Small Business Administration:
A Primer on Programs and Funding

Robert Jay Dilger
Senior Specialist in American National Government
Sean Lowry
Analyst in Public Finance
July 30, 2015
Congressional Research Service
7-5700
www.crs.gov
RL33243


Small Business Administration: A Primer on Programs and Funding

Summary
The Small Business Administration (SBA) administers several types of 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 the SBA’s loan, venture capital, training, and contracting programs has
increased in recent years, primarily because small businesses are viewed as a means to stimulate
economic activity, create jobs, and assist in the national economic recovery. Many Members of
Congress also regularly receive constituent inquiries about the SBA’s programs.
This report provides an overview of the SBA’s business loan guaranty programs (including the
7(a) loan guaranty program, the 504/Certified Development Company (CDC) program,
International Trade and Export Promotion Loan programs, and the Microloan program); venture
capital programs (including the Small Business Investment Company program and the New
Markets Venture Capital program); entrepreneurial development programs (including Small
Business Development Centers, Women’s Business Centers, and SCORE); government
contracting and business development programs (including the 8(a) Minority Small Business and
Capital Ownership Development Program, the Historically Underutilized Business Zones
(HUBZones) program, the Service-Disabled Veteran-Owned Small Business Program, and the
Women-Owned Small Business (WOSB) Federal Contract program); and capital access programs
(including the Surety Bond Guarantee Program).
The report also discusses programmatic changes resulting from the enactment of P.L. 111-5, the
American Recovery and Reinvestment Act of 2009, P.L. 111-240, the Small Business Jobs Act of
2010, P.L. 112-239, the National Defense Authorization Act for Fiscal Year 2013, P.L. 113-235,
the Consolidated and Further Continuing Appropriations Act, 2015, and P.L. 114-38, the Veterans
Entrepreneurship Act of 2015. In addition, it provides an overview of the SBA’s budget and
references other CRS reports that examine these programs in greater detail.

Congressional Research Service

Small Business Administration: A Primer on Programs and Funding

Contents
Introduction ...................................................................................................................................... 1
Disaster Loans ................................................................................................................................. 3
Overview ................................................................................................................................... 3
Types of Disaster Loans ............................................................................................................ 3
Disaster Loans to Homeowners, Renters, and Personal Property Owners .......................... 3
Disaster Loans to Businesses and Nonprofit Organizations ................................................ 4
Capital Access Programs ................................................................................................................. 6
Overview ................................................................................................................................... 6
What Is a Business?............................................................................................................. 6
What Is Small? .................................................................................................................... 7
Loan Guarantees ........................................................................................................................ 8
Overview ............................................................................................................................. 8
7(a) Loan Guaranty Program ............................................................................................. 10
The 504/CDC Loan Guaranty Program............................................................................. 12
International Trade and Export Promotion Programs ........................................................ 14
The Microloan Program .................................................................................................... 14
Surety Bond Guarantee Program ............................................................................................. 15
Entrepreneurial Development Programs ........................................................................................ 16
Small Business Contracting Programs ........................................................................................... 17
Prime Contracting Programs ................................................................................................... 17
Subcontracting Programs for Small Disadvantaged Businesses ............................................. 18
Goaling Program ..................................................................................................................... 19
Office of Small and Disadvantaged Business Utilization ........................................................ 21
Regional and District Offices......................................................................................................... 21
Office of Inspector General ........................................................................................................... 22
Capital Investment Programs ......................................................................................................... 23
The Small Business Investment Company Program ............................................................... 23
New Market Venture Capital Program .................................................................................... 24
Small Business Innovation Research Program ........................................................................ 25
Small Business Technology Transfer Program ........................................................................ 26
Office of Advocacy ........................................................................................................................ 26
Executive Direction Programs ....................................................................................................... 27
The National Women’s Business Council ............................................................................... 27
Office of Ombudsman ............................................................................................................. 27
BusinessUSA ........................................................................................................................... 28
Legislative Activity ........................................................................................................................ 28
Appropriations ............................................................................................................................... 30

Tables
Table 1. Major SBA Program Areas, Estimated Program Costs, FY2015 ....................................... 2
Table 2. SBA Business Loan Subsidies, Authorized Amounts, FY2010-FY2016 ........................... 9
Congressional Research Service

Small Business Administration: A Primer on Programs and Funding

Table 3. Summary of the 7(a) Loan Guaranty Program’s Key Features ........................................ 10
Table 4. Summary of the 504/CDC Loan Guaranty Program’s Key Features ............................... 13
Table 5. Summary of the Microloan Program’s Key Features ....................................................... 15
Table 6. Federal Contracting Goals and Percentage of FY2014 Federal Contract Dollars
Awarded to Small Businesses, by Type ...................................................................................... 21
Table 7. Summary of Small Business Investment Company Program’s Key Features.................. 24
Table 8. SBA Appropriations, FY2014-FY2016 ............................................................................ 31

Contacts
Author Contact Information........................................................................................................... 31
Acknowledgments ......................................................................................................................... 31

Congressional Research Service

Small Business Administration: A Primer on Programs and Funding

Introduction
Established in 1953, the Small Business Administration’s (SBA’s) origins can be traced to the
Great Depression of the 1930s and World War II, when concerns about unemployment and war
production were paramount. The SBA assumed some of the functions of the Reconstruction
Finance Corporation (RFC), which had been created by the federal government in 1932 to
provide funding for businesses of all sizes during the Depression and later financed war
production. During the early 1950s, the RFC was disbanded following charges of political
favoritism in the granting of loans and contracts.1
In 1953, Congress passed the Small Business Act (P.L. 83-163), which authorized the SBA. The
act specifies that the SBA’s mission is to promote the interests of small businesses to enhance
competition in the private marketplace:
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
The SBA currently administers several types of 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 has increased in recent years,
primarily because small businesses are viewed as a means to stimulate economic activity, create
jobs, and assist in the national economic recovery. Many Members of Congress also regularly
receive constituent inquiries about the SBA’s programs.
This report provides an overview of the SBA’s programs and funding. It also references other
CRS reports that examine the SBA’s programs in greater detail.3

1 U.S. Congress, Senate Committee on Expenditures, Subcommittee on Investigations, Influence in Government
Procurement, 82nd Cong., 1st sess., September 13-15, 17, 19-21, 24-28, October 3-5, 1951 (Washington: GPO, 1951);
and U.S. Congress, Senate Banking and Currency, RFC Act Amendments of 1951, hearing on bills to amend the
Reconstruction Finance Corporation Act, 82nd Cong., 1st sess., April 27, 30, May 1, 2, 22, 23, 1951 (Washington: GPO,
1951).
2 P.L. 83-163, the Small Business Act of 1953 (as amended), see http://legcoun.house.gov/members/Comps/SBA.pdf.
3 The Small Business Administration’s (SBA’s) programs have detailed rules on program requirements and
administration that are not covered in this report. More detailed information concerning the SBA’s programs is
available in the CRS reports referenced later in this report, on the SBA’s website at https://www.sba.gov/, in 15 U.S.C.
§631 et seq., and in Title 13 of the Code of Federal Regulations, see http://www.gpo.gov/fdsys/browse/
collectionCfr.action?collectionCode=CFR&searchPath=Title+13%2FChapter+I&oldPath=Title+13&isCollapsed=
true&selectedYearFrom=2015&ycord=0.
Congressional Research Service
1

Small Business Administration: A Primer on Programs and Funding

The SBA’s FY2016 congressional budget justification document includes funding and program
costs for the following programs and offices:
1. disaster assistance;
2. capital access programs (including the 7(a) program, the 504/Certified
Development Company [CDC] program, the Microloan program, International
Trade and Export Promotion Loans, and the Surety Bond Guarantee program);
3. entrepreneurial development programs (including Small Business Development
Centers, Women’s Business Centers, SCORE, and veterans’ programs);
4. government contracting and business development programs (including the 7(j)
program, the 8(a) Minority Small Business and Capital Ownership Development
program, the Historically Underutilized Business Zones (HUBZones) program,
the Prime Contract Assistance program, the Women’s Business Program, and the
Subcontracting program);
5. regional and district offices (counseling, training, and outreach services);
6. the Office of Inspector General (OIG);
7. capital investment programs (including the Small Business Investment Company
[SBIC] program, the New Market Venture Capital program, the Small Business
Innovation Research [SBIR] program, and the Small Business Technology
Transfer program [STTR]);
8. the Office of Advocacy; and
9. executive direction programs (the National Women’s Business Council, Office of
Ombudsman, and BusinessUSA website initiative).
Table 1 shows the SBA’s estimated costs in FY2015 for these program areas. Program costs often
differ from new budget authority provided in annual appropriations acts because the SBA has
specified authority to carry over appropriations from previous fiscal years. The SBA also has
limited, specified authority to shift appropriations among various programs.
Table 1. Major SBA Program Areas, Estimated Program Costs, FY2015
($ in millions)
Program Category
Estimated Costs
Disaster Loan Programs
$244.00
Capital Access Programs
$204.38
Entrepreneurial Development Programs
$197.43
Government Contracting and 8(a) Business Development Programs
$95.26
Regional and District Offices
$47.71
Office of Inspector General
$24.94
Capital Investment Programs
$24.56
Office of Advocacy
$12.12
Executive Direction Programs
$3.28
Total
$853.68
Source: U.S. Small Business Administration, FY2016 Congressional Budget Justification and FY2014 Annual
Performance Report
, pp. 26-28, at https://www.sba.gov/sites/default/files/1-
FY%202016%20CBJ%20FY%202014%20APR.PDF.
Congressional Research Service
2

Small Business Administration: A Primer on Programs and Funding

Notes: Program costs often differ from new budget authority provided in annual appropriations acts because
the SBA has specified authority to carry over appropriations from previous fiscal years. The SBA also has limited,
specified authority to shift appropriations among various programs.
Disaster Loans
Overview4
SBA disaster assistance is provided in the form of loans, not grants, which must be repaid to the
federal government. The SBA’s disaster loans are unique in two respects: they are the only loans
made by the SBA that (1) go directly to the ultimate borrower and (2) are not limited to small
businesses.5
SBA disaster loans are available to individuals, businesses, and nonprofit organizations in
declared disaster areas.6 About 80% of the SBA’s direct disaster loans are issued to individuals
and households (renters and property owners) to repair and replace homes and personal property.
In recent years, the SBA Disaster Loan Programs has been the subject of regular congressional
and media attention because of concerns expressed about the time it takes the SBA to process
disaster loan applications.
Types of Disaster Loans
The SBA Disaster Loan Program includes the following categories of loans for disaster-related
losses: home disaster loans, business physical disaster loans, economic injury disaster loans, and
pre-disaster mitigation loans.7
Disaster Loans to Homeowners, Renters, and Personal Property Owners
Homeowners, renters, and personal property owners located in a declared disaster area (and in
contiguous counties) may apply to the SBA for loans to help recover losses from a declared
disaster. Only victims located in a declared disaster area (and contiguous counties) are eligible to
apply for disaster loans. Disaster declarations are “official notices recognizing that specific
geographic areas have been damaged by floods and other acts of nature, riots, civil disorders, or
industrial accidents such as oil spills.”8 Five categories of declarations put the SBA Disaster Loan
Program into effect. These include two types of presidential major disaster declarations as

4 For additional information and analysis, see CRS Report R41309, The SBA Disaster Loan Program: Overview and
Possible Issues for Congress
, by Bruce R. Lindsay.
5 13 C.F.R. §123.200.
6 13 C.F.R. §123.105 and 13 §123.203.
7 The SBA also offers military reservist economic injury disaster loans. These loans are available when economic
injury is incurred as a direct result of a business owner or an essential employee being called to active duty. Generally,
these loans are not associated with disasters. See CRS Report R42695, SBA Veterans Assistance Programs: An
Analysis of Contemporary Issues
, by Robert Jay Dilger and Sean Lowry.
8 13 C.F.R. §123.2.
Congressional Research Service
3

Small Business Administration: A Primer on Programs and Funding

authorized by the Robert T. Stafford Disaster Relief and Emergency Assistance Act (the Stafford
Act)9 and three types of SBA declarations.10
The SBA’s Home Disaster Loan Program falls into two categories: personal property loans and
real property loans. These loans are limited to uninsured losses. The maximum term for SBA
disaster loans is 30 years, but the law restricts businesses with credit available elsewhere to a
maximum 7-year term. The SBA sets the installment payment amount and corresponding
maturity based upon each borrower’s ability to repay.
Personal Property Loans
A personal property loan provides a creditworthy homeowner or renter with up to $40,000 to
repair or replace personal property items, such as furniture, clothing, or automobiles, damaged or
lost in a disaster. These loans cover only uninsured or underinsured property and primary
residences and cannot be used to replace extraordinarily expensive or irreplaceable items, such as
antiques or recreational vehicles. Interest rates vary depending on whether applicants are able to
obtain credit elsewhere. For applicants who can obtain credit without SBA assistance, the interest
rate may not exceed 8% per year. For applicants who cannot obtain credit without SBA
assistance, the interest rate may not exceed 4% per year.11
Real Property Loans
A creditworthy homeowner may apply for a real property loan of up to $200,000 to repair or
restore his or her primary residence to its pre-disaster condition.12 The loans may not be used to
upgrade homes or build additions, unless upgrades or changes are required by city or county
building codes. The interest rate for real property loans is determined in the same way as it is
determined for personal property loans.
Disaster Loans to Businesses and Nonprofit Organizations
Several types of loans, discussed below, are available to businesses and nonprofit organizations
located in counties covered by a presidential disaster declaration. In certain circumstances, the
SBA will also make these loans available when a governor, the Secretary of Agriculture, or the
Secretary of Commerce makes a disaster declaration. Physical disaster loans are available to
almost any nonprofit organization or business. Other business disaster loans are limited to small
businesses.

9 P.L. 93-288, Disaster Relief Act Amendments; and 42 U.S.C. §5721 et seq.
10 Disaster declarations are published in the Federal Register and can also be found on the SBA website at
https://www.sba.gov/content/current-disaster-declarations.
11 13 C.F.R. §123.105(a)(1).
12 13 C.F.R. §123.105(a)(2). For mitigation measures implemented after a disaster has occurred to protect the damaged
property from a similar disaster in the future, a homeowner can request that the approved loan amount be increased by
the lesser of the cost of the mitigation measure or up to 20% of the verified loss (before deducting compensation from
other sources), to a maximum of $200,000. 13 C.F.R. §127.
Congressional Research Service
4

Small Business Administration: A Primer on Programs and Funding

Physical Disaster Loan
Any business or nonprofit organization, regardless of size, can apply for a physical disaster
business loan of up to $2 million for repairs and replacements to real property, machinery,
equipment, fixtures, inventory, and leasehold improvements that are not covered by insurance.
Physical disaster loans for businesses may use up to 20% of the verified loss amount for
mitigation measures in an effort to prevent loss from a similar disaster in the future. Nonprofit
organizations that are rejected or approved by the SBA for less than the requested amount for a
physical disaster loan are, in some circumstances, eligible for grants from the Federal Emergency
Management Agency (FEMA). For applicants that can obtain credit without SBA assistance, the
interest rate may not exceed 8% per year. For applicants that cannot obtain credit without SBA
assistance, the interest rate may not exceed 4% per year.13
Economic Injury Disaster Loans
Economic injury disaster loans (EIDLs) are limited to small businesses as defined by the SBA’s
size regulations, which vary from industry to industry.14 If the Secretary of Agriculture designates
an agriculture production disaster, small farms and small cooperatives are eligible. EIDLs are
available in the counties included in a presidential disaster declaration and contiguous counties.
The loans are designed to provide small businesses with operating funds until those businesses
recover. The maximum loan is $2 million, and the terms are the same as personal and physical
disaster business loans. The loan can have a maturity of up to 30 years and has an interest rate of
4% or less.15
Pre-Disaster Mitigation Loan Program
To support FEMA’s Pre-Disaster Mitigation Program, the SBA may make low-interest, fixed-rate
loans to small businesses to finance measures to protect commercial property, leasehold
improvements, or contents from disaster-related damages that may occur in the future.16 A
business that participates in the program may borrow up to $50,000 each fiscal year. The business
applying for the loan must be located in a Special Flood Hazard Area (SFHA).17 The interest rate
for a pre-disaster mitigation loan is fixed at 4% per annum or less.18

13 13 C.F.R. §123.203.
14 See 13 C.F.R. §123.300 for eligibility requirements. Size standards vary according to a variety of factors, including
industry type, average firm size, and start-up costs and entry barriers. Size standards can be located in 13 C.F.R. 121.
For further information and analysis, see CRS Report R40860, Small Business Size Standards: A Historical Analysis of
Contemporary Issues
, by Robert Jay Dilger.
15 13 C.F.R. §123.302.
16 For further information and analysis concerning FEMA’s Pre-Disaster Mitigation Program see CRS Report
RL34537, FEMA’s Pre-Disaster Mitigation Program: Overview and Issues, by Francis X. McCarthy.
17 13 C.F.R. §123.403(a).
18 13 C.F.R. §123.406.
Congressional Research Service
5

Small Business Administration: A Primer on Programs and Funding

Capital Access Programs
Overview
The SBA has authority to make direct loans but, with the exception of disaster loans and loans to
Microloan program intermediaries, has not exercised that authority since 1998.19 The SBA
indicated that it stopped issuing direct business loans primarily because the subsidy rate was “10
to 15 times higher” than the subsidy rate for its loan guaranty programs.20 Instead of making
direct loans, the SBA guarantees loans issued by approved lenders to encourage those lenders to
provide loans to small businesses “that might not otherwise obtain financing on reasonable terms
and conditions.”21 With few exceptions, to qualify for SBA assistance, an organization must be
both a business and small.22
What Is a Business?
To participate in any of the SBA programs, a business must meet the SBA’s definition of small
business
. This is a business that
• is organized for profit;
• has a place of business in the United States;
• operates primarily within the United States or makes a significant contribution to
the U.S. economy through payment of taxes or use of American products,
materials, or labor;
• is independently owned and operated; and
• is not dominant in its field on a national basis.23
The business may be a sole proprietorship, partnership, corporation, or any other legal form.

19 Prior to October 1, 1985, the SBA provided direct business loans to qualified small businesses. From October 1,
1985, to September 30, 1994, SBA direct business loan eligibility was limited to qualified small businesses owned by
individuals with low incomes or located in areas of high unemployment, owned by Vietnam-era or disabled veterans,
owned by the handicapped or certain organizations employing them, and certified under the minority small business
capital ownership development program. Microloan program intermediaries were also eligible. On October 1, 1994,
SBA direct loan eligibility was limited to Microloan program intermediaries and small businesses owned by the
handicapped. Funding to support direct loans to the handicapped through the Handicapped Assistance (renamed the
Disabled Assistance) Loan program ended in 1996. The last loan under the Disabled Assistance Loan program was
issued in FY1998. See U.S. Congress, House Committee on Small Business, Summary of Activities, 105rd Cong., 2nd
sess., January 2, 1999, H.Rept. 105-849 (Washington: GPO, 1999), p. 8.
20 U.S. Congress, Senate Committee on Small Business, Hearing on the Proposed Fiscal Year 1995 Budget for the
Small Business Administration
, 103rd Cong., 2nd sess., February 22, 1994, S. Hrg. 103-583 (Washington: GPO, 1994),
p. 20.
21 SBA, Fiscal Year 2010 Congressional Budget Justification, p. 30, at https://www.sba.gov/sites/default/files/
Congressional_Budget_Justification_2010.pdf.
22 The SBA provides financial assistance to nonprofit organizations to provide training to small business owners and to
provide loans to small businesses through the SBA Microloan program. Also, nonprofit child care centers are eligible
to participate in SBA’s Microloan program.
23 13 C.F.R. §121.105.
Congressional Research Service
6

Small Business Administration: A Primer on Programs and Funding

What Is Small?24
The SBA uses two measures to determine if a business is small: SBA-derived industry specific
size standards or a combination of the business’s net worth and net income. For example,
businesses participating in the SBA’s 7(a) loan guaranty program, including its express programs,
are deemed small if they either meet the SBA’s industry-specific size standards for firms in 1,047
industrial classifications in 18 sub-industry activities described in the North American Industry
Classification System (NAICS) or do not have more than $15 million in tangible net worth and
not more than $5 million in average net income after federal taxes (excluding any carryover
losses) for the two full fiscal years before the date of the application. All of the company’s
subsidiaries, parent companies, and affiliates are considered in determining if it meets the size
standard.25
The SBA’s industry size standards vary by industry, are designed to encourage competition within
the industry, and are based on one of the following four measures: the firm’s (1) average annual
receipts in the previous three years, (2) number of employees, (3) asset size, or (4) for refineries,
a combination of number of employees and barrel per day refining capacity. Historically, the SBA
has used the number of employees to determine if manufacturing and mining companies are small
and average annual receipts for most other industries.
As a starting point, the SBA presumes $7.0 million in average annual receipts in the previous
three years to be an appropriate size standard for the services, retail trade, construction, and other
industries with receipts-based size standards. It considers 500 employees to be an appropriate size
for the manufacturing, mining, and other industries with employee-based size standards and 100
employees to be appropriate for the wholesale trade industries. These three levels, referred to as
anchor size standards, are used by the SBA as benchmarks or starting points when establishing its
size standards. To the extent an industry displays “differing industry characteristics” necessary to
enable small businesses to compete successfully with larger businesses within that industry, the
SBA will consider a size standard higher, or in some cases lower, than an anchor size standard.26
Overall, about 98% of all businesses are considered small by the SBA.27 These firms represent
about 30% of industry receipts.

24 For additional information and analysis, see CRS Report R40860, Small Business Size Standards: A Historical
Analysis of Contemporary Issues
, by Robert Jay Dilger.
25 13 C.F.R. §121.201; and P.L. 111-240, the Small Business Act of 2010, §1116. Alternative Size Standards.
26 SBA, Office of Government Contracting and Business Development, “SBA Size Standards Methodology,” April
2009, pp. 1-8, at https://www.sba.gov/sites/default/files/size_standards_methodology.pdf.
27 SBA, “Table of Small Business Size Standards Matched to North American Industry Classification System Codes,”
at https://www.sba.gov/content/small-business-size-standards; and SBA, “SBA’s Size Standards Analysis: An
Overview on Methodology and Comprehensive Size Standards Review,” power point presentation, Khem R. Sharma,
SBA Office of Size Standards, July 13, 2011, p. 4, at http://www.gtscoalition.com/wp-content/uploads/2011/07/Size-
Stds-Presentation_Dr.-Sharma-SBA.pdf.
Congressional Research Service
7

Small Business Administration: A Primer on Programs and Funding

Loan Guarantees
Overview
The SBA provides loan guarantees for small businesses that cannot obtain credit elsewhere. Its
largest loan guaranty programs are the 7(a) loan guaranty program, the 504/CDC loan guaranty
program, international trade and export promotion loans, and the Microloan program.
The SBA’s loan guaranty programs require personal guarantees from borrowers and share the risk
of default with the lender by making the guaranty less than 100%. In the event of a default, the
borrower owes the amount contracted less the value of any collateral liquidated. The SBA can
attempt to recover the unpaid debt through administrative offset, salary offset, or IRS tax refund
offset. Most types of business are eligible for loan guarantees, but a few are not. A list of
ineligible businesses (such as insurance companies, real estate investment firms, firms involved in
financial speculation or pyramid sales, businesses involved in illegal activities, and businesses
deriving more than one-third of gross annual revenue from legal gambling activities) is contained
in 13 C.F.R. Section 120.110.28 With one exception, nonprofit and charitable organizations are
also ineligible.29
In addition, as shown in the following tables, most of these programs charge fees to help offset
program costs, including costs related to loan defaults. In most instances, the SBA’s fees are set in
statute. For example, for 7(a) loans with a maturity exceeding 12 months, the SBA is authorized
to charge lenders an up-front guaranty fee of up to 2% for the SBA guaranteed portion of loans of
$150,000 or less, up to 3% for the SBA guaranteed portion of loans exceeding $150,000 but not
more than $700,000, and up to 3.5% for the SBA guaranteed portion of loans exceeding
$700,000. Lenders with a 7(a) loan that has a SBA guaranteed portion in excess of $1 million can
be charged an additional fee not to exceed 0.25% of the guaranteed amount in excess of $1
million. These loans are also subject to an ongoing servicing fee not to exceed 0.55% of the
outstanding balance of the guaranteed portion of the loan (0.519% in FY2015).30 In addition,
lenders are authorized to collect fees from borrowers to offset their administrative expenses.
The SBA waived the up-front loan guaranty fee and ongoing servicing fee for 7(a) loans of
$150,000 or less in FY2014. The SBA also waived the up-front, one-time loan guaranty fee for all
veteran loans under the 7(a) SBAExpress program (up to $350,000) from January 1, 2014,
through the end of FY2014.31 It is continuing these fee waivers in FY2015 and waiving 50% of
the up-front loan guaranty fee on all non-SBAExpress 7(a) loans (of $150,001 up to and including
$5 million) for veterans.32 In addition, the SBA has announced that it plans to continue all of these
fee waivers in FY2016.33

28 Title 13 of the Code of Federal Regulations can be viewed at http://www.gpo.gov/fdsys/pkg/CFR-2013-title13-vol1/
pdf/CFR-2013-title13-vol1-chapI.pdf.
29 P.L. 105-135, the Small Business Reauthorization Act of 1997, expanded the SBA’s Microloan program’s eligibility
to include borrowers establishing a nonprofit child care business.
30 15 U.S.C. §636(a)(23)(a).
31 The small business must be owned and controlled (51%+) by one or more of the following groups: veteran; active
duty military in the Transition Assistance Program; reservist or National Guard member; a spouse of any of these
groups; or a widowed spouse of a servicemember or veteran who died during service or of a service-connected
disability.
32 SBA, FY2015 Congressional Budget Justification and FY2013 Annual Performance Report, p. 10, at
(continued...)
Congressional Research Service
8

Small Business Administration: A Primer on Programs and Funding

P.L. 113-235, the Consolidated and Further Continuing Appropriations Act, 2015, provided
statutory authorization to waive the 7(a) SBAExpress program’s guarantee fee for veterans (and
their spouses) in FY2015.
The SBA’s goal is to achieve a zero subsidy rate, meaning that the loan guarantee programs do
not require annual appropriations of budget authority for new loan guaranties. As shown in Table
2
, in recent years, the SBA’s fees and proceeds from loan liquidations have not generated enough
revenue to cover loan losses, resulting in the need for additional appropriations to account for the
shortfall. However, “due to the continued improvement in performance in the loan portfolio,” the
SBA is not requesting funding for credit subsidies for the 7(a) and 504/CDC loan guaranty
programs in FY2016.34
Table 2. SBA Business Loan Subsidies, Authorized Amounts, FY2010-FY2016
($ in millions)
7(a) Loan
504/CDC Loan
Guaranty
Guaranty
Microloan
Fiscal Year
Program
Program
Program Total
Subsidy
2010 $80.00
$0.00 $3.00
$83.00
2011a $79.84
$0.00 $2.99
$82.83
2012 $139.40
$67.70 $3.68
$210.78
2013b $218.38
$97.87 $3.49 $319.74
2014 $0.00
$107.00
$4.60
$111.60
2015 $0.00
$45.00
$2.50
$47.50
2016
request
$0.00
$0.00 $3.34 $3.34
Sources: SBA, Congressional Budget Justification (Summary of Credit Programs & Revolving Fund), various years,
at https://www.sba.gov/about-sba/sba-performance/performance-budget-finances/congressional-budget-
justificationannual-performance-reports; P.L. 111-117, the Consolidated Appropriations Act, 2010; P.L. 112-10,
the Department of Defense and Ful -Year Continuing Appropriations Act, 2011; P.L. 112-74, the Consolidated
Appropriations Act, 2012; P.L. 112-175, the Continuing Appropriations Resolution, 2013;SBA, “General
Statement Regarding the Implications of Sequestration;” P.L. 113-76, the Consolidated Appropriations Act, 2014;
and P.L. 113-235, the Consolidated and Further Continuing Appropriations Act, 2015.
a. In FY2011, there was a 0.2% across-the-board rescission. Before the rescission, the authorized subsidy
amounts were $80.0 million for the 7(a) program, $0.0 for the 504/ Certified Development Companies
(CDC) program, and $3.0 million for the Microloan program.
b. In FY2013, there was a 0.2% across-the-board rescission and sequestration. Before these reductions, the
authorized subsidy amounts were $225.5 million for the 7(a) program, $108.1 million for the 504/CDC
program, $3.678 million for the Microloan program, and $337.278 million total.

(...continued)
https://www.sba.gov/sites/default/files/files/FY15_CBJ_FY%202013_APR.pdf; and SBA, “SBA Will Continue to Zero
Out Fees on Small Dollar Loans, Expands Relief for Larger Loans to Vets,” October 1, 2014, at https://www.sba.gov/
content/sba-will-continue-zero-out-fees-small-dollar-loans-expands-relief-larger-loans-vets.
33 SBA, FY2016 Congressional Budget Justification and FY2014 Annual Performance Report, p. 10, at
https://www.sba.gov/sites/default/files/1-FY%202016%20CBJ%20FY%202014%20APR.PDF.
34 Ibid., p. 6.
Congressional Research Service
9

Small Business Administration: A Primer on Programs and Funding

7(a) Loan Guaranty Program35
The 7(a) loan guaranty program is named after the section of the Small Business Act that
authorizes it. These are loans made by SBA partners (mostly banks but also some other financial
institutions) and partially guaranteed by the SBA. The 7(a) program’s current guaranty rate is
85% for loans of $150,000 or less and 75% for loans greater than $150,000 (up to a maximum
guaranty of $3.75 million—75% of $5 million). Although the SBA’s offer to guarantee a loan
provides an incentive for lenders to make the loan, lenders are not required to do so.
Table 3 provides information on the 7(a) program’s key features, including its eligible uses,
maximum loan amount, loan maturity, interest rates, and guarantee fees.
Table 3. Summary of the 7(a) Loan Guaranty Program’s Key Features
Key Feature
Program Summary
Use of Proceeds
Fixed assets, working capital, financing of start-ups, or to purchase an existing business;
some debt payment al owed, but lender’s loan exposure may not be reduced with the
Express products. Lines of credit are offered with the Express programs.
Maximum Loan Amount
$5 million.
Maturity
5 years to 7 years for working capital, up to 25 years for equipment and real estate. Al
other loan purposes have a maximum term of 10 years.
Maximum Interest Rates Base rate plus 2.25% for maturities of fewer than 7 years. Base rate plus 2.75% for
maturities of 7 years or longer. Loans of $50,000 or less may add an additional 1% and
loans under $25,000 may add an additional 2%. There is a prepayment penalty for loans
with maturities of 15 years or more if prepaid during the first 3 years.
Guaranty Fees
For loans with a maturity of 12 months or less, the SBA normally charges an up-front
guaranty fee of 0.25% of the guaranteed portion of the loan (0% for loans of $150,000 or
less in FY2015). For loans with maturities of more than 12 months, the SBA is authorized
to charge an up-front guaranty fee of: up to 2% for loans of $150,000 or less (0% in
FY2015); up to 3% for loans of $150,001 to $700,000; up to 3.5% for loans of more than
$700,000; and up to 3.75% for the guaranty portion over $1 million. The SBA is also
allowed to charge an ongoing, annual servicing fee of up to 0.55% (0% for loans of
$150,000 or less; 0.519% for loans of more than $150,000 in FY2015).
For FY2015, the SBA is not charging an up-front guaranty fee or an annual servicing fee
for 7(a) loans in the amount of $150,000 or less; the up-front, one-time loan guaranty fee
for al veteran loans under the 7(a) SBAExpress program (for loans of up to $350,000), or
50% of the up-front loan guaranty fee on veteran non-SBAExpress 7(a) loans (for loans of
$150,001 up to and including $5 million).
Job Creation
No job creation requirements.
Source: Table compiled by CRS from data from the SBA.
Note: In 2009 and 2010, Congress provided $962.5 million to temporarily eliminate some of the SBA’s fees. For
example, the Small Business Jobs Act of 2010 (P.L. 111-240) provided $505 million (plus $5 million for
administrative expenses) to subsidize fees in the SBA’s 7(a) and 504/CDC loan guarantee programs from its date
of enactment (September 27, 2010) through December 31, 2010.
As mentioned previously, in FY2015, the SBA is not charging the up-front loan guaranty fee and
ongoing servicing fee for 7(a) loans of $150,000 or less; the up-front, one-time loan guaranty fee

35 For further information and analysis, see CRS Report R41146, Small Business Administration 7(a) Loan Guaranty
Program
, by Robert Jay Dilger.
Congressional Research Service
10

Small Business Administration: A Primer on Programs and Funding

for all veteran loans under the 7(a) SBAExpress program (for loans up to and including
$350,000), or 50% of the up-front loan guaranty fee on veteran non-SBAExpress 7(a) loans (for
loans of $150,001 up to and including $5 million).36 Lenders are permitted to charge borrowers
fees to recoup specified expenses. Because the SBA’s fees on loans of $150,000 or less are zero,
lenders are prohibited from charging borrowers a guaranty fee on those loans.37
Variable-rate loans can be pegged to either the prime rate or the SBA optional peg rate, which is a
weighted average of rates that the federal government pays for loans with maturities similar to the
guaranteed loan. The spread over the prime rate or SBA optional peg rate is negotiable between
the borrower and the lender, but no more than 6%. The adjustment period can be no more than
monthly and cannot change over the life of the loan.
Variations on the 7(a) Program
The 7(a) program has several specialized programs that offer streamlined and expedited loan
procedures for particular groups of borrowers, including the SBAExpress program (for loans of
$350,000 or less), the Export Express program (for loans of up to $500,000 for entering or
expanding an existing export market), and the Community Advantage program (for loans of
$250,000 or less), which is limited to mission-focused lenders targeting underserved markets and
scheduled to expire on March 15, 2017. Lenders must be approved by the SBA to participate in
these programs.
The SBA’s Small Loan Advantage program (for loans of $350,000 or less) also exists, but it is
currently being used as the 7(a) program’s model for processing loans of $350,000 or less and
exists as a separate, specialized program in name only.
The SBAExpress program was established as a pilot program by the SBA on February 27, 1995,
and made permanent through legislation, subject to reauthorization, in 2004 (P.L. 108-447, the
Consolidated Appropriations Act, 2005). The program is designed to increase the availability of
credit to small businesses by permitting lenders to use their existing documentation and
procedures in return for receiving a reduced SBA guarantee on loans. It provides a 50% loan
guarantee on loan amounts of $350,000 or less.38 The loan proceeds can be used for the same
purposes as the 7(a) program, except participant debt restructuring cannot exceed 50% of the
project and may be used for revolving credit. The program’s fees and loan terms are the same as
the 7(a) program, except the term for a revolving line of credit cannot exceed seven years.39

36 SBA, FY2015 Congressional Budget Justification and FY2013 Annual Performance Report, p. 10, at
https://www.sba.gov/sites/default/files/files/FY15_CBJ_FY%202013_APR.pdf; and SBA, “SBA Will Continue to Zero
Out Fees on Small Dollar Loans, Expands Relief for Larger Loans to Vets,” October 1, 2014, at https://www.sba.gov/
content/sba-will-continue-zero-out-fees-small-dollar-loans-expands-relief-larger-loans-vets.
37 SBA, “SBA Information Notice: 7(a) and 504 Fees Effective On October 1, 2013,” at https://www.sba.gov/sites/
default/files/5000-1288.pdf; and SBA, “SBA Will Continue to Zero Out Fees on Small Dollar Loans, Expands Relief
for Larger Loans to Vets,” October 1, 2014, at https://www.sba.gov/content/sba-will-continue-zero-out-fees-small-
dollar-loans-expands-relief-larger-loans-vets.
38 P.L. 111-240, the Small Business Jobs Act of 2010, temporarily increased the SBAExpress program’s loan limit to
$1 million for one year following enactment (through September 26, 2011).
39 On November 8, 2013, the SBA announced it was waiving the up-front, one-time loan guaranty fee for all veteran
loans under the SBAExpress program (up to $350,000) from January 1, 2014, through the end of FY2014. The SBA
announced that the fee waiver was part “of SBA’s broader efforts to make sure that veterans have the tools they need to
start and grow a business.” See SBA, “SBA Announces New Measures to Help Get Small Business Loans Into the
(continued...)
Congressional Research Service
11

Small Business Administration: A Primer on Programs and Funding

As mentioned previously, the SBA is not charging an up-front guaranty fee or an annual servicing
fee for 7(a) loans in the amount of $150,000 or less; the up-front, one-time loan guaranty fee for
all veteran loans under the SBAExpress program; or 50% of the up-front loan guaranty fee on
veteran non-SBAExpress 7(a) loans (for loans of $150,001 up to and including $5 million).40
Special Purpose Loan Guaranty Programs
In addition to the 7(a) loan guaranty program, the SBA has special purpose loan guaranty
programs for small businesses adjusting to the North American Free Trade Agreement (NAFTA),
to support Employee Stock Ownership Program trusts, pollution control facilities, and working
capital.
Community Adjustment and Investment Program. The Community Adjustment and Investment
Program (CAIP) uses federal funds to pay the fees on 7(a) and 504/CDC loans to businesses
located in communities that have been adversely affected by NAFTA.
Employee Trusts. The SBA will guarantee loans to Employee Stock Ownership Plans (ESOPs)
that are used either to lend money to the employer or to purchase control from the owner. ESOPs
must meet regulations established by the IRS, Department of the Treasury, and Department of
Labor. These are 7(a) loans.
Pollution Control. In 1976, the SBA was provided authorization to guarantee the payment of
rentals or other amounts due under qualified contracts for pollution control facilities. P.L. 100-
590, the Small Business Reauthorization and Amendment Act of 1988, eliminated the revolving
fund for pollution control guaranteed loans and transferred its remaining funds to the SBA’s
business loan and investment revolving fund. Since 1989, loans for pollution control have been
guaranteed under the 7(a) loan guaranty program.
CAPLines. CAPLines are five special 7(a) loan guaranty programs designed to meet the
requirements of small businesses for short-term or cyclical working capital. The maximum term
is five years.
The 504/CDC Loan Guaranty Program41
The 504/CDC loan guaranty program uses Certified Development Companies (CDCs), which are
private, nonprofit corporations established to contribute to economic development within their
communities. Each CDC has its own geographic territory. The program provides long-term,
fixed-rate loans for major fixed assets such as land, structures, machinery, and equipment.
Program loans cannot be used for working capital, inventory, or repaying debt. A commercial
lender provides up to 50% of the financing package, which is secured by a senior lien. The CDC’s

(...continued)
Hands of Veterans,” November 8, 2013, at https://www.sba.gov/content/sba-announces-new-measures-help-get-small-
business-loans-hands-veterans.
40 SBA, “SBA Will Continue to Zero Out Fees on Small Dollar Loans, Expands Relief for Larger Loans to Vets,”
October 1, 2014, at https://www.sba.gov/content/sba-will-continue-zero-out-fees-small-dollar-loans-expands-relief-
larger-loans-vets.
41 For further information and analysis, see CRS Report R41184, Small Business Administration 504/CDC Loan
Guaranty Program
, by Robert Jay Dilger.
Congressional Research Service
12

Small Business Administration: A Primer on Programs and Funding

loan of up to 40% is secured by a junior lien. The SBA backs the CDC with a guaranteed
debenture.42 The small business must contribute at least 10% as equity.
To participate in the program, small businesses cannot exceed $15 million in tangible net worth
and cannot have average net income of more than $5 million for two full fiscal years before the
date of application. Also, CDCs must intend to create or retain one job for every $65,000 of the
debenture ($100,000 for small manufacturers) or meet an alternative job creation standard if they
meet any one of 15 community or public policy goals.
Table 4 summarizes the 504/CDC loan guaranty program’s key features.
Table 4. Summary of the 504/CDC Loan Guaranty Program’s Key Features
Key Feature
Program Summary
Use of Proceeds
Fixed assets only—no working capital.
Maximum Loan Amount
Maximum 504/CDC participation in a single project is $5 million and $5.5 million for
manufacturers; minimum is $50,000. There is no limit on the project size.
Maturity
10 years for equipment; 20 years for real estate. Unguaranteed financing may have a
shorter term.
Maximum Interest Rates
Fixed rate is established when the debenture backing the loan is sold and is based on the
current market rate for 5-year and 10-year Treasury bonds.
Participation
504/CDC projects general y have three main participants: a third-party lender provides
Requirements
50% or more of the financing; a CDC provides up to 40% of the financing through a
504/CDC debenture, which is guaranteed 100% by the SBA; and the borrower
contributes at least 10% of the financing. For good cause shown, the SBA may authorize
an increase in the CDC’s percentage of project costs covered up to 50%. No more than
50% of eligible costs can be from federal sources.
Guaranty Fees
The SBA is authorized to charge CDCs a one-time, up-front guaranty fee (0.5% of the
debenture), an annual servicing fee (0.9375% of the unpaid principal balance), a funding
fee (not to exceed 0.25% of the debenture), an annual development company fee
(0.125% of the debenture’s outstanding principal balance), and a one-time participation
fee (0.5% of the senior mortgage loan if in a senior lien position to the SBA and the loan
was approved after September 30, 1996). In addition, CDCs are al owed to charge
borrowers a processing (or packaging) fee of up to 1.5% of the net debenture proceeds
and a closing fee, servicing fee, late fee, assumption fee, Central Servicing Agent (CSA)
fee, other agent fees, and an underwriters’ fee.
Job Creation
Must intend to create or retain one job for every $65,000 of the debenture ($100,000
Requirements
for small manufacturers) or meet an alternative job creation standard if it meets any one
of 15 community or public policy goals.
Source: Table compiled by CRS from data from the SBA.
Notes: The maximum loan amount is the total financial package, including the commercial loan and the CDC
loan. It does not include the owner’s minimum 10% equity contribution. It assumes the CDC loan is 40% of the
total package.

42 A debenture is a bond that is not secured by a lien on specific collateral.
Congressional Research Service
13

Small Business Administration: A Primer on Programs and Funding

International Trade and Export Promotion Programs43
Although any of SBA’s loan guaranty programs can be used by firms looking to begin exporting
or expanding their current exporting operations, the SBA has three loan programs that specifically
focus on trade and export promotion:
1. Export Express loan program provides working capital or fixed asset financing
for firms that will begin or expand exporting. It offers a 90% guaranty on loans
of $350,000 or less and a 75% guaranty on loans of $350,001 to $500,000.
2. Export Working Capital loan program provides financing to support export
orders or the export transaction cycle, from purchase order to final payment. It
offers a 90% guaranty of loans up to $5 million.
3. International Trade loan program provides long-term financing to support firms
that are expanding because of growing export sales or have been adversely
affected by imports and need to modernize to meet foreign competition. It offers
a 90% guaranty on loans up to $5 million.44
In many ways, the SBA’s trade and export promotion loan programs share similar characteristics
with other SBA loan guaranty programs. For example, the Export Express program resembles the
SBAExpress program. The SBAExpress program shares several characteristics with the standard
7(a) loan guarantee program except that the SBAExpress program has an expedited approval
process, a lower maximum loan amount, and a smaller percentage of the loan guaranteed.
Similarly, the Export Express program shares several of the characteristics of the standard
International Trade loan program, such as an expedited approval process in exchange for a lower
maximum loan amount ($500,000 compared with $5 million) and a lower percentage of guaranty.
Additionally, the SBA administers the State Trade and Export Promotion (STEP) grant program.
STEP grants are awarded to states to execute export programs that assist small business concerns,
such as a trade show exhibition, training workshops, or a foreign trade mission. Initially, the
STEP program was authorized for three years and appropriated $30 million annually in FY2011
and FY2012. The program’s authorization expired at the end of FY2012, and the President has
not requested appropriations for subsequent rounds of awards. However, Congress approved $8
million in appropriations for STEP in FY2014 and $17.4 million for FY2015.
The Microloan Program45
The Microloan program provides direct loans to qualified nonprofit intermediary Microloan
lenders that, in turn, provide “microloans” of up to $50,000 to small businesses and nonprofit
child care centers. It also provides marketing, management, and technical assistance to Microloan
borrowers and potential borrowers. The program was authorized in 1991 as a five-year
demonstration project and became operational in 1992. It was made permanent, subject to

43 For further information and analysis, see CRS Report R43155, Small Business Administration Trade and Export
Promotion Programs
, by Sean Lowry.
44 The International Trade loan program limits its guaranty for working capital to $4 million ($4.444 million gross loan
amount).
45 For further information and analysis, see CRS Report R41057, Small Business Administration Microloan Program,
by Robert Jay Dilger.
Congressional Research Service
14

Small Business Administration: A Primer on Programs and Funding

reauthorization, by P.L. 105-135, the Small Business Reauthorization Act of 1997. Although the
program is open to all small businesses, it targets new and early stage businesses in underserved
markets, including borrowers with little to no credit history, low-income borrowers, and women
and minority entrepreneurs in both rural and urban areas who generally do not qualify for
conventional loans or other, larger SBA guaranteed loans.
Table 5 summarizes the Microloan program’s key features.
Table 5. Summary of the Microloan Program’s Key Features
Key Feature
Program Summary
Use of proceeds
Working capital and acquisition of materials, supplies, furniture, fixtures, and equipment.
Loans cannot be made to acquire land or property.
Maximum Loan Amount
$50,000.
Maturity
Up to six years.
Maximum Interest Rates The SBA charges intermediaries an interest rate that is based on the five-year Treasury
rate, adjusted to the nearest one-eighth percent (called the Base Rate), less 1.25% if the
intermediary maintains a historic portfolio of Microloans averaging more than $10,000
and less 2.0% if the intermediary maintains a historic portfolio of Microloans averaging
$10,000 or less. The Base Rate, after adjustment, is called the Intermediary’s Cost of
Funds. The Intermediary’s Cost of Funds is initially calculated one year from the date of
the note and is reviewed annually and adjusted as necessary (called recasting). The
interest rate cannot be less than zero.
On loans of more than $10,000, the maximum interest rate that can be charged to the
borrower is the interest rate charged by the SBA on the loan to the intermediary, plus
7.75%. On loans of $10,000 or less, the maximum interest rate that can be charged to the
borrower is the interest charged by the SBA on the loan to the intermediary, plus 8.5%.
Rates are negotiated between the borrower and the intermediary and typically range from
7% to 9%.
Guaranty Fees
The SBA does not charge intermediaries up-front or ongoing service fees under the
Microloan program.
Job Creation
No job creation requirements.
Requirements
Source: Table compiled by CRS from data from the SBA.
Surety Bond Guarantee Program46
The SBA’s Surety Bond Guarantee Program is designed to increase small businesses’ access to
federal, state, and local government contracting, as well as private-sector contracts, by
guaranteeing bid, performance, and payment bonds for small businesses that cannot obtain surety
bonds through regular commercial channels.47 The program guarantees individual contracts of up
to $6.5 million and up to $10 million if a federal contracting officer certifies that such a guarantee

46 For additional information and analysis, see CRS Report R42037, SBA Surety Bond Guarantee Program, by Robert
Jay Dilger.
47 Ancillary bonds are also eligible if they are incidental and essential to a contract for which the SBA has guaranteed a
final bond. A reclamation bond is eligible if it is issued to reclaim an abandoned mine site and for a project undertaken
for a specific period of time.
Congressional Research Service
15

Small Business Administration: A Primer on Programs and Funding

is necessary. The SBA’s guarantee ranges from 70% to 90% of the surety’s loss if a default
occurs.
A surety bond is a three-party instrument between a surety (someone who agrees to be
responsible for the debt or obligation of another), a contractor, and a project owner. The
agreement binds the contractor to comply with the terms and conditions of a contract. If the
contractor is unable to successfully perform the contract, the surety assumes the contractor’s
responsibilities and ensures that the project is completed. The surety bond reduces the risk
associated with contracting.48
Surety bonds are viewed as a means to encourage project owners to contract with small
businesses that may not have the credit history or prior experience of larger businesses and are
considered to be at greater risk of failing to comply with the contract’s terms and conditions.49
Entrepreneurial Development Programs50
The SBA’s entrepreneurial development programs provide technical and managerial training to
small business owners and aspiring entrepreneurs. Some of this training is free, and some is
offered at low cost. It includes services provided by the Service Corps of Retired Executives
(SCORE), Small Business Development Centers (SBDCs), Women’s Business Centers (WBCs),
Veteran Business Outreach Centers, and Native American Outreach programs, among others.
SCORE was established on October 5, 1964, by then-SBA Administrator Eugene P. Foley as a
national, volunteer organization, uniting more than 50 independent nonprofit organizations into a
single, national nonprofit organization. SCORE’s 354 chapters and more than 800 branch offices
are located throughout the United States and partner with nearly 13,000 volunteer counselors,
who are working or retired business owners, executives, and corporate leaders, to provide
management and training assistance to small businesses.
SBDCs provide free or low-cost assistance to small businesses using programs customized to
local conditions. SBDCs support small business in marketing and business strategy, finance,
technology transfer, government contracting, management, manufacturing, engineering, sales,
accounting, exporting, and other topics. SBDCs are funded by grants from the SBA and matching
funds. There are 63 lead SBDC service centers, one located in each state (four in Texas and six in
California), the District of Columbia, Puerto Rico, the Virgin Islands, Guam, and American
Samoa. These lead SBDC service centers manage more than 900 SBDC outreach locations.
WBCs are similar to SBDCs, except they concentrate on assisting women entrepreneurs. There
are currently 106 WBCs, with at least one WBC in most states and territories.
The SBA’s 15 Veterans Business Outreach Centers provide “outreach, assessment, long term
counseling, training, coordinated service delivery referrals, mentoring and network building,
procurement assistance and E-based assistance to benefit Small Business concerns and potential

48 SBA, “Surety Bonds,” at https://www.sba.gov/category/navigation-structure/loans-grants/bonds/surety-bonds.
49 Ibid.
50 For further information and analysis, see CRS Report R41352, Small Business Management and Technical
Assistance Training Programs
, by Robert Jay Dilger.
Congressional Research Service
16

Small Business Administration: A Primer on Programs and Funding

concerns owned and controlled by Veterans, Service Disabled Veterans and Members of Reserve
Components of the U.S. Military.”51
The SBA’s Office of Native American Affairs provides management and technical educational
assistance to Native Americans (American Indians, Alaska natives, native Hawaiians, and the
indigenous people of Guam and American Samoa) to start and expand small businesses.
Small Business Contracting Programs52
Several programs assist small businesses in obtaining and performing federal contracts and
subcontracts. These include various prime contracting programs; subcontracting programs; and
other assistance (e.g., the federal goaling program and federal Offices of Small and
Disadvantaged Business Utilization).
Prime Contracting Programs
Several contracting programs allow small businesses to compete only with similar firms for
government contracts or receive sole-source awards in circumstances in which such awards could
not be made to other firms. These programs, which give small businesses a chance to win
government contracts without having to compete against larger and more experienced companies,
include the following:
8(a) Program.53 The 8(a) Minority Small Business and Capital Ownership
Development Program (named for the section of the Small Business Act from
which it derives its authority) is for businesses owned by persons who are
socially and economically disadvantaged.54 In addition, an individual’s net worth,
excluding ownership interest in the 8(a) firm and equity in his or her primary
personal residence, must be less than $250,000 at the time of application to the
8(a) Program, and less than $750,000 thereafter. A firm certified by the SBA as
an 8(a) firm is eligible for set-aside and sole-source contracts. The SBA also
provides technical assistance and training to 8(a) firms. Firms may participate in
the 8(a) Program for no more than nine years. As of July 30, 2015, there were
6,628 firms with active certifications in the 8(a) program.55

51 SBA, “Veterans Business Outreach Centers,” at https://www.sba.gov/offices/headquarters/ovbd/resources/362341.
There were eight veterans business outreach centers in FY2009.
52 These programs apply government-wide but are implemented under the authority of the Small Business Act,
pursuant to regulations promulgated by the SBA that determine, in part, eligibility for the programs.
53 For further information and analysis, 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.
54 Section 8(a) of the Small Business Act, P.L. 85-536, as amended, can be found at 15 U.S.C 637(a). Regulations are
in 13 C.F.R. §124. For recent legal developments, see CRS Report R40987, “Disadvantaged” Small Businesses:
Definitions and Designations for Purposes of Federal and Federally Funded Contracting Programs
, by Kate M.
Manuel, and CRS Report RL33284, Minority Contracting and Affirmative Action for Disadvantaged Small Businesses:
Legal Issues
, by Jody Feder.
55 SBA, “Dynamic Small Business Search,” at http://dsbs.sba.gov/dsbs/search/dsp_dsbs.cfm. As of February 3, 2015,
there were 6,733 firms with active certifications in the 8(a) program.
Congressional Research Service
17

Small Business Administration: A Primer on Programs and Funding

Historically Underutilized Business Zone Program.56 This program assists
small businesses located in Historically Underutilized Business Zones
(HUBZones) through set-asides, sole-source awards, and price evaluation
preferences in full and open competitions.57 The determination of whether an area
is a HUBZone is based upon criteria specified in 13 C.F.R. Section 126.103. To
be certified as a HUBZone small business, at least 35% of the small business’s
employees must generally reside in a HUBZone. As of July 30, 2015, there were
5,239 firms with active HUBZone certifications.58
Service-Disabled Veteran-Owned Small Business Program. This program
assists service-disabled veteran-owned small businesses through set-asides and
sole-source awards. For purposes of this program, veterans and service-related
disabilities are defined as they are under the statutes governing veterans affairs.59
Women-Owned Small Business Program. Under this program, contracts may
be set aside for economically disadvantaged women-owned small businesses in
industries in which women are underrepresented and women-owned small
businesses in industries in which women are substantially underrepresented.
Other small businesses. Agencies may also set aside contracts or make sole-
source awards to small businesses not participating in any other program under
certain conditions.
Subcontracting Programs for Small Disadvantaged Businesses
Other federal programs promote subcontracting with small disadvantaged businesses (SDBs).
SDBs include 8(a) participants and other small businesses that are at least 51% unconditionally
owned and controlled by socially or economically disadvantaged individuals or groups.
Individuals owning and controlling non-8(a) SDBs may have net worth of up to $750,000
(excluding ownership interests in the SDB firm and equity in their primary personal residence).
Otherwise, however, SDBs must generally satisfy the same eligibility requirements as 8(a) firms,
although they do not apply to the SBA to be designated SDBs in the same way that 8(a) firms
do.
Federal agencies must negotiate “subcontracting plans” with the apparently successful bidder or
offeror on eligible prime contracts prior to awarding the contract. Subcontracting plans set goals
for the percentage of subcontract dollars to be awarded to SDBs, among others, and describe
efforts that will be made to ensure that SDBs “have an equitable opportunity to compete for
subcontracts.” Federal agencies may also consider the extent of subcontracting with SDBs in

56 For additional information and analysis, see CRS Report R41268, Small Business Administration HUBZone
Program
, by Robert Jay Dilger.
57 For recent legal developments relating to the priority given to the HUBZone program, see CRS Report R40591, Set-
Asides for Small Businesses: Recent Developments in the Law Regarding Precedence Among the Set-Aside Programs
and Set-Asides Under Indefinite-Delivery/Indefinite-Quantity Contracts
, by Kate M. Manuel.
58 SBA, “Dynamic Small Business Search,” at http://dsbs.sba.gov/dsbs/search/dsp_dsbs.cfm. As of February 3, 2015,
there were 5,547 firms with active HUBZone certifications.
59 Veteran-owned small businesses and service-disabled veteran-owned small businesses are eligible for separate
preferences in procurements conducted by the Department of Veterans Affairs under the authority of the Veterans
Benefits, Health Care, and Information Technology Act, as amended by the Veterans’ Benefits Improvements Act of
2008.
Congressional Research Service
18

Small Business Administration: A Primer on Programs and Funding

determining to whom to award a contract or give contractors “monetary incentives” to
subcontract with SDBs. As of July 30, 2015, there were 5,983 SBA-certified SDBs and 88,648
self-certified SDBs.60
Goaling Program
Since 1978, federal agency heads have been required to establish federal procurement contracting
goals, in consultation with the SBA, “that realistically reflect the potential of small business
concerns” to participate in federal procurement. Each agency is required, at the conclusion of
each fiscal year, to report its progress in meeting these goals to the SBA.61
In 1988, Congress authorized the President to annually establish government-wide minimum
participation goals for procurement contracts awarded to small businesses and small businesses
owned and controlled by socially and economically disadvantaged individuals. Congress required
the government-wide minimum participation goal for small businesses to be “not less than 20%
of the total value of all prime contract awards for each fiscal year” and “not less than 5% of the
total value of all prime contract and subcontract awards for each fiscal year” for small businesses
owned and controlled by socially and economically disadvantaged individuals.62
Each federal agency was also directed to “have an annual goal that presents, for that agency, the
maximum practicable opportunity for small business concerns and small business concerns
owned and controlled by socially and economically disadvantaged individuals to participate in the
performance of contracts let by such agency.”63 The SBA was required to report to the President
annually on the attainment of these goals and to include this information in an annual report to
Congress.64 The SBA negotiates the goals with each federal agency and establishes a “small
business eligible” baseline for evaluating the agency’s performance.
The small business eligible baseline excludes certain contracts that the SBA has determined do
not realistically reflect the potential for small business participation in federal procurement (such
as contracts awarded to mandatory and directed sources), contracts awarded and performed
overseas, contracts funded predominantly from agency-generated sources, contracts not covered
by Federal Acquisition Regulations, and contracts not reported in the Federal Procurement Data
System (such as contracts or government procurement card purchases valued less than $3,000).65
These exclusions typically account for 18% to 20% of all federal prime contracts each year.
The SBA then evaluates the agencies’ performance against their negotiated goals annually, using
data from the Federal Procurement Data System—Next Generation, managed by the U.S. General
Services Administration, to generate the small business eligible baseline. This information is
compiled into the official Small Business Goaling Report, which the SBA releases annually.

60 SBA, “Dynamic Small Business Search,” at http://dsbs.sba.gov/dsbs/search/dsp_dsbs.cfm. As of February 3, 2015,
there were 6,410 certified SDBs.
61 P.L. 95-507, a bill to amend the Small Business Act and the Small Business Investment Act of 1958.
62 P.L. 100-656, the Business Opportunity Development Reform Act of 1988.
63 Ibid.
64 Ibid.
65 See U.S. General Services Administration, Federal Procurement Data System—Next Generation, “Small Business
Goaling Report: Fiscal Year 2011,” at https://www.fpds.gov/downloads/top_requests/
FPDSNG_SB_Goaling_FY_2011.pdf.
Congressional Research Service
19

Small Business Administration: A Primer on Programs and Funding

Over the years, federal government-wide procurement contracting goals have been established for
small businesses generally (P.L. 100-656, the Business Opportunity Development Reform Act of
1988, and P.L. 105-135, the HUBZone Act of 1997—Title VI of the Small Business
Reauthorization Act of 1997), small businesses owned and controlled by socially and
economically disadvantaged individuals (P.L. 100-656, the Business Opportunity Development
Reform Act of 1988), women (P.L. 103-355, the Federal Acquisition Streamlining Act of 1994),
small businesses located within a HUBZone (P.L. 105-135, the HUBZone Act of 1997—Title VI
of the Small Business Reauthorization Act of 1997), and small businesses owned and controlled
by a service disabled veteran (P.L. 106-50, the Veterans Entrepreneurship and Small Business
Development Act of 1999).
The current federal small business contracting goals are
• at least 23% of the total value of all small business eligible prime contract awards
to small businesses for each fiscal year,
• 5% of the total value of all small business eligible prime contract awards and
subcontract awards to small disadvantaged businesses for each fiscal year,
• 5% of the total value of all small business eligible prime contract awards and
subcontract awards to women-owned small businesses,
• 3% of the total value of all small business eligible prime contract awards and
subcontract awards to HUBZone small businesses, and
• 3% of the total value of all small business eligible prime contract awards and
subcontract awards to service-disabled veteran-owned small businesses.66
Although there are no punitive consequences for not meeting the small business procurement
goals, the SBA’s Small Business Goaling Report is distributed widely, receives media attention,
and serves to heighten public awareness of the issue of small business contracting. For example,
agency performance as reported in the SBA’s Small Business Goaling Report is often cited by
Members during their questioning of federal agency witnesses during congressional hearings.
As shown in Table 6, the FY2014 Small Business Goaling Report, using data in the Federal
Procurement Data System as of February 20, 2015, indicates that federal agencies met the federal
contracting goal for small businesses generally (for the second year in a row and the second time
in nine years), small disadvantaged businesses, and service-disabled veteran-owned small
businesses in FY2014.
Federal agencies awarded 24.99% of the value of their small business eligible contracts ($366.8
billion) to small businesses ($91.7 billion), 9.46% to small disadvantaged businesses ($34.7
billion), 4.68% to women-owned small businesses ($17.2 billion), 1.82% to HUBZone small
businesses ($6.7 billion), and 3.68% to service-disabled veteran-owned small businesses ($13.5
billion).67 The percentage of total reported federal contracts (without exclusions) awarded to those
small businesses in FY2014 is also provided in the table for comparative purposes.

66 15 U.S.C. §644(g)(1)-(2).
67 U.S. General Services Administration, Federal Procurement Data System—Next Generation, “Small Business
Goaling Report: Fiscal Year 2014,” at https://www.fpds.gov/downloads/top_requests/
FPDSNG_SB_Goaling_FY_2014.pdf.
Congressional Research Service
20

Small Business Administration: A Primer on Programs and Funding

Table 6. Federal Contracting Goals and Percentage of FY2014 Federal Contract
Dollars Awarded to Small Businesses, by Type
Percentage of FY2014
Percentage of FY2014
Federal Contracts
Federal Contracts (all
Business Type
Federal Goal
(small business eligible)
reported contracts)
Smal Businesses
23.0%
24.99%
22.16%
Small Disadvantaged
5.0% 9.46% 6.90%
Businesses
Women-Owned Smal
5.0% 4.68% 3.98%
Businesses
HUBZone Smal Businesses
3.0%
1.82%
1.57%
Service-Disabled Veteran-
3.0% 3.68% 3.36%
Owned Small Businesses
Sources: SBA, “Statutory Guidelines,” at https://www.sba.gov/content/statutory-guidelines-0 (federal goals); U.S.
General Services Administration, Federal Procurement Data System—Next Generation, “Small Business Goaling
Report: Fiscal Year 2014,” at https://www.fpds.gov/downloads/top_requests/FPDSNG_SB_Goaling_FY_2014.pdf;
and U.S. General Services Administration, Federal Procurement Data System—Next Generation, at
https://www.fpds.gov/fpdsng/ (contract dol ars).
Notes: The Federal Procurement Data System (FPDS) is a dynamic system with records updated daily. The
smal business goaling report for FY2014 is based on FPDS prime contract data as of February 20, 2015. It
reports that smal business eligible contracts at that time totaled $366.8 billion and that $91.7 billion was
awarded to small businesses, $34.7 billion to small disadvantaged businesses, $17.2 billion to women-owned
small businesses, $6.7 billion to SBA-certified HUBZone small businesses, and $13.5 billion to service-disabled
veteran-owned smal businesses. The smal business goaling report for FY2014 does not indicate the total
amount of federal contracts reported in the FPDS as of February 20, 2015. Therefore, the percentages provided
in the column for all reported contracts in FY2014 were calculated using FPDS data as reported on June 29,
2015: $445.1 billion in total contracts, $98.6 billion awarded to small businesses, $30.7 billion to small
disadvantaged businesses, $17.7 billion to women-owned small businesses, $7.0 billion to HUBZone small
businesses, and $14.9 billion to service-disabled veteran-owned small businesses.
Office of Small and Disadvantaged Business Utilization
Government agencies with procurement authority have an Office of Small and Disadvantaged
Business Utilization (OSDBU) to advocate within the agency for small businesses, as well as
assist small businesses in their dealings with federal agencies (e.g., obtaining payment).
Regional and District Offices
As mentioned previously, the SBA proves funding to third parties, such as SBDCs, to provide
management and training services to small business owners and aspiring entrepreneurs. The SBA
also provides management, training, and outreach services to small business owners and aspiring
entrepreneurs through its 68 district offices. These offices are overseen by the SBA Office of
Field Operations and 10 regional offices.
In FY2014, SBA district offices conducted more than 20,000 outreach events with stakeholders
and resource partners, “including lender trainings, government contracting events, joint efforts
Congressional Research Service
21

Small Business Administration: A Primer on Programs and Funding

with agency resource partners, underserved market events, and events targeted to high growth
entrepreneurial markets such as exporting.”68 In FY2014, SBA district field offices also
performed annual program eligibility and compliance reviews on 100% of the 8(a) business
development firms in the SBA’s portfolio and conducted 550 on-site examinations (a 10% sample
of HUBZone certified firms) to validate compliance with the HUBZone program’s geographic
requirement for principal offices.69
Office of Inspector General
The Office of Inspector General’s (OIG’s) mission is “to improve SBA management and
effectiveness, and to detect and deter fraud in the Agency’s programs.”70 It serves as “an
independent and objective oversight office created within the SBA by the Inspector General Act
of 1978 [P.L. 95-452], as amended.”71 The Inspector General, who is nominated by the President
and confirmed by the Senate, directs the office. The Inspector General Act provides the OIG with
the following responsibilities:
• “promote economy, efficiency, and effectiveness in the management of SBA
programs and supporting operations;
• conduct and supervise audits, investigations, and reviews relating to the SBA’s
programs and support operations;
• detect and prevent fraud, waste and abuse;
• review existing and proposed legislation and regulations and make appropriate
recommendations;
• maintain effective working relationships with other Federal, State and local
governmental agencies, and non-governmental entities, regarding the mandated
duties of the Inspector General;
• keep the SBA Administrator and Congress informed of serious problems and
recommend corrective actions and implementation measures;
• comply with the audit standards of the Comptroller General;
• avoid duplication of Government Accountability Office (GAO) activities; and
• report violations of Federal criminal law to the Attorney General.”72

68 SBA, FY2016 Congressional Budget Justification and FY2014 Annual Performance Report, p. 107, at
https://www.sba.gov/sites/default/files/1-FY%202016%20CBJ%20FY%202014%20APR.PDF.
69 Ibid., pp. 130, 133.
70 SBA, “Office of Inspector General,” at https://www.sba.gov/office-of-inspector-general.
71 SBA, “Office of the Inspector General Strategic Plan for FY 2012–2017,” p. 3, at https://www.sba.gov/sites/default/
files/oig/SBA-OIG%202012-2017%20Strategic%20Plan%20.pdf.
72 Ibid.
Congressional Research Service
22

Small Business Administration: A Primer on Programs and Funding

Capital Investment Programs
The SBA has several programs to improve small business access to capital markets, including the
Small Business Investment Company program, the New Market Venture Capital Program, and
two special high technology contracting programs (the Small Business Innovative Research and
Small Business Technology Transfer programs).
The Small Business Investment Company Program73
The Small Business Investment Company (SBIC) program enhances small business access to
venture capital 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.”74 The SBA works with 294 privately owned and managed SBICs licensed by
the SBA to provide financing to small businesses with private capital the SBIC has raised and
with funds the SBIC borrows at favorable rates because the SBA guarantees the debenture (loan
obligation). 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);75
• 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;76
• purchasing debt securities from small businesses, which may be convertible into,
or have rights to purchase, equity in the small business;77 and
• subject to limitations, providing small businesses a guarantee of their monetary
obligations to creditors not associated with the SBIC.78

73 For further information and analysis, see CRS Report R41456, SBA Small Business Investment Company Program,
by Robert Jay Dilger.
74 15 U.S.C. §661.
75 13 C.F.R. §107.800. The 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.
76 13 C.F.R. §107.810; and 13 C.F.R. §107.840.
77 13 C.F.R. §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.
78 13 C.F.R. §107.820.
Congressional Research Service
23

Small Business Administration: A Primer on Programs and Funding

Table 7. Summary of Small Business Investment Company Program’s Key Features
Key Feature
Program Summary
Use of Proceeds
To purchase small business equity securities, make loans to small businesses, purchase
debt securities from small businesses, and provide, subject to limitations, small
businesses a guarantee of their monetary obligations to creditors not associated with
the SBIC.
Maximum Leverage
A licensed SBIC in good standing with a demonstrated need for funds may apply to the
Amount
SBA for financial assistance (called leverage) of up to 300% of its private capital.
However, most SBICs are approved for a maximum of 200% of their private capital, and
no fund management team may exceed the al owable maximum amount of leverage,
currently $150 million per SBIC and $225 million for two or more licenses under
common control. SBICs 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 they have invested at least 50% of their financings in
low-income geographic areas and certify that at least 50% of their future investments
will be in low-income geographic areas.
Maturity
SBA-guaranteed debenture participation certificates can have a term of up to 15 years,
although currently only one outstanding SBA-guaranteed debenture participation
certificate has a term exceeding 10 years and all recent public offerings have specified a
term of 10 years. SBA-guaranteed debentures provide for semiannual interest payments
and a lump sum principal payment to investors at maturity. SBICs are allowed to prepay
SBA-guaranteed debentures without penalty. However, a SBA-guaranteed debenture
must be prepaid in whole and not in part and can only be prepaid on a semiannual
payment date. Also, low-to-moderate income area (LMI) debentures are available in two
maturities, for 5 years and 10 years (plus the stub period).
Maximum Interest Rates
The debenture’s coupon (interest) rate is determined by market conditions and the
interest rate of 10-year Treasury securities at the time of the sale.
Guaranty Fees
The SBA requires the SBIC to pay a 3% origination fee for each debenture issued (1% at
commitment and 2% at draw), an annual fee on the leverage drawn, which is fixed at the
time of the leverage commitment, and other administrative and underwriting fees, which
are adjusted annually.
Job Creation
No job creation requirements.
Requirements
Source: Table compiled by CRS from data from the SBA.
New Market Venture Capital Program79
The New Market Venture Capital (NMVC) program encourages equity investments in small
businesses in low-income areas that meet specific statistical criteria established by regulation.
The program operates through public-private partnerships between the SBA and newly formed
NMVC investment companies and existing Specialized Small Business Investment Companies
(SSBICs) that operate under the Small Business Investment Company program.
The NMVC program’s objective is to serve the unmet equity needs of local entrepreneurs in low-
income areas by providing developmental venture capital investments and technical assistance,

79 For further information and analysis of the New Markets Venture Capital program, see CRS Report R42565, SBA
New Markets Venture Capital Program
, by Robert Jay Dilger.
Congressional Research Service
24

Small Business Administration: A Primer on Programs and Funding

helping to create quality employment opportunities for low-income area residents, and building
wealth within those areas.
The SBA’s role is essentially the same as with the SBIC program. The SBA selects participants
for the NMVC program, provides funding for their investments and operational assistance
activities, and regulates their operations to ensure public policy objectives are being met. The
SBA requires the companies to provide regular performance reports and have annual financial
examinations by the SBA.
Small Business Innovation Research Program80
The Small Business Innovation Research (SBIR) program is designed to increase the participation
of small, high technology firms in federal research and development (R&D) endeavors, provide
additional opportunities for the involvement of minority and disadvantaged individuals in the
R&D process, and result in the expanded commercialization of the results of federally funded
R&D.81 Current law requires that every federal department with an R&D budget of $100 million
or more establish and operate a SBIR program. A set percentage of that agency’s applicable
extramural R&D budget—originally set at not less than 0.2% in FY1983 and currently not less
than 2.9% in FY2015—is to be used to support mission-related work in small businesses.82
Agency SBIR efforts involve a three-phase process. During Phase I, awards of up to $150,000 for
six months are made to evaluate a concept’s scientific or technical merit and feasibility. The
project must be of interest to and coincide with the mission of the supporting organization.
Projects that demonstrate potential after the initial endeavor may compete for Phase II awards of
up to $1 million, lasting one to two years. Phase II awards are for the performance of the principal
R&D by the small business. Phase III funding, directed at the commercialization of the product or
process, is expected to be generated in the private sector. Federal dollars may be used if the
government perceives that the final technology or technique will meet public needs.
Eight departments and three other federal agencies currently have SBIR programs, including the
Departments of Agriculture, Commerce, Defense, Education, Energy, Health and Human
Services, Homeland Security, and Transportation; the Environmental Protection Agency; the
National Aeronautics and Space Administration (NASA); and the National Science Foundation
(NSF). Each agency’s SBIR activity reflects that organization’s management style. Individual
departments select R&D interests, administer program operations, and control financial support.
Funding can be disbursed in the form of contracts, grants, or cooperative agreements. Separate
agency solicitations are issued at established times.

80 For further information and analysis of the SBIR program, see CRS Report R43695, Small Business Innovation
Research and Small Business Technology Transfer Programs
, by John F. Sargent Jr.
81 See P.L. 97-219, the Small Business Innovation Development Act of 1982; and 15 U.S.C. §638.
82 The percentage of each designated agency’s applicable extramural research and development budget to be used to
support mission-related work in small businesses was scheduled to increase to not less than 2.7% in FY2013, not less
than 2.8% in FY2014, not less than 2.9% in FY2015, not less than 3.0% in FY2016, and not less than 3.2% in FY2017
and each fiscal year thereafter. See P.L. 112-81, the National Defense Authorization Act for Fiscal Year 2012; and
SBA, “Small Business Innovation Research Program Policy Directive,” 77 Federal Register 46806-46855.
Congressional Research Service
25

Small Business Administration: A Primer on Programs and Funding

The SBA is responsible for establishing the broad policy and guidelines under which individual
departments operate their SBIR programs. The SBA monitors and reports to Congress on the
conduct of the separate departmental activities.
Small Business Technology Transfer Program
The Small Business Technology Transfer program (STTR) provides funding for research
proposals that are developed and executed cooperatively between a small firm and a scientist in a
nonprofit research organization and meet the mission requirements of the federal funding
agency.83 Up to $150,000 in Phase I financing is available for approximately one year to fund the
exploration of the scientific, technical, and commercial feasibility of an idea or technology. Phase
II awards of up to $1 million may be made for two years, during which time the developer
performs R&D work and begins to consider commercial potential. Only Phase I award winners
are considered for Phase II. Phase III funding, directed at the commercialization of the product or
process, is expected to be generated in the private sector. The small business must find funding in
the private sector or other non-STTR federal agency.
The STTR program is funded by a set-aside, initially set at not less than 0.05% in FY1994 and
now at not less than 0.4%, of the extramural R&D budget of departments that spend more than $1
billion per year on this effort.84 The Departments of Energy, Defense, and Health and Human
Services, participate in the STTR program, as do NASA and NSF.
The SBA is responsible for establishing the broad policy and guidelines under which individual
departments operate their STTR programs. The SBA monitors and reports to Congress on the
conduct of the separate departmental activities.
Office of Advocacy85
The SBA’s Office of Advocacy is “an independent voice for small business within the federal
government.”86 The Chief Counsel for Advocacy, who is nominated by the President and
confirmed by the Senate, directs the office. The Office of Advocacy’s mission is to “encourage
policies that support the development and growth of American small businesses” by
• intervening early in federal agencies’ regulatory development process on
proposals that affect small businesses and providing Regulatory Flexibility Act
compliance training to federal agency policymakers and regulatory development
officials;
• producing research to inform policymakers and other stakeholders on the impact
of federal regulatory burdens on small businesses, to document the vital role of

83 See P.L. 102-564, the Small Business Research and Development Enhancement Act of 1992; and 15 U.S.C. §638.
84 The STTR program’s set-aside is scheduled to increase to 0.45% in FY2016 and each fiscal year thereafter. See P.L.
112-81, the National Defense Authorization Act for Fiscal Year 2012; and SBA, “Small Business Technology Transfer
Program Policy Directive,” 77 Federal Register 46855-46908.
85 For further information and analysis of the Office of Advocacy, see CRS Report R43625, SBA Office of Advocacy:
Overview, History, and Current Issues
, by Robert Jay Dilger.
86 SBA, “Office of Advocacy: About Us,” at https://www.sba.gov/category/advocacy-navigation-structure/about-us-0.
Congressional Research Service
26

Small Business Administration: A Primer on Programs and Funding

small businesses in the economy, and to explore and explain the wide variety of
issues of concern to the small business community; and
• fostering a two-way communication between federal agencies and the small
business community.87
Executive Direction Programs
The SBA’s executive direction programs consist of the National Women’s Business Council, the
Office of Ombudsman, and the BusinessUSA website initiative.
The National Women’s Business Council
The National Women’s Business Council is a bipartisan federal advisory council created to serve
as an independent source of advice and counsel to the President, Congress, and the SBA on
economic issues of importance to women business owners. The council’s mission “is to promote
bold initiatives, policies, and programs designed to support women’s business enterprises at all
stages of development in the public and private sector marketplaces—from start-up to success to
significance.”88
Office of Ombudsman
The National Ombudsman’s mission “is to assist small businesses when they experience
excessive or unfair federal regulatory enforcement actions, such as repetitive audits or
investigations, excessive fines, penalties, threats, retaliation or other unfair enforcement action by
a federal agency.”89 The Office of Ombudsman works with federal agencies that have regulatory
authority over small businesses to provide a means for entrepreneurs to comment about
enforcement activities and encourage agencies to address those concerns promptly. It also
receives comments from small businesses about unfair federal compliance or enforcement
activities and refers those comments to the Inspector General of the affected agency in
appropriate circumstances. In addition, the National Ombudsman files an annual report with
Congress and affected federal agencies that rates federal agencies based on substantiated
comments received from small business owners. Affected agencies are provided an opportunity to
comment on the draft version of the annual report to Congress before it is submitted.90

87 SBA, Office of Advocacy, FY2013 Congressional Budget Justification, p. 2, at https://www.sba.gov/sites/default/
files/files/1-508%20Compliant%20FY%202013%20CBJ%20FY%202011%20APR%281%29.pdf.
88 The National Women’s Business Council, “About the Council,” Washington, DC, at https://www.nwbc.gov/about-
the-nwbc.
89 SBA, “Office of the National Ombudsman and Assistant Administrator for Regulatory Enforcement Fairness,” at
https://www.sba.gov/ombudsman.
90 SBA, “National Ombudsman’s Fiscal Year Reports to Congress,” at https://www.sba.gov/ombudsman/national-
ombudsmans-fiscal-year-reports-congress.
Congressional Research Service
27

Small Business Administration: A Primer on Programs and Funding

BusinessUSA
The SBA’s BusinessUSA website initiative provides a common Internet-based platform for the
sharing of information of interest to both small and large businesses from 10 federal agencies,
including the SBA. It is designed to focus on the needs of small businesses and to “match
businesses with the services relevant to them, regardless of where the information is located or
which agency’s website, call center, or office they go to for help.”91 The BusinessUSA website
(http://www.BusinessUSA.gov) presents information about several topics, including starting and
expanding a business, financing, export opportunities, disaster assistance, resources for veterans,
health care changes, and counseling and training services.
Legislative Activity
During the 111th Congress, several laws were enacted that included provisions designed to
increase small business access to capital. For example, P.L. 111-5, the American Recovery and
Reinvestment Act of 2009 (ARRA) provided the SBA an additional $730 million in temporary
funding, including $375 million to subsidize fees for the SBA’s 7(a) and 504/CDC loan guaranty
programs and to increase the 7(a) program’s maximum loan guaranty percentage to 90% for all
regular 7(a) loans through September 30, 2010, or when appropriated funding for the subsidies
and loan modification was exhausted. P.L. 111-240, the Small Business Jobs Act of 2010,
authorized the Secretary of the Treasury to establish a $30 billion Small Business Lending Fund
(SBLF) to encourage community banks with less than $10 billion in assets to increase their
lending to small businesses (about $4.0 billion was issued) and a $1.5 billion State Small
Business Credit Initiative to provide funding to participating states with small business capital
access programs. The act also provided the SBA an additional $697.5 million; including $510
million to continue the SBA’s fee subsidies and the 7(a) program’s 90% maximum loan guaranty
percentage through December 31, 2010, and about $12 billion in tax relief for small businesses.92
P.L. 111-322, the Continuing Appropriations and Surface Transportation Extensions Act, 2011,
authorized the SBA to continue its fee subsidies and the 7(a) program’s 90% maximum loan
guaranty percentage through March 4, 2011, or until available funding was exhausted, which
occurred on January 3, 2011.
During the 112th Congress, the SBA’s statutory authorization expired (on July 31, 2011).93 Since
then, the SBA has been operating under authority provided by annual appropriations acts. Prior to
July 31, 2011, the SBA’s authorization had been temporarily extended 15 times since 2006.

91 Karen Mills, former SBA Administrator, “BusinessUSA: New Website to Help Small Businesses and Exporters
Navigate the Federal Government,” February 13, 2013, at http://www.sba.gov/community/blogs/official-sba-news-and-
views/open-business/businessusa-new-website-help-small-busines.
92 P.L. 111-240, the Small Business Jobs Act of 2010, made several changes relating to the SBA’s loan guaranty
programs. The legislation increased loan limits for the 7(a) program from $2 million to $5 million and raised the
504/CDC program’s loan limits from $2 million to $5 million for standard borrowers and from $4 million to $5.5
million for manufacturers. It temporarily expanded for two years the eligibility for low-interest refinancing under the
SBA’s 504/CDC program for qualified debt. It also amended the SBAExpress program, the SBA Microloan program,
the SBA secondary market program, the SBA size standards, and the SBA International Trade Finance program. For
further information and analysis concerning P.L. 111-240, the Small Business Jobs Act of 2010, see CRS Report
R41385, Small Business Legislation During the 111th Congress, by Robert Jay Dilger and Gary Guenther; and CRS
Report R40985, Small Business: Access to Capital and Job Creation, by Robert Jay Dilger.
93 P.L. 112-17, the Small Business Additional Temporary Extension Act of 2011.
Congressional Research Service
28

Small Business Administration: A Primer on Programs and Funding

P.L. 112-239, the National Defense Authorization Act for Fiscal Year 2013, made a number of
changes to several SBA programs. For example, among other provisions, the act increased the
SBA’s surety bond limit from $2 million to $6.5 million (and up to $10 million if a federal
contracting officer certifies that such a guarantee is necessary); required the SBA to oversee and
establish standards for most federal mentor-protégé programs and establish a mentor-protégé
program for all small business concerns; required the SBA’s Chief Counsel for Advocacy to enter
into a contract with an appropriate entity to conduct an independent assessment of the small
business procurement goals, including an assessment of which contracts should be subject to the
goals; and addressed the SBA’s recent practice of combining size standards within industrial
groups as a means to reduce the complexity of its size standards by requiring the SBA to make
available a justification when establishing or approving a size standard that the size standard is
appropriate for each individual industry classification.
During the 113th Congress, legislation was introduced to reauthorize two temporary SBA
programs authorized by P.L. 111-240 that had expired: a temporary two-year 504/CDC loan
refinancing program for purposes other than business expansion (expired on September 27, 2012)
and the Office of International Trade’s State Trade and Export Promotion (STEP) grant program
(authorized for three years, funded for two years).94 The STEP program was subsequently
provided an appropriation of $8 million in FY2014 and $17.4 million in FY2015. In addition, P.L.
113-76, the Consolidated Appropriations Act, 2014, increased the SBA’s SBIC program’s annual
authorization amount to $4 billion from $3 billion. Legislation was also introduced to target
additional SBA assistance to start-up and early stage small businesses through the SBIC program
and to provide additional resources to WBCs.95
During the 114th Congress, P.L. 114-38, the Veterans Entrepreneurship Act of 2015, authorized
and made permanent the SBA’s current practice of waiving the SBAExpress loan program’s one
time, up-front loan guaranty fee for veterans (and their spouse). The act also increased the 7(a)
loan program’s FY2015 authorization limit from $18.75 billion to $23.5 billion.

94 H.R. 1240, the Commercial Real Estate and Economic Development Act of 2013 (CREED Act of 2013), would have
extended the temporary expansion of the projects eligible for 504/CDC program refinancing of existing debt for five
years following the bill’s enactment. It was referred to the House Committee on Small Business on March 18, 2013. Its
companion bill in the Senate (S. 289) was referred to the Senate Committee on Small Business and Entrepreneurship on
February 12, 2013, and was ordered to be reported favorably, with an amendment, on June 17, 2013. As amended, S.
289 would have extended the temporary expansion of the projects eligible for 504/CDC program refinancing of
existing debt during any fiscal year in which the 504/CDC program is operating at zero subsidy. H.R. 2333, the Next
STEP Act of 2013, would have provided for the permanent extension of the STEP program. On July 17, 2013, the
Senate passed a Financial Services appropriations bill (S. 1371) that recommended $20 million in STEP funding for
FY2014.
95 For example, the Small Business Investment Enhancement and Tax Relief Act (H.R. 30) and the Small Business
Innovation Act (S. 1285) would have authorized the Administration to establish a separate SBIC program for early
stage small businesses. Also, the Expanding Access to Capital for Entrepreneurial Leaders Act (S. 511, EXCEL Act)
and the Small Business Innovation Act of 2013 (S. 1285) would have increased the SBIC program’s annual
authorization amount to $4 billion from $3 billion and increase the program’s family of funds limit (the amount of
outstanding leverage allowed for two or more SBIC licenses under common control) to $350 million from $225
million. The Women’s Small Business Ownership Act of 2014 (S. 2693) would have authorized to be appropriated
$26.75 million for Women Business Centers (WBCs) for each of FYs 2015-2019, nearly double the amount ($14
million) appropriated in FY2014; increased the WBC annual grant award amount from not more than $150,000 to not
more than $250,000; and authorized the SBA Administrator to waive, in whole or in part, the WBC nonfederal
matching requirement for up to two consecutive fiscal years under specified circumstances.
Congressional Research Service
29

Small Business Administration: A Primer on Programs and Funding

In addition, the House has passed legislation to expand the role of the SBA’s Office of Advocacy
in the federal rule-making process (H.R. 527, the Small Business Regulatory Flexibility
Improvements Act of 2015); increase the guaranty rate from not less than 70% to not less than
90% for preferred sureties participating in the SBA’s Surety Bond Guarantee Program (H.R.
1735, the National Defense Authorization Act for Fiscal Year 2016); and make it easier for
businesses located in a Base Realignment and Closure Act (BRAC) military base closure area to
meet the HUBZone program’s requirement that at least 35% of a business’s employees reside in a
HUBZone area (H.R. 1735).
The Senate has also passed legislation to make it easier for businesses located in a Base
Realignment and Closure Act (BRAC) military base closure area to meet the HUBZone
program’s requirement that at least 35% of a business’s employees reside in a HUBZone area
(H.R. 1735, the National Defense Authorization Act for Fiscal Year 2016, as amended).
Other legislation currently under consideration includes, among others, bills to expand the
projects eligible for refinancing under the 504/CDC loan guaranty program, eliminate restrictions
on Microloan intermediaries’ use of technical assistance funding, increase the amount of funding
Microloan intermediaries may receive from the SBA, and increase the SBIC program’s family of
funds limit (the amount of outstanding leverage allowed for two or more SBIC licenses under
common control).
Over the years, the SBA has discontinued many programs. Some of these cancellations were done
administratively, others at the direction of Congress. In many cases, key features of the programs
were incorporated into other programs. In recent years, the small loans FA$TRAK loan program
(now called SBAExpress, which continues), LowDoc loan program, handicapped assistance loan
program, disabled assistance loan program, community express pilot program, Dealer Floor Plan
program, Small/Rural Lender Advantage program, and Patriot Express program have been
discontinued. The SBA has also ended its support of the veterans franchise program
(VETFRAN), which the Department of Veterans Affairs continues to support. During the 112th
Congress, both the House and Senate Committees on Small Business considered legislation to
terminate several smaller SBA programs, such as the Drug-Free Workplace Program, and several
authorized but inactive programs, such as the lease guarantee loan program, the pollution control
loan program, and the small business telecommuting pilot program.96
Appropriations97
The SBA’s received an appropriation of $928.975 million in FY2014 and $887.604 million in
FY2015. The Obama Administration has requested $860.130 million for the SBA in FY2016.
As shown in Table 8, the SBA’s FY2015 appropriation of $887.604 million includes $257.00
million for salaries and expenses, $220.00 million for entrepreneurial development and noncredit

96 See the legislative history of H.R. 2608 (112th Congress), the Continuing Appropriations Act, 2012. Before becoming
the legislative vehicle for the continuing appropriations bill, the bill contained the Small Business Program Extension
and Reform Act of 2011.
97 For further information concerning appropriations for the Small Business Administration and other independent
agencies, see CRS Report R43352, Financial Services and General Government (FSGG): FY2014 Appropriations,
coordinated by Baird Webel; and CRS Report R43846, Small Business Administration (SBA) Funding: Overview and
Recent Trends
, by Robert Jay Dilger.
Congressional Research Service
30

Small Business Administration: A Primer on Programs and Funding

programs, $147.73 million for administrative expenses related to the SBA’s business loan
programs, $47.5 million for business loan credit subsidies, $19.4 million for Office of Inspector
General, $9.12 million for the Office of Advocacy, and $186.86 million for disaster assistance.98
Table 8 also shows that the Obama Administration’s FY2016 budget request of $860.130 million
for the SBA would increase funding for salaries and expenses, business loan administration, and
the Office of Inspector General; decrease funding for entrepreneurial development programs and
business loan credit subsidies; and keep funding at the same level as in FY2015 for the Office of
Advocacy and disaster assistance.
Table 8. SBA Appropriations, FY2014-FY2016
($ in millions)
FY2016
Administration
Program Account
FY2014
FY2015
request
Salaries and Expenses
$250.00
$257.00
$281.93
Entrepreneurial
Development $196.17 $220.00 $206.25
Business Loan Administration
$151.56
$147.73
$152.73
Business Loan Credit Subsidy
$111.60
$47.50
$3.34
Office of Inspector General
$19.00
$19.40
$19.90
Office of Advocacy
$8.75
$9.12
$9.12
Disaster
Assistance
$191.90 $186.86 $186.86
Total
$928.98 $887.60 $860.13
Sources: P.L. 113-76, the Consolidated Appropriations Act, 2014, P.L. 113-235, the Consolidated and Further
Continuing Appropriations Act, 2015; and U.S. Smal Business Administration, FY2016 Congressional Budget
Justification and FY2014 Annual Performance Report
, p. 16, at https://www.sba.gov/sites/default/files/1-
FY%202016%20CBJ%20FY%202014%20APR.PDF.
Notes: The sum of the amounts appropriated for each of the program accounts may not equal the total amount
appropriated for that fiscal year due to rounding.
Author Contact Information

Robert Jay Dilger
Sean Lowry
Senior Specialist in American National Government
Analyst in Public Finance
rdilger@crs.loc.gov, 7-3110
slowry@crs.loc.gov, 7-9154

Acknowledgments
Oscar R. Gonzales, former analyst in Economic Development Policy, and N. Eric Weiss, specialist in
Financial Economics, authored earlier versions of this report.


98 U.S. Office of Management and Budget, Appendix, Budget of the U.S. Government, FY2015: Small Business
Administration,
at https://www.whitehouse.gov/sites/default/files/omb/budget/fy2015/assets/sba.pdf.
Congressional Research Service
31