data
to the SBA. Largely because the data are not verified by the SBA, the SBA refers to these data as
the number of jobs supported, as opposed to the number of jobs created and retained.
In the 504/CDC loan guaranty program, where job creation and retention is a program criterion,
applicants are required to report the number of current employees, jobs to be created in the next
two years, and jobs to be retained because of the loan. CDCs must list the estimated jobs created
or retained in its annual report to the SBA, and at the two-year anniversary of each loan’s
disbursement CDCs must list the actual number of full-time equivalent jobs created or retained
for that loan (whether the initial approval was based on job creation/retention or some other 504
goal).61 Again, for methodological reasons, the SBA refers to these data as the number of jobs
supported, as opposed to the number of jobs created and retained.
Each time a Microloan is made, the SBA requires that the loan either create or retain at least one
job. Beyond that job, the Microloan intermediary must also account for any other jobs created or
retained (counted in terms of full time equivalents) and report that data to the SBA. The SBA
reserves the right to verify the correctness of the number of jobs created or retained during any
visit to a Microloan intermediary or a Microloan borrower’s site. The SBA reports the data as the
number of jobs supported.62
As shown in Table 8, from FY2012 through FY2014, the Microloan program provided startups a
higher percentage of the total number of jobs it supported than the 7(a) and the 504/CDC
programs. This finding might have been expected, given that startups are one of the Microloan
program’s primary target audiences.
As shown in the table, from FY2012 to FY2014, startups accounted for 50.3%, 55.9% and 36.5%
of the total number of jobs supported by the Microloan program, 26.2%, 26.8%, and 29.4% of the
total number of jobs supported by the 7(a) program, and 11.6%, 14.6% and 20.4% of the total
number of jobs supported by the 504/CDC program.

60 SBA, “SOP 50 10 5(G): Lender and Development Company Loan Programs,” (effective October 1, 2014), p. 189, at
https://www.sba.gov/sites/default/files/sops/SOP%2050%2010%205%20G%20FINALWEB%20VERSION%20-
%20CLEAN%20Eff,%2010-1-2014.pdf; and SBA, Office of the Inspector General, “Review of SBA’s Job Creation
Data Under the Recovery Act,” p. 2, at https://www.sba.gov/sites/default/files/oig/oig_report_10-15.pdf.
61 SBA, “SOP 50 10 5(G): Lender and Development Company Loan Programs,” (effective October 1, 2014), p. 267, at
https://www.sba.gov/sites/default/files/sops/SOP%2050%2010%205%20G%20FINALWEB%20VERSION%20-
%20CLEAN%20Eff,%2010-1-2014.pdf; and SBA, Office of the Inspector General, “Review of SBA’s Job Creation
Data Under the Recovery Act,” p. 2, at https://www.sba.gov/sites/default/files/oig/oig_report_10-15.pdf.
62 SBA, “SOP 52 00: Microloan Program,” p. 56, at https://www.sba.gov/sites/default/files/
Microloan%20SOP%2052%2000%20(FINAL).pdf.
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Table 8. 7(a), 504/CDC, and Microloan Programs, Reported Number of Jobs
Supported by Development Stage, FY2012-FY2014
Development Stage
FY2012
FY2013
FY2014
7(a) Startup
119,029
129,637
148,114
(26.2%)
(26.8%)
(29.4%)
7(a) In-Business
335,785
354,339
355,739
(73.8%)
(73.2%)
(70.6%)
Total 7(a)
454,814
483,976
503,853
(100.0%)
(100.0%)
(100.0%)
504/CDC Startup
13,549
13,205
13,589
(11.6%)
(14.6%)
(20.4%)
504/CDC In-Business
103,020
77,052
53,155
(88.4%)
(85.4%)
(79.6%)
504/CDC Total
116,569
90,257
66,744
(100.0%)
(100.0%)
(100.0%)
Microloan Startup
6,685
8,741
5,799
(50.3%)
(55.9%)
(36.5%)
Microloan In-Business
6,595
6,895
10,081
(49.7%)
(44.1%)
(63.5%)
Microloan Total
13,280
15,636
15,880
(100.0%)
(100.0%)
(100.0%)
Source: SBA, Office of Congressional and Legislative Affairs, “Correspondence with the author,” April 8, 2013,
February 25, 2014, and February 19, 2015.
Notes: Startup borrowers are individuals who have been in business one year or less. In-business borrowers are
individuals who have been in business more than one year and their business was classified as small by the SBA.
SBA Venture Capital Programs
The SBA has two venture capital programs. The SBIC program, authorized by P.L. 85-699, the
Small Business Investment Act of 1958, as amended, is the SBA’s flagship venture capital
program.63 It is designed to “improve and stimulate the national economy in general and the small
business segment thereof in particular” by stimulating and supplementing “the flow of private
equity capital and long-term loan funds which small business concerns need for the sound
financing of their business operations and for their growth, expansion, and modernization, and
which are not available in adequate supply.”64 The SBA also sponsors the much smaller New
Markets Venture Capital Program, which is not discussed here given its relatively small size
($2.08 million in financing to 4 small businesses in FY2014). It is designed to promote economic
development and the creation of wealth and job opportunities in low-income geographic areas by
addressing the unmet equity investments needs of small businesses located in those areas.65

63 For further information and analysis of the SBA’s SBIC program, see CRS Report R41456, SBA Small Business
Investment Company Program
, by Robert Jay Dilger.
64 15 U.S.C. §661.
65 For further information and analysis of the SBA’s New Markets Venture Capital program, see CRS Report R42565,
SBA New Markets Venture Capital Program, by Robert Jay Dilger.
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The SBIC Program
The SBA does not make direct investments in small businesses. It partners with privately owned
and managed SBICs licensed by the SBA to provide financing to small businesses with private
capital the SBIC has raised (called regulatory capital) and with funds (called leverage) the SBIC
borrows at favorable rates because the SBA guarantees the debenture (loan obligation). As of
January 31, 2015, there were 298 licensed SBICs participating in the SBIC program.66
A licensed debenture SBIC in good standing, with a demonstrated need for funds, may apply to
the SBA for financial assistance (leverage) of up to 300% of its private capital. However, the SBA
has traditionally approved debenture SBICs for a maximum of 200% of their private capital and
no fund management team may exceed the allowable maximum amount of leverage of $150
million per SBIC and $225 million for two or more licenses under common control.67 A SBIC
licensed on or after October 1, 2009, may elect to have a maximum leverage amount of $175
million per SBIC and $250 million for two or more licenses under common control if it has
invested at least 50% of its financings in low-income geographic areas and certifies that at least
50% of its future investments will be in low-income geographic areas.68
SBICs pursue investments in a broad range of industries, geographic areas, and stages of
investment. Some SBICs specialize in a particular field or industry, while others invest more
generally. Most SBICs concentrate on a particular stage of investment (i.e., startup, expansion, or
turnaround) and geographic area.
SBICs provide equity capital to small businesses in various ways, including by
• purchasing small business equity securities (e.g., stock, stock options, warrants,
limited partnership interests, membership interests in a limited liability company,
or joint venture interests);69
• making loans to small businesses, either independently or in cooperation with
other private or public lenders, that have a maturity of no more than 20 years;70
• purchasing debt securities from small businesses;71 and

66 SBA, “SBIC Program Overview, as of January 31, 2015,” at http://c.ymcdn.com/sites/www.sbia.org/resource/
resmgr/Docs/SBIC_Program_Overview_-_Janu.pdf.
67 13 CFR §107.1120; 13 CFR §107.1150; and SBA, “American Recovery and Reinvestment Act of 2009:
Implementation of SBIC Program Changes,” letter from Harry Haskins, Acting Associate Administrator for
Investment, to All Small Business Investment Companies (SBICs) and Applicants, May 4, 2009, p. 1.
68 13 CFR §107.1150. A low-income area is (1) any population census tract that has a poverty rate that is not less than
20% or (a) if located within a metropolitan area, 50% or more of the households in that census tract have an income
equal to less than 60% of the area median gross income; or (b) if not located within a metropolitan area, the median
household income in that census tract does not exceed 80% of the statewide median household income; or (c) has been
determined by the SBA Administrator to contain a substantial population of low-income individuals in residence, an
inadequate access to investment capital, or other indications of economic distress; or (2) any area located within (i) a
Historically Underutilized Business Zone; (ii) an Urban Empowerment Zone or Urban Enterprise Community (as
designated by the Secretary of the United States Department of Housing and Urban Development); or (iii) a Rural
Empowerment Zone or Rural Enterprise Community (as designated by the Secretary of the United States Department
of Agriculture). See 13 CFR §108.50.
69 13 CFR §107.800. A SBIC is not allowed to become a general partner in any unincorporated business or become
jointly or severally liable for any obligations of an unincorporated business.
70 13 CFR §107.810; and 13 CFR §107.840.
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• providing small businesses (subject to limitations) a guarantee of their monetary
obligations to creditors not associated with the SBIC.72
The SBA is authorized to provide up to $4 billion in leverage to SBICs annually. The SBIC
program has invested or committed about $23.8 billion in small businesses, with the SBA’s share
of capital at risk about $11.6 billion. In FY2014, the SBA committed to guarantee $2.55 billion in
SBIC small business investments. SBICs invested another $2.92 billion from private capital for a
total of almost $5.5 billion in financing for 1,085 small businesses.73
Early Stage Debenture SBICs
On April 27, 2012, the SBA published a final rule in the Federal Register establishing a $1 billion
early stage debenture SBIC initiative (up to $150 million in leverage in FY2012, and up to $200
million in leverage per fiscal year thereafter until the limit is reached).74 Early stage debenture
SBICs are required to invest at least 50% of their financings in early stage small businesses,
defined as small businesses that have never achieved positive cash flow from operations in any
fiscal year.75
In recognition of the higher risk associated with investments in early stage small businesses, the
initiative includes “several new regulatory provisions intended to reduce the risk that an early
stage SBIC would default on its leverage and to improve SBA’s recovery prospects should a
default occur.”76 For example, early stage debenture SBICs are required to raise more regulatory
capital (at least $20 million) than debenture SBICs (at least $5 million). They are also subject to
special distribution rules to require pro rata repayment of SBA leverage when making
distributions of profits to their investors. In addition, early stage debenture SBICs are also
provided less leverage (up to 100% of regulatory capital, $50 million maximum) than debenture
SBICs (up to 200% of regulatory capital, $150 million maximum per SBIC and $225 million for
two or more SBICs under common control).
On May 1, 2012, the SBA published a notice in the Federal Register inviting venture capital fund
managers to submit an application to become a licensed early stage debenture SBIC. The
application deadline for applicants with signed commitments for at least $15 million in regulatory
capital and evidence of their ability to raise the remaining $5 million in regulatory capital was set
as July 30, 2012. The application deadline for all other applicants was set as May 15, 2013.77
Thirty-three venture capital funds submitted preliminary application materials to participate in the

(...continued)
71 13 CFR §107.815. Debt securities are instruments evidencing a loan with an option or any other right to acquire
equity securities in a small business or its affiliates, or a loan which by its terms is convertible into an equity position,
or a loan with a right to receive royalties that are excluded from the cost of money.
72 13 CFR §107.820.
73 SBA, “SBIC Program Overview, as of January 31, 2015,” at http://c.ymcdn.com/sites/www.sbia.org/resource/
resmgr/Docs/SBIC_Program_Overview_-_Janu.pdf.
74 SBA, “Small Business Investment Companies - Early Stage SBICs,” 77 Federal Register 25043, 25050, April 27,
2012.
75 Ibid., pp. 25051-25053.
76 Ibid., p. 25043.
77 SBA, “Small Business Investment Companies - Early Stage SBICs,” 77 Federal Register 25775-25779, May 1,
2012.
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program. After these materials were examined and interviews held, the SBA announced on
October 23, 2012, that it had issued “green light” letters to six funds, formally inviting these
funds to file a license application.78 Five companies subsequently were granted a license.
The SBA’s second, third, and fourth annual calls for venture capital fund managers to submit an
application to become a licensed early stage debenture SBIC took place on December 18, 2012,
February 4, 2014, and January 12, 2015.79
As of September 30, 2014, five early stage SBICs had raised $226.5 million in private capital,
received $16.3 million in SBA-guaranteed leverage, had $76.6 million in outstanding
commitments, and invested $56.4 million in 27 small businesses.80
Program Performance
The SBA gathers a relatively robust list of SBIC program output measures, such as the number
and amount of financing made each fiscal year, the number of active SBIC debenture firms, the
use of proceeds (operating capital, plant modernization, acquisition of existing business, land
acquisition, etc.), the type of financing provided (straight debt, debt with equity, and equity only),
licensing times, and financing by industrial sector, type of small business (corporations,
partnerships, proprietorships or limited liability corporations), state, region, demographic group,
age of the licensee and, of particular interest here, age of the business at the time of the financing.
The SBA does not gather information concerning the number of jobs supported by the program.
Extent of SBIC Financial Assistance, by Developmental Stage
The SBIC program provides financing to small businesses at all developmental stages, with most
of its financing provided to businesses that have been in operation for at least five years. For
example, in FY2014, 67.0% of the SBIC program’s financing was with businesses that were in
operation for at least five years ($3.662 billion of $5.464 billion). As shown in Table 9, the
amount of SBIC financing provided to startups (defined as being in operation for one year or less)
as a share of SBIC financing has remained about the same since FY2012 (16.8% in FY2012,
19.9% in FY2013, and 16.5% in FY2014). The amount of SBIC financing to startups has
increased in recent years, primarily because the amount of financing provided by the program as
whole has increased ($541.2 million in FY2012, $696.7 million in FY2013, and $899.3 million in
FY2014).

78 SBA, “SBA’s Growth Capital Program Sets Record For Third Year in a Row $2.95 Billion in Financing for Small
Businesses in FY12,” at https://www.sba.gov/content/sbas-growth-capital-program-sets-record-third-year-row; and
SBA, “The Small Business Investment Company (SBIC) Program: Annual Report FY2012,” p. 20, at
https://www.sba.gov/sites/default/files/files/SBIC%20Program%20FY%202012%20Annual%20Report.pdf.
79 SBA, “Small Business Investment Companies - Early Stage SBICs,” 77 Federal Register 74908-74913, December
18, 2012; SBA, “Small Business Investment Companies—Early Stage SBICs,” 79 Federal Register 6665, February 4,
2014; SBA, “Small Business Investment Companies—Early Stage SBICs,” 79 Federal Register 18750, April 3, 2014;
and SBA, “Small Business Investment Companies—Early Stage SBICs,” 80 Federal Register 1575-1579, January 12,
2015. The deadline to submit a MAQ for funds seeking a license in FY2015 is February 27, 2015, with anticipated
Green Light letters issued through May 7, 2015 and new licenses issued no later than September 30, 2015. All other
funds have 12 months from issuance of a Green Light letter to submit their license application.
80 SBA, Office of Congressional and Legislative Affairs, “Correspondence with the author,” October 20, 2014.
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It is too early to determine the extent to which the SBA’s early stage debenture initiative may
affect the share and amount of total SBA financing provided to startups.
Table 9. SBIC Program, Number and Amount of Financings by Development Stage,
FY2012-FY2014
($ in thousands)
FY2012
FY2013
FY2014
Development Stage
# Amount #
Amount # Amount
Startup (1 year or less)
224
$541,189
281
$696,749
335
$899,355
(11.7%)
(16.8%)
(15.2%)
(19.9%)
(14.5%)
(16.5%)
In-Business (over 1 year)
1,683
$2,686,241
1,565
$2,801,565
1,974
$4,565,205
(88.3%)
(83.2%)
(84.8%)
(80.1%)
(85.5%)
(83.5%)
Total SBIC Financings
1,907
$3,227,430
1,846
$3,498,314
2,309
$5,464,560
(100.0%)
(100.0%)
(100.0%)
(100.0%)
(100.0%)
(100.0%)
Source: U.S. Small Business Administration, “All SBIC Program Licensees: Financing to Small Businesses,”
various fiscal years.
Concluding Observations
The SBA has indicated, from the very start of the agency, that assisting small businesses to create
and retain jobs is part of its mission. However, the SBA also has a long-established tradition of
providing assistance to all qualifying small businesses. With some exceptions, the SBA has
generally not taken actions or requested authorization to focus its assistance solely onto those
businesses, such as startups, that are judged to be the ones most likely to contribute to job growth
or wealth creation. The tradition of providing SBA assistance to all qualified small businesses
without regard to their potential for job growth or wealth creation is perhaps understandable given
that the tradition aligns with one of the SBA’s primary missions, which is to promote free
markets—by limiting monopoly and oligarchy formation within all industries. In addition, the
tradition of providing assistance to all qualified small businesses has, for the most part, never
been challenged by Congress or interested small business organizations.
The SBA’s recent initiatives to focus increased attention to assisting startups (e.g., the Growth
Accelerators initiative and the early stage debenture SBIC initiative) are less of a challenge to the
SBA’s tradition of assisting all qualified small businesses than a recognition of the potential role
of startups in job creation and concerns about the pace of job growth during the current economic
recovery. For example, the SBA has offered the initiatives as supplements to, rather than
replacements of, existing programs. Moreover, as has been discussed, the SBA’s recent effort to
enhance the ability of startups to access venture capital through the SBIC program is not without
precedent within the agency. Although the SBA has not explicitly indicated that the early stage
debenture SBIC initiative is designed to fill the void left by the winding down of the SBIC
Participating Securities program, the SBA has acknowledged the lessons learned from that
program in the development of regulations to manage risk within the early stage debenture SBIC
initiative.81

81 SBA, “Small Business Investment Companies - Early Stage SBICs,” 76 Federal Register 76907-76917, December 9,
(continued...)
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As mentioned previously, the relatively “high risk-high reward” of targeting SBA assistance to
startups makes it tempting for some and controversial for others. Most who have participated in
these programs report in surveys sponsored by the SBA that the programs were useful. However,
determining if the risk of financial losses associated with targeting SBA assistance to startups
outweighs the startups’ potential for job growth is difficult because the data collected by the SBA
concerning these programs’ impact on economic activity and job creation are somewhat limited
and subject to methodological challenges concerning their validity as reliable performance
measures.

Author Contact Information

Robert Jay Dilger

Senior Specialist in American National Government
rdilger@crs.loc.gov, 7-3110



(...continued)
2011; and SBA, “Small Business Investment Companies - Early Stage SBICs,” 77 Federal Register 25042-25055,
April 27, 2012.
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