Small Business:
Access to Capital and Job Creation

Robert Jay Dilger
Senior Specialist in American National Government
November 25, 2015
Congressional Research Service
7-5700
www.crs.gov
R40985


Small Business: Access to Capital and Job Creation

Summary
The U.S. Small Business Administration (SBA) administers several programs to support small
businesses, including loan guaranty and venture capital programs to enhance small business
access to capital; contracting programs to increase small business opportunities in federal
contracting; direct loan programs for businesses, homeowners, and renters to assist their recovery
from natural disasters; and small business management and technical assistance training programs
to assist business formation and expansion. Congressional interest in these programs has
increased in recent years, primarily because assisting small business is viewed as a means to
enhance economic growth.
Some, including President Obama, have argued that the SBA should be provided additional
resources to assist small businesses in acquiring capital necessary to start, continue, or expand
operations and create jobs. Others worry about the long-term adverse economic effects of
spending programs that increase the federal deficit. They advocate business tax reduction, reform
of financial credit market regulation, and federal fiscal restraint as the best means to assist small
business economic growth and job creation.
During the 111th Congress
 P.L. 111-5, the American Recovery and Reinvestment Act of 2009 (ARRA),
provided the SBA an additional $730 million, including $375 million to
temporarily subsidize SBA fees and increase the 7(a) loan guaranty program’s
maximum loan guaranty percentage to 90%;
 P.L. 111-240, the Small Business Jobs Act of 2010, authorized $30 billion for the
Small Business Lending Fund to encourage community banks to provide small
business loans ($4 billion was issued); $1.5 billion for the State Small Business
Credit Initiative to provide funding to participating states with small business
capital access programs, numerous changes to the SBA’s loan guaranty and
contracting programs, and $510 million to continue the SBA’s fee subsidies and
90% maximum loan guaranty percentage through December 31, 2010; and about
$12 billion in tax relief for small businesses; and
 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, several bills were introduced to enhance small business access to
capital through the SBA, including bills to extend the SBA’s temporary fee subsidies and the 90%
maximum loan guaranty percentage. Congress did not adopt these legislative efforts. Instead,
Congress passed legislation to enhance small business contracting opportunities, expand access to
the SBA’s surety bond guarantee program, amend the SBA’s size standard practices, require a
review and reassessment of the federal procurement small business goaling program, and expand
small business mentor-protégé programs. Congress also adopted the Jumpstart Our Business
Startups Act (P.L. 112-106) that established a regulatory structure for startups and small
businesses to raise capital through securities offerings using the Internet through crowdfunding.
During the 113th Congress, P.L. 113-76, the Consolidated Appropriations Act, 2014, increased the
annual authorization amount for the SBA’s Small Business Investment Company venture capital
program to $4 billion from $3 billion. The increased authorization amount is designed to provide
small businesses additional access to venture capital.
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Small Business: Access to Capital and Job Creation

During the 114th Congress, P.L. 114-38, the Veterans Entrepreneurship Act of 2015, made
permanent the Obama Administration’s waiver of the up-front, one-time loan guaranty fee for
veteran loans under the SBAExpress loan guaranty program and increased the 7(a) loan guaranty
program’s FY2015 authorization limit to $23.5 billion from $18.75 billion.
This report addresses a core issue facing the 114th Congress: What, if any, additional action
should the federal government take to enhance small business access to capital? It discusses the
role of small business in job creation and retention, then provides an assessment of the supply and
demand for small business loans and recently enacted laws designed to enhance small business
access to capital by increasing either the supply of small business loans or the demand for small
business loans, or both. It also examines recent actions concerning the SBA’s budget and
concludes with a brief overview of three legislative options available to address small business
access to capital issues during the 114th Congress: wait-and-see, enact additional programs, or
reduce and consolidate existing programs.
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Small Business: Access to Capital and Job Creation

Contents
Small Business Access to Capital .................................................................................................... 1
Three Indicators of the Supply and Demand for Private-Sector Small Business Loans ................. 4
Federal Reserve Board: Surveys of Senior Loan Officers ........................................................ 4
FDIC Call Reports: Outstanding Small Business Loans ........................................................... 5
Federal Reserve Board: Survey of Commercial Banks ............................................................. 6
SBA Lending ................................................................................................................................... 8
Recent Laws Designed to Enhance the Supply of Small Business Loans ...................................... 11
Recent Laws Designed to Enhance the Demand for Small Business Loans ................................. 16
Discussion ..................................................................................................................................... 18
SBA Funding ................................................................................................................................. 21
Concluding Observations .............................................................................................................. 24

Figures
Figure 1. Small Business Lending Environment, 2000-2015 .......................................................... 5
Figure 2. Outstanding Small Business Loans, Non-Agricultural Purposes, 2005-2015.................. 6
Figure 3. Estimated Value of Commercial and Industrial Loans Made by Commercial
Banks on a Quarterly Basis, Including Loans Under $1 Million, 2005-2015 .............................. 7
Figure 4. Estimated Value of Commercial and Industrial Loans Made By Commercial
Banks in Amounts Under $1 Million, on a Quarterly Basis, 2005-2015...................................... 8

Tables
Table 1. Selected Small Business Administration Financial Statistics, FY2000-FY2015 ............... 9
Table 2. Small Business Administration Appropriations, FY2000-FY2016 ................................. 22

Appendixes
Appendix. Selected Provisions in the Small Business Jobs Act of 2010....................................... 27

Contacts
Author Contact Information .......................................................................................................... 29

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Small Business: Access to Capital and Job Creation

Small Business Access to Capital
The Small Business Administration (SBA) administers several programs to support small
businesses, including venture capital programs to provide “long-term loans and equity capital to
small businesses, especially those with potential for substantial job growth and economic
impact”1 and loan guaranty programs to encourage lenders to provide loans to small businesses
“that might not otherwise obtain financing on reasonable terms and conditions.”2 Historically, one
of the justifications presented for funding the SBA’s access to capital programs has been that
small businesses can be at a disadvantage, compared with other businesses, when trying to obtain
sufficient capital and credit.3 As an economist explained,
Growing firms need resources, but many small firms may have a hard time obtaining
loans because they are young and have little credit history. Lenders may also be reluctant
to lend to small firms with innovative products because it might be difficult to collect
enough reliable information to correctly estimate the risk for such products. If it’s true
that the lending process leaves worthy projects unfunded, some suggest that it would be
good to fix this “market failure” with government programs aimed at improving small
businesses’ access to credit.4
Congressional interest in the SBA’s access to capital programs has increased in recent years,
primarily because assisting small business in accessing capital is viewed as a means to enhance
job creation and economic growth.5
Some, including President Obama, have argued that the SBA should be provided additional
resources to assist small businesses in acquiring capital necessary to start, continue, or expand
operations and create jobs. They note that small businesses have led job formation during
previous economic recoveries.6 In addition, the SBA has argued that “improving access to credit
by small businesses is a crucial step in supporting economic recovery and job creation.”7
Others contend the long-term adverse economic effects of spending programs that increase the
federal deficit. They advocate business tax reduction, reform of financial credit market regulation,

1 U.S. Small Business Administration (SBA), Fiscal Year 2014 Congressional Budget Justification and FY2012 Annual
Performance Report
, p. 58.
2 SBA, Fiscal Year 2010 Congressional Budget Justification, p. 30.
3 Proponents of providing federal funding for the SBA’s loan guarantee programs also argue that small business can
promote competitive markets. See P.L. 83-163, §2(a), as amended; and 15 U.S.C. §631a.
4 Veronique de Rugy, Why the Small Business Administration’s Loan Programs Should Be Abolished, American
Enterprise Institute for Public Policy Research, AEI Working Paper #126, April 13, 2006, at http://www.aei.org/files/
2006/04/13/20060414_wp126.pdf. Also, see U.S. Government Accountability Office, Small Business Administration:
7(a) Loan Program Needs Additional Performance Measures
, GAO-08-226T, November 1, 2007, pp. 3, 9-11, at
http://www.gao.gov/new.items/d08226t.pdf.
5 For example, see The White House, “Remarks by the President on Job Creation and Economic Growth,” December 8,
2009, at http://www.whitehouse.gov/the-press-office/remarks-president-job-creation-and-economic-growth; and SBA,
Fiscal Year 2014 Congressional Budget Justification and FY2012 Annual Performance Report, pp. 1-14. For further
analysis concerning the role of small business in job creation, see CRS Report R41392, Small Business and the
Expiration of the 2001 Tax Rate Reductions: Economic Issues
, by Jane G. Gravelle and Sean Lowry; and CRS Report
R41523, Small Business Administration and Job Creation, by Robert Jay Dilger.
6 SBA, Office of Advocacy, Small Business Economic Indicators for 2003, August 2004, p. 3; Brian Headd, “Small
Businesses Most Likely to Lead Economic Recovery,” The Small Business Advocate, vol. 28, no. 6 (July 2009), pp. 1,
2; and SBA, FY2013 Congressional Budget Justification and FY2011 Annual Performance Report, p. 1.
7 SBA, “President Obama Announces New Efforts to Improve Access to Credit for Small Businesses,” October 21,
2009, at https://www.whitehouse.gov/assets/documents/small_business_final.pdf.
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and federal fiscal restraint as the best means to assist small business economic growth and job
creation.8
Economists generally do not view job creation as a justification for providing federal assistance to
small businesses. They argue that in the long term such assistance will likely reallocate jobs
within the economy, not increase them. In their view, jobs arise primarily from the size of the
labor force, which depends largely on population, demographics, and factors that affect the choice
of home versus market production (e.g., the entry of women in the workforce). However,
economic theory does suggest that increased federal spending may result in additional jobs in the
short term. For example, the SBA reported in September 2010 that the $730 million in additional
funding provided to the agency by P.L. 111-5, the American Recovery and Reinvestment Act of
2009 (ARRA), created or retained 785,955 jobs.9
As will be discussed, the tightening of private-sector lending standards and the disruption of
credit markets in 2008 and 2009 led to increased concern in Congress that small businesses might
be prevented from accessing sufficient capital to start, continue, or expand their operations—
actions that were expected to lead to higher levels of employment. As the SBA indicated in its
FY2010 congressional budget justification report,
Over the last decade, small businesses across this country have been responsible for the
majority of new private sector jobs, leaving little doubt that they are a vital engine for the
nation’s economic growth. However, with the United States facing the most severe
economic crisis in more than 70 years, small businesses are confronted with a frozen
lending market and limited access to the capital they need to survive and grow at this
critical time.10
Since then credit markets have improved and lending standards have moderated, but
congressional concern about the economy and disagreements concerning the best means to
enhance job creation and economic growth remain.
During the 111th Congress, several laws were enacted to enhance small business access to capital.
For example,
 P.L. 111-5, provided the SBA an additional $730 million, including $375 million
to temporarily subsidize SBA fees and increase the 7(a) loan guaranty program’s
maximum loan guaranty percentage from 85% on loans of $150,000 or less and
75% on loans exceeding $150,000 to 90% for all regular 7(a) loans.
 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)
($4.0 billion was issued) to encourage community banks with less than $10
billion in assets to increase their lending to small businesses; $1.5 billion State
Small Business Credit Initiative to provide funding to participating states with
small business capital access programs, numerous changes to the SBA’s loan
guaranty and contracting programs, and funding to continue the SBA’s fee

8 Susan Eckerly, “NFIB Responds to President’s Small Business Lending Initiatives,” Washington, DC, October 21,
2009, at http://www.nfib.com/newsroom/newsroom-item/cmsid/50080/; NFIB, “Government Spending,” Washington,
DC, at http://www.nfib.com/issues-elections/issues-elections-item/cmsid/49051/; and National Federation of
Independent Business, “Payroll Tax Holiday,” at http://www.nfib.com/issues-elections/issues-elections-item/cmsid/
49039/.
9 SBA, “FY2009/2010 Final—Recovery Program Performance Report, September 2010,” September, 2010, at
https://www.sba.gov/sites/default/files/recovery_act_reports/perform_report_9_2010.pdf.
10 SBA, Fiscal Year 2010 Congressional Budget Justification, p. 1.
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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 (see Table A-1 in the Appendix for a list of its key provisions).
 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.
According to the SBA, the temporary fee subsidies and 90% maximum loan guaranty for the 7(a)
program “engineered a significant turnaround in SBA lending.... The end result is that the agency
helped put more than $42 billion in the hands of small businesses through the Recovery Act and
Jobs Act combined.”11
During the 112th Congress, several bills were introduced to enhance small business access to
capital through the SBA, including bills to extend the SBA’s temporary fee subsidies and increase
the 7(a) program’s loan guaranty percentage to 90%.12 Congress did not adopt these legislative
efforts. Instead, Congress passed legislation designed to enhance small business contracting
opportunities, expand access to the SBA’s surety bond guarantee program, amend the SBA’s size
standard practices, require a review and reassessment of the federal procurement small business
goaling program, and expand small business mentor-protégé programs.13 Congress also adopted
the Jumpstart Our Business Startups Act (P.L. 112-106) that established a regulatory structure for
startups and small businesses to raise capital through securities offerings using the Internet
through crowdfunding (discussed later).14
During the 113th Congress, P.L. 113-76, the Consolidated Appropriations Act, 2014, increased the
SBA’s Small Business Investment Company venture capital program’s authorization amount to $4
billion from $3 billion as a means to provide small businesses additional access to venture capital.
During the 114th Congress, P.L. 114-38, the Veterans Entrepreneurship Act of 2015, authorized
and made permanent the Obama Administration’s waiver of the up-front, one-time loan guaranty
fee for veteran loans under the SBAExpress loan guaranty program beginning on or after October
1, 2015, except during any upcoming fiscal year for which the President’s budget, submitted to
Congress, includes a credit subsidy cost for the 7(a) program, in its entirety, that is above zero.15
The act also increased the 7(a) program’s FY2015 authorization limit of $18.75 billion (on

11 SBA, “Jobs Act Supported More Than $12 Billion in SBA Lending to Small Businesses in Just Three Months,”
January 3, 2010, at https://www.sba.gov/content/jobs-act-supported-more-12-billion-sba-lending-small-businesses-just-
three-months.
12 For example, see H.R. 5851, the Increasing Small Business Lending Act of 2012 (112th Congress); and S. 1828, the
Increasing Small Business Lending Act of 2011 (112th Congress).
13 P.L. 112-239, the National Defense Authorization Act for Fiscal Year 2013.
14 Securities and Exchange Commission, “Crowdfunding,” 80 Federal Register 71388-71615, November 16, 2015.
15 U.S. Congress, House Committee on Small Business, Veterans Entrepreneurship Act of 2015, report to accompany
H.R. 2499, 114th Cong., 1st sess., June 25, 2015, H.Rept. 114-187 (Washington: GPO, 2015), p. 9. Credit subsidy cost
is the estimated long-term amount that a direct loan or loan guarantee will cost the federal government (typically the
difference between the revenue collected from fees and collateral liquidation and the costs related to loan defaults and,
for the Microloan program, actuarial costs related to the provision of loans with below market interest rates to
intermediaries). The Obama Administration has waived the up-front loan guaranty fee and ongoing servicing fee for
7(a) loans of $150,000 or less approved in FY2014 and FY2015 as a means to increase small business access to capital.
In addition, the Administration waived the up-front, one-time loan guaranty fee for a loan to a veteran or to a veteran’s
spouse under the SBAExpress program (up to $350,000) from January 1, 2014, through the end of FY2015 (called the
SBA Veterans Advantage Program). The Administration is also waiving 50% of the up-front loan guaranty fee on all
non-SBAExpress 7(a) loans to veterans exceeding $150,000 in FY2015.
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disbursements) to $23.5 billion to accommodate an unexpected increase in the demand for SBA
loans.
This report addresses a core issue facing the 114th Congress: What, if any, additional action
should the federal government take to enhance small business access to capital? After discussing
the role of small business in job creation and retention, this report provides an assessment of the
supply and demand for small business loans, including the number and amount of small business
loans guaranteed by the SBA. It also discusses several laws recently enacted by Congress to
enhance small business access to capital by increasing the supply of small business loans or the
demand for small business loans, or both. The report also examines recent actions concerning the
SBA’s budget and concludes with a brief overview of three legislative options available to address
small business access to capital issues during the 114th Congress: wait-and-see, enact additional
programs, or reduce and consolidate existing programs.
Three Indicators of the Supply and Demand for
Private-Sector Small Business Loans

Federal Reserve Board: Surveys of Senior Loan Officers
Each quarter, the Federal Reserve Board surveys senior loan officers concerning their bank’s
lending practices. The survey includes a question concerning their bank’s credit standards for
small business loans: “Over the past three months, how have your bank’s credit standards for
approving applications for C&I [commercial and industrial] loans or credit lines—other than
those to be used to finance mergers and acquisitions—for small firms (annual sales of less than
$50 million) changed?” The senior loan officers are asked to indicate if their bank’s credit
standards have “Tightened considerably,” “Tightened somewhat,” “Remained basically
unchanged,” “Eased somewhat,” or “Eased considerably.” Subtracting the percentage of
respondents reporting “Eased somewhat” and “Eased considerably” from the percentage of
respondents reporting “Tightened considerably” and “Tightened somewhat” provides an
indication of the market’s supply of small business loans.
As shown in Figure 1senior loan officers reported that they tightened small business loan credit
standards during the early 2000s; loosened them during the mid-2000s, and tightened them during
the late 2000s. Since 2009, small business credit markets have generally improved.
The survey also includes a question concerning the demand for small business loans: “Apart from
normal seasonal variation, how has demand for C&I loans changed over the past three months for
small firms (annual sales of less than $50 million)?” Senior loan officers are asked to indicate if
demand was “Substantially stronger,” “Moderately stronger,” “About the same,” “Moderately
weaker,” or “Substantially weaker.” Subtracting the percentage of respondents reporting
“Moderately weaker” and “Substantially weaker” from the percentage of respondents reporting
“Substantially stronger” and “Moderately stronger” provides an indication of the market’s
demand for small business loans.
Figure 1 shows senior loan officers reported that the demand for small business loans declined
from 2000 to 2004, increased from 2004 to late 2006, declined somewhat in 2007 and 2008, and
declined significantly in 2009. Demand then leveled off (at a relatively reduced level) during
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2010, increased somewhat during the first half of 2011, declined somewhat during the latter half
of 2011, and has generally increased since then.16
Figure 1. Small Business Lending Environment, 2000-2015
(senior loan officers’ survey responses)
80%
60%
Tightening Standards
Increasing Demand
40%
20%
0%
-20%
Loosening Standards
-40%
-60%
Decreasing Demand
-80%
Bank Lending Standards
Small Businesses Demand for Loans

Source: Federal Reserve Board, “Senior Loan Officer Opinion Survey on Bank Lending Practices,” at
http://www.federalreserve.gov/boarddocs/SnLoanSurvey/; and Brian Headd, “Forum Seeks Solutions To Thaw
Frozen Small Business Credit,” The Small Business Advocate, vol. 28, no. 10 (December 2009), p. 3, at
https://www.sba.gov/sites/default/files/The%20Small%20Business%20Advocate%20-%20December%202009.pdf.
FDIC Call Reports: Outstanding Small Business Loans
The Federal Deposit Insurance Corporation (FDIC) reports bank lending statistics on a quarterly
basis drawn from the banks’ Consolidated Reports of Condition and Income (Call Report).17 The
FDIC has maintained comparable small business lending data for the second quarter (June 30) of
each year since 2002. Figure 2 shows the amount of outstanding small business loans (defined by
the FDIC as commercial and industrial loans of $1 million or less) for non-agricultural purposes
as of June 30 of each year since 2005. As shown in Figure 2, the amount of outstanding small
business loans for non-agricultural purposes increased at a relatively steady pace from June 30,

16 Federal Reserve Board, “Senior Loan Officer Opinion Survey on Bank Lending Practices,” at
http://www.federalreserve.gov/boarddocs/SnLoanSurvey/.
17 Every national bank, state member bank, and insured nonmember bank is required by its primary federal regulator to
file consolidated Reports of Condition and Income as of the close of business on the last day of each calendar quarter
(the report date). The specific reporting requirements depend upon the size of the bank and whether it has any foreign
offices.
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2005, to June 30, 2008, declined over the next several years, and has increased modestly since
June 30, 2012.
Figure 2. Outstanding Small Business Loans, Non-Agricultural Purposes, 2005-2015
(billions of $)
$750
$730
$711.5
$710
$696.8
$695.2
$690
$670
$650
$652.2
$634.2
$630
$610
$607.0
$601.5
$590
$587.8 $585.3 $589.7 $598.9
$570
$550
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015

Source: Federal Deposit Insurance Corporation, “Statistics on Depository Institutions,” at http://www2.fdic.gov/
SDI/main.asp.
Notes: Data as of June 30th each year. The FDIC defines a small business loan as a loan of $1 mil ion or less.
Although changes in small business outstanding debt are not necessarily a result of changes in the
supply of small business loans, many, including the SBA, view a decline in small business
outstanding debt as a signal that small businesses might be experiencing difficulty accessing
sufficient capital to enable them to lead job growth during the current recovery.
Federal Reserve Board: Survey of Commercial Banks
The Federal Reserve Board conducts a quarterly “Survey of Terms of Business Lending,” which
provides information concerning the lending activity of commercial banks during the first full
business week in the middle month of each quarter. As shown in Figure 3, the Federal Reserve
Board data indicate that the total estimated value of commercial and industrial loans (hereinafter
C&I loans) provided by commercial banks has experienced some volatility over the years, with
relatively steep declines during the latter half of the December 2007-June 2009 recession and
immediately following the recession. In addition, Figure 3 shows the total estimated value of
commercial banks’ C&I loans has generally increased since the recession’s end. During the week
of August 3-7, 2015 (the latest available data), the estimated value of commercial banks’ C&I
loans was $97.2 billion.
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Figure 3. Estimated Value of Commercial and Industrial Loans Made by Commercial
Banks on a Quarterly Basis, Including Loans Under $1 Million, 2005-2015
(billions of $)
$130
$120
$110
$100
$90
$80
$70
$60
$50
$40
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Value of Commercial Banks' Commercial and Industrial Loans

Source: Board of Governors of the Federal Reserve System, “Survey of Terms of Business Lending - E.2,” at
http://www.federalreserve.gov/releases/E2/default.htm.
Notes: Data were col ected during the first ful business week in the middle month of each quarter. Value is the
amount borrowed.
As shown in Figure 4, the data also indicate that the estimated value of commercial banks’ small
business loans (defined by the Federal Reserve Board as a C&I loan under $1 million) has shown
some volatility, ranging from a low of $10.0 billion during the third quarter of 2009 to a high of
$16.4 billion during the week of August 3-7, 2015 (the latest available data).
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Figure 4. Estimated Value of Commercial and Industrial Loans Made By Commercial
Banks in Amounts Under $1 Million, on a Quarterly Basis, 2005-2015
(billions of $)
$20
$16
$12
$8
$4
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Value of Commerical Banks' Commerical and Industrial Loans Under $1
million (Federal Reserve Board's proxy for small business loans), Quarterly

Source: Board of Governors of the Federal Reserve System, “Survey of Terms of Business Lending - E.2,” at
http://www.federalreserve.gov/releases/E2/default.htm.
Notes: The data were col ected during the first ful business week in the middle month of each quarter. Value is
the amount borrowed.
SBA Lending
Table 1
shows selected financial statistics for the SBA from FY2000 to FY2015. It provides an
overview of the extent of the SBA’s various programs to enhance small business access to capital.
The first two columns report the amount and number of non-disaster business loans guaranteed by
the SBA from FY2000 to FY2015. These figures are less than the amount and number of loans
approved by the SBA. Each year, 7% to 10% of the loans approved by the SBA are subsequently
canceled for a variety of reasons, typically by the borrower.
The third column reports the number of bonds guaranteed under the SBA’s surety bond guarantee
program.18 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 contract’s terms and conditions. If the
contractor is unable to successfully perform the contract, the surety assumes the contractor’s
responsibilities and ensures that the project is completed. It is designed to reduce the risk of
contracting with small businesses that may not have the credit history or prior experience of
larger businesses. The SBA does not issue surety bonds. Instead, it provides and manages surety

18 For further information and analysis of the SBA’s surety bond guarantee program, see CRS Report R42037, SBA
Surety Bond Guarantee Program
, by Robert Jay Dilger.
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bond guarantees for qualified small and emerging businesses through its Surety Bond Guarantee
(SBG) Program. The SBA reimburses a participating surety (within specified limits) for losses
incurred due to a contractor’s default on a bond.19
The fourth column reports the outstanding principal balance for the SBA’s 7(a) secondary market
guarantee program, which is discussed later in this report. The final column reports the SBA’s
outstanding principal balance of loans that have not been charged off as of the end of the fiscal
year. It provides a measure of the SBA’s scope of lending.
Table 1. Selected Small Business Administration Financial Statistics, FY2000-FY2015
(millions of $)
SBA Business Loan Guarantees
7(a)
Secondary
Market
Guarantee
Unpaid
Surety Bond
Program
Principal
Amount
Number
Guarantees
Outstanding
Loan
Fiscal Year
Disbursedb
Disbursed
Number
Principal
Balancea
2015
$15,777 43,462
(preliminary)c
(preliminary)c
NA
NA
$118,767
2014
$20,628
49,625
12,384
$22,500
$114,433
2013
$21,299
46,796
12,866
$20,500
$109,758
2012
$21,388
47,304
9,503
$19,200
$104,443
2011
$22,100
52,573
8,638
$17,600
$99,704
2010
$15,048
52,251
8,348
$15,500
$93,519
2009
$11,979
44,931
6,135
$14,700
$90,454
2008
$16,313
69,051
6,055
$14,900
$88,244
2007
$18,461
97,291
5,809
$14,100
$84,522
2006
$17,973
94,963
5,214
$14,600
$78,119
2005
$17,770
92,154
5,678
$14,900
$71,497
2004
$18,446
78,387
7,803
$14,100
$64,362
2003
$13,918
65,055
8,974
$13,000
$59,181
2002
$14,086
49,894
7,372
$12,000
$56,219
2001
$12,528
41,905
6,320
$11,000
$53,116
2000
$11,869
41,514
7,034
$10,000
$52,227
Sources: U.S. Small Business Administration, correspondence with the author, November 18, 2015 (loan
disbursements by program cohort year); U.S. Small Business Administration, Agency Financial Report [various fiscal
years]
(surety bonds and 7(a) secondary market guarantee program outstanding principal); and U.S. Small
Business Administration, “Unpaid Principal Balance,” at https://www.sba.gov/sites/default/files/
WDS_Table1_UPB_Report.pdf.
a. Includes unpaid principal loan balance for disaster loans: $5.8 bil ion in FY2000, $4.3 bil ion in FY2001, $3.6
bil ion in FY2002, $2.9 bil ion in FY2003, $3.0 bil ion in FY2004, $3.6 bil ion in FY2005, $6.8 bil ion in
FY2006, $9.0 bil ion in FY2007, $8.6 bil ion in FY2008, $8.4 bil ion in FY2009, $7.9 bil ion in FY2010, $7.5

19 SBA, “Surety Bonds,” at https://www.sba.gov/category/navigation-structure/loans-grants/bonds/surety-bonds.
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bil ion in FY2011, $7.2 bil ion in FY2012, $7.2 billion in FY2013, $6.8 bil ion in FY2014, and $6.3 bil ion in
FY2015.
b. The amount disbursed is the amount provided to the borrower. In recent years, the SBA has guaranteed
about 84% to 87% of the loan amount approved.
c. The amount and number of SBA business loan guarantees in FY2015 wil increase as more data becomes
available.
As shown in Table 1, the amount of non-disaster small business loans disbursed by the SBA
declined in FY2008 and FY2009; increased, but remained below pre-recession levels in FY2010;
and has generally exceeded pre-recession levels since FY2011.20
The decline in the amount of small business loans guaranteed by the SBA during FY2008 and
FY2009 was, at least in part, due to the following three interrelated factors:
 many lending institutions become increasingly reluctant to lend to small
businesses, even with an SBA loan guarantee, as loan defaults increased due to
the recession, earnings fell and an increasing number of lending institutions
failed;21
 the secondary market for small business loans, as with other secondary markets,
began to contract in October 2008, reached its nadir in January 2009, and then
began a relatively prolonged recovery.22 The SBA estimates that about half of the
lenders that make SBA guaranteed loans resell them to obtain additional capital
to make additional loans; and
 the demand for small business loans declined as many small business owners
(and entrepreneurs considering starting a new small business) became more risk
adverse during the recession.

20 The recession began in December 2007 and ended in June 2009.
21 FDIC-insured lending institutions lost $12.9 billion in 2008, including a $37.8 billion loss in the fourth quarter,
which more than erased $24.9 billion in profits during the previous three quarters. In 2009, FDIC-insured lending
institutions had a net profit of $4.2 billion. See Federal Deposit Insurance Corporation, “Quarterly Banking Profile:
Quarterly Net Income,” at http://www2.fdic.gov/qbp/2009dec/chart1.htm. In 2010, FDIC-insured lending institutions
had $85.4 billion in net profits. See Federal Deposit Insurance Corporation, “Quarterly Banking Profile: Quarterly Net
Income,” at http://www2.fdic.gov/qbp/2010dec/chart1.htm. The number of lending institutions which failed increased
from 3 in 2007 to 26 in 2008, 140 in 2009 and 157 in 2010. In 2011, 92 lending institutions failed and in 2012 92
lending institutions failed. See Federal Deposit Insurance Corporation, “Failed Bank List,” at http://www.fdic.gov/
bank/individual/failed/banklist.html. Included in the list of failed lending institutions in 2009 was CIT Group, Inc., the
nation’s largest lender to small businesses at that time. See Patrice Hill, “Lender to small business bankrupt,” The
Washington Post
, November 2, 2009, pp. A1, A10. CIT Group, Inc. failed on November 1, 2009.
22 In a secondary market, loans are pooled together and packaged as securities for sale to investors. This practice makes
more capital available by allowing lending institutions to remove existing loans from their balance sheets, freeing them
to make new loans. When secondary credit markets constrict, lenders tend to become both less willing and less able to
supply small business loans. The Federal Reserve Bank of New York, using authority provided under §13(3) of the
Federal Reserve Act, created the Term Asset-Backed Securities Loan Facility (TALF) on March 3, 2009, to stabilize
secondary credit markets by lending up to $200 billion to eligible owners of certain AAA-rated asset backed securities
(ABS) backed by newly and recently originated auto loans, credit card loans, student loans, and SBA-guaranteed small
business loans. The initial TALF subscription took place on March 19, 2009, and the last one took place in June 2010.
There were 23 monthly ABS and Commercial Mortgage Backed Securities (CMBS) subscriptions. TALF supported
about $58 billion of ABS and $12 billion of CMBS. See Federal Reserve Bank of New York, “Term Asset-Backed
Securities Loan Facility: Terms and Conditions,” New York, NY, at http://www.newyorkfed.org/markets/
talf_terms.html; Federal Reserve Bank of New York, “New York Fed releases revised TALF Master Loan and Security
Agreement and appendices,” press release, New York, NY, at http://www.federalreserve.gov/newsevents/press/
monetary/20090303a.htm; and U.S. Department of the Treasury, “Secretary of the Treasury Timothy F. Geithner,
Written Testimony Congressional Oversight Panel,” press release, June 22, 2010, at http://cop.senate.gov/documents/
testimony-062210-geithner.pdf.
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In 2009, the number and amount of small business loans guaranteed by the SBA declined sharply
early in the year, followed by modest increases during the second and third quarters, and briefly
surpassed pre-recession levels in the fourth quarter as small business owners took advantage of
ARRA funded fee subsidies for the SBA’s 7(a) and 504/CDC loan guaranty programs and an
increase in the 7(a) program’s maximum loan guaranty percentage to 90%, which were expected
to end by the end of the year.23
The SBA argued that the increase in the number and amount of small business loans it guaranteed
during FY2010 was primarily due to fee subsidies and loan enhancements first put in place under
ARRA and later extended by law to cover most of the fiscal year.24 The SBA noted that its
average weekly loan volume for FY2010 ($333 million) was 29% higher than its average weekly
loan volume for FY2009 ($258 million).25 Another likely factor contributing to the higher loan
volume was a general improvement in the economy as the recession ended (officially in June
2009) and the economic recovery began, albeit slowly in many parts of the nation.
The demand for SBA loans increased significantly during the first quarter of FY2011 (October-
December 2010), as borrowers took advantage of SBA fee subsidies that were expected to expire
at the end of the calendar year. The SBA announced, on January 3, 2011, that it “approved nearly
22,000 small business loans for $10.47 billion, supporting a total of $12.16 billion in lending”
during the first quarter of FY2011, which “was the highest volume in a fiscal year’s first quarter
than at any time in the agency’s history.”26 After the fee subsidies ended, SBA lending declined
during the second quarter of FY2011, and then increased somewhat during the final two quarters
of FY2011. As mentioned previously, the amount of non-disaster small business loans disbursed
by the SBA has continued at or above pre-recession levels since FY2011.
Recent Laws Designed to Enhance the Supply of
Small Business Loans
As mentioned previously, several laws were enacted during the 110th and 111th Congresses to
enhance small business access to capital. The following laws were enacted largely in response to
the contraction of financial credit markets which started in 2008, and reached its nadir in early
2009.
P.L. 110-343, the Emergency Economic Stabilization Act of 2008, was designed to enhance the
supply of loans to businesses of all sizes. The act authorized the Troubled Asset Relief Program
(TARP) to “restore liquidity and stability to the financial system of the United States” by
purchasing or insuring up to $700 billion in troubled assets from banks and other financial
institutions.27 TARP’s purchase authority was later reduced from $700 billion to $475 billion by
P.L. 111-203, the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Department

23 SBA, “Recovery Act Changes to SBA Loan Programs Sparked Major Mid-Year Turn-Around in Volume,” October
1, 2009; and Nancy Waitz, “U.S. stimulus funds run out for lower SBA loan fees,” Reuters News, November 24, 2009,
at http://www.reuters.com/article/companyNewsAndPR/idUSN2431964620091125.
24 SBA, “Recovery Loan Incentives Spurred Continued Rebound in SBA Lending in FY2010,” October 4, 2010.
25 Ibid.
26 SBA, “Jobs Act Supported More Than $12 Billion in SBA Lending to Small Businesses in Just Three Months,”
January 3, 2011, at https://www.sba.gov/content/jobs-act-supported-more-12-billion-sba-lending-small-businesses-just-
three-months.
27 For further analysis, see CRS Report R41427, Troubled Asset Relief Program (TARP): Implementation and Status,
by Baird Webel.
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of the Treasury has disbursed $389 billion in TARP funds, including $337 million to purchase
SBA 7(a) loan guaranty program securities.28 The authority to make new TARP commitments
expired on October 3, 2010.
P.L. 111-5 (ARRA) included several provisions to enhance the supply of loans to small
businesses.29 It
 authorized the SBA to establish a temporary secondary market guarantee
authority to provide a federal guarantee for pools of first lien 504/CDC program
loans that are to be sold to third-party investors. The SBA was granted
emergency rulemaking authority to issue regulations for the program within 15
days after enactment (by March 4, 2009). After experiencing unanticipated delays
in implementing the program due to “limited staff resources” and determining
how to meet ARRA reporting requirements, the SBA issued regulations for its
504/CDC First Mortgage Loan Pooling program on October 30, 2009, and it
became operational in June 2010.30 The program was scheduled to end on
February 16, 2011, or until $3 billion in new pools are created, whichever
occurred first. As will be discussed, the Small Business Jobs Act of 2010
extended the program.31
 authorized the SBA to use emergency rulemaking authority to issue regulations
within 30 days after enactment (by March 19, 2009), to make below market
interest rate direct loans to SBA-designated “Systemically Important Secondary
Market (SISM) Broker-Dealers.” These broker-dealers would use the loan funds
to purchase SBA-guaranteed loans from commercial lenders, assemble them into
pools, and sell them to investors in the secondary loan market. The SBA
experienced unanticipated delays in implementing the program primarily due to
the need to determine “the extent to which broker-dealers, and perhaps small
business lenders, would be required to share in the potential losses associated
with extending the guarantee in the 504 loan program.”32 The SBA issued

28 U.S. Department of the Treasury, Troubled Assets Relief Program Monthly 105(a) Report—November 2010,
December 10, 2010, pp. 2-4, at http://www.financialstability.gov/docs/November%20105(a)%20FINAL.pdf. On March
16, 2009, President Obama announced that the Department of the Treasury would use TARP funds to purchase up to
$15 billion of SBA-guaranteed loans to “immediately unfreeze the secondary market for SBA loans and increase the
liquidity of community banks.” The plan was deferred after it met resistance from lenders. Some lenders objected to
TARP’s requirement that participating lenders comply with executive compensation limits and issue warrants to the
federal government. Smaller, community banks objected to the program’s paperwork requirements, such as the
provision of a small-business lending plan and quarterly reports. See The White House, “Remarks by the President to
Small Business Owners, Community Leaders, and Members of Congress,” March 16, 2009.
29 For further analysis, see CRS Report R40728, Small Business Tax Benefits and the American Recovery and
Reinvestment Act of 2009
, by Gary Guenther, and CRS Report R41385, Small Business Legislation During the 111th
Congress, by Robert Jay Dilger and Gary Guenther.
30 SBA, “SBA Creates Secondary Market Guarantee Program for 504 First Mortgage Loan Pools,” October 28, 2009;
U.S. Government Accountability Office, Recovery Act: Project Selection and Starts Are Influenced by Certain Federal
Requirements and Other Factors
, GAO-10-383, February 10, 2010, p. 23, at http://www.gao.gov/new.items/
d10383.pdf; and SBA, “New First Mortgage Loan Poolers Will Jump-Start Secondary Market for SBA 504 Loans,
Make Credit More Available,” June 24, 2010, at https://www.sba.gov/content/new-first-mortgage-loan-poolers-will-
jump-start-secondary-market-sba-504-loans-make-credit.
31 SBA, “The American Recovery and Reinvestment Act of 2009: Secondary Market First Lien Position 504 Loan Pool
Guarantee,” 74 Federal Register 56087, October 30, 2009; and SBA, “New First Mortgage Loan Poolers Will Jump-
Start Secondary Market for SBA 504 Loans, Make Credit More Available, June 24, 2010, at https://www.sba.gov/
content/new-first-mortgage-loan-poolers-will-jump-start-secondary-market-sba-504-loans-make-credit.
32 U.S. Government Accountability Office, Status of the Small Business Administration’s Implementation of
(continued...)
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regulations to establish the Direct Loan Program for Systemically Important
Secondary Market Broker-Dealers on November 19, 2009.33
 provided $255 million for a temporary, two-year small business stabilization
program to guarantee loans of $35,000 or less to small businesses for qualified
debt consolidation, later named the America’s Recovery Capital (ARC) Loan
program (the program ceased issuing new loan guarantees on September 30,
2010); $15 million for the SBA’s surety bond program, and temporarily increased
the maximum bond amount from $2 million to $5 million, and up to $10 million
under certain conditions (the higher maximum bond amounts ended on
September 30, 2010); $6 million for the SBA’s Microloan program’s lending
program and $24 million for the Microloan program’s technical assistance
program; and increased the funds (“leverage”) available to SBA-licensed Small
Business Investment Companies (SBICs) to no more than 300% of the
company’s private capital or $150,000,000, whichever is less.
 authorized the SBA to guarantee 504/CDC loans used to refinance business
expansion projects as long as the existing indebtedness did not exceed 50% of the
project cost of the expansion and the borrower met specified requirements.
P.L. 111-240 was enacted after the financial credit markets had stabilized. It included several
provisions designed to enhance the supply of loans to small businesses. For example, the act
 authorized the Secretary of the Treasury to establish a $30 billion Small Business
Lending Fund (SBLF) to encourage community banks to provide small business
loans ($4 billion was issued) and a $1.5 billion State Small Business Credit
Initiative (SSBCI) to provide funding to participating states with small business
capital access programs.34
 extended the SBA’s secondary market guarantee authority from two years after
the date of ARRA’s enactment to two years after the date of the program’s first
sale of a pool of first lien position 504/CDC loans to a third-party investor (which
took place on September 24, 2010).35
 authorized $22.5 million for a temporary, three-year Small Business Intermediary
Lending Pilot Program to provide direct loans to intermediaries which provide
loans to small business startups, newly established small businesses, and growing
small businesses. On August 4, 2011, the SBA announced the first 20 community
lenders which were selected to participate in the program.36
 authorized $15 million in additional funding for the SBA’s 7(a) loan guaranty
program.

(...continued)
Administrative Provisions in the American Recovery and Reinvestment Act of 2009, GAO-10-298R, January 19, 2010,
p. 7, at http://www.gao.gov/new.items/d10298r.pdf.
33 SBA, “American Recovery and Reinvestment Act: Loan Program for Systemically Important SBA Secondary
Market Broker-Dealers,” 74 Federal Register 59891, November 19, 2009.
34 For further analysis of the Small Business Lending Fund, see CRS Report R42045, The Small Business Lending
Fund
, by Robert Jay Dilger. For a further analysis of the State Small Business Credit Initiative see CRS Report
R42581, State Small Business Credit Initiative: Implementation and Funding Issues, by Robert Jay Dilger.
35 SBA, Office of Congressional and Legislative Affairs, correspondence with the author, January 4, 2010.
36 SBA, “Small Businesses Have New Non-Profit Sources for SBA-financed Loans,” August 4, 2011, at
https://www.sba.gov/content/small-businesses-have-new-non-profit-sources-sba-financed-loans.
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 increased the loan guarantee limits for the SBA’s 7(a) program from $2 million to
$5 million, and for the 504/CDC program from $1.5 million to $5 million for
“regular” borrowers, from $2 million to $5 million if the loan proceeds are
directed toward one or more specified public policy goals, and from $4 million to
$5.5 million for manufacturers.
 increased the SBA’s Microloan program’s loan limit for borrowers from $35,000
to $50,000 and for microlender intermediaries after their first year in the program
from $3.5 million to $5 million.37
 temporarily increased for one year the SBA 7(a) Express Program’s loan limit
from $350,000 to $1 million (the temporary increase expired on September 26,
2011).
 required the SBA to establish an on-line lending platform listing all SBA lenders
and information concerning their loan rates.
 authorized the SBA to temporarily guarantee for two years, under specified
circumstances, 504/CDC loans that refinance existing business debt even if the
project does not involve the expansion of the business.
For additional details concerning provisions in the Small Business Jobs Act of 2010, see Table A-
1
in the Appendix.
During the 112th Congress, P.L. 112-106, the Jumpstart Our Business Startups Act (JOBS Act),
established “a regulatory structure for startups and small businesses to raise capital through
securities offerings using the Internet through crowdfunding.”38 The JOBS Act’s crowdfunding
provisions “were intended to help provide startups and small businesses with capital by making
relatively low dollar offerings of securities, featuring relatively low dollar investments by the
“crowd,” less costly.”39
On November 16, 2015, the Securities and Exchange Commission (SEC) published a final rule,
effective May 16, 2016, to implement the JOBS Act’s crowdfunding provisions (e.g., the SEC
established limits on the amount of money an issuer can raise and individual investors can invest
over a 12-month period under the crowdfunding exemption to the securities laws,40 imposed
disclosure requirements on the issuer’s business and securities offering, and created a regulatory
framework for the broker-dealers and funding portals that facilitate the crowdfunding
transactions).41

37 The act also temporarily allowed the SBA to waive, in whole or in part, for successive fiscal years, the non-federal
share requirement for loans to the Microloan program’s intermediaries and for grants made to Microloan intermediaries
for small business marketing, management, and technical assistance under specified circumstances (e.g., the economic
conditions affecting the intermediary). See P.L. 111-240, the Small Business Jobs Act of 2010, §1401. Matching
Requirements Under Small Business Programs.
38 Securities and Exchange Commission, “Crowdfunding,” 80 Federal Register 71388, November 16, 2015.
39 Ibid.
40 The rule will “ ... Permit a company to raise a maximum aggregate amount of $1 million through crowdfunding
offerings in a 12-month period; Permit individual investors, over a 12-month period, to invest in the aggregate across
all crowdfunding offerings up to: If either their annual income or net worth is less than $100,000, than the greater of:
$2,000 or 5% of the lesser of their annual income or net worth. If both their annual income and net worth are equal to
or more than $100,000, 10% of the lesser of their annual income or net worth; and During the 12-month period, the
aggregate amount of securities sold to an investor through all crowdfunding offerings may not exceed $100,000. See
Securities and Exchange Commission, press release, “SEC Adopts Rules to Permit Crowdfunding,” October 30, 2015,
at http://www.sec.gov/news/pressrelease/2015-249.html.
41 Ibid.
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During the 113th Congress, P.L. 113-76, the Consolidated Appropriations Act, 2014, included a
provision increasing the annual authorization amount for the SBA’s Small Business Investment
Company (SBIC) program to $4 billion from $3 billion. The SBIC program is designed to
“improve and stimulate the national economy in general and the small business segment thereof
in particular” by stimulating and supplementing “the flow of private equity capital and long term
loan funds which small business concerns need for the sound financing of their business
operations and for their growth, expansion, and modernization, and which are not available in
adequate supply.”42
As of September 30, 2015, there were 303 privately owned and managed SBA-licensed SBICs
providing small businesses private capital the SBIC has raised (called regulatory capital) and
funds the SBIC borrows at favorable rates (called leverage) because the SBA guarantees the
debenture (loan obligation).43 SBICs provide equity capital to small businesses in various ways,
including by purchasing small business equity securities (e.g., stock, stock options, warrants),
making loans to small businesses, purchasing debt securities from small businesses, and
providing small businesses, subject to limitations, a guarantee of their monetary obligations to
creditors not associated with the SBIC.44
In FY2013, the SBA committed to guarantee $2.15 billion in SBIC small business investments,
and SBICs invested another $1.34 billion from private capital, for almost $3.5 billion in financing
for 1,068 small businesses. Although the SBA’s commitment of $2.15 billion in SBIC leverage in
FY2013 was well below the new $4 billion threshold amount, advocates of the higher threshold
argued that the increase would enable the program to grow, providing more capital to a larger
number of small businesses in the future.
In FY2014, the SBA committed to guarantee nearly $2.55 billion in SBIC small business
investments. SBICs invested another $2.92 billion from private capital for a total of almost $5.5
billion in financing for 1,085 small businesses.45
In FY2015, the SBA committed to guarantee just over $2.55 billion in SBIC small business
investments. SBICs invested another $3.73 billion from private capital for a total of nearly $6.3
billion in financing for 1,210 small businesses.46
During the 114th Congress, P.L. 114-38 increased the supply of 7(a) loans by increasing the
program’s FY2015 authorization limit of $18.75 billion (on disbursements) to $23.5 billion. The
increased authorization amount was necessary to accommodate an unexpected increase in the
demand for SBA loans.

42 15 U.S.C. §661. For further information and analysis concerning the SBA’s Small Business Investment Company
program, see CRS Report R41456, SBA Small Business Investment Company Program, by Robert Jay Dilger.
43 SBA, “SBIC Program Overview, as of September 30, 2015,” at https://www.sba.gov/sites/default/files/files/
WebSBICProgramOverview_September2015.pdf.
44 13 C.F.R. §107.820.
45 SBA, “SBIC Program Overview, as of September 30, 2015,” at https://www.sba.gov/sites/default/files/files/
WebSBICProgramOverview_September2015.pdf.
46 Ibid.
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Recent Laws Designed to Enhance the Demand for
Small Business Loans
ARRA provided the SBA $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 from
up to 85% of loans of $150,000 or less and up to 75% of loans exceeding $150,000 to 90% for all
regular 7(a) loans through September 30, 2010, or when appropriated funding for the subsidies
and loan modification was exhausted. The fee subsidies were designed to increase the demand for
SBA loans by reducing loan costs.
ARRA’s funding for the fee subsidies and 90% maximum loan guaranty percentage was about to
be exhausted in November 2009, when Congress passed the first of six laws to extend the loan
subsidies and 90% maximum loan guaranty percentage:
 P.L. 111-118, the Department of Defense Appropriations Act, 2010, provided the
SBA $125 million to continue the fee subsides and 90% maximum loan guaranty
percentage through February 28, 2010.
 P.L. 111-144, the Temporary Extension Act of 2010, provided the SBA $60
million to continue the fee subsides and 90% maximum loan guaranty percentage
through March 28, 2010.
 P.L. 111-150, an act to extend the Small Business Loan Guarantee Program, and
for other purposes, provided the SBA authority to reprogram $40 million in
previously appropriated funds to continue the fee subsides and 90% maximum
loan guaranty percentage through April 30, 2010.
 P.L. 111-157, the Continuing Extension Act of 2010, provided the SBA $80
million to continue the SBA’s fee subsides and 90% maximum loan guaranty
percentage through May 31, 2010.
 P.L. 111-240, the Small Business Jobs Act of 2010, provided $505 million (plus
an additional $5 million for administrative expenses) to continue the SBA’s fee
subsides and 90% maximum loan guaranty percentage from the act’s date of
enactment (September 27, 2010) through December 31, 2010.
 P.L. 111-322, the Continuing Appropriations and Surface Transportation
Extensions Act, 2011, authorizes the SBA to use funds provided under the Small
Business Jobs Act of 2010 to continue the SBA’s fee subsides and 90% maximum
loan guaranty percentage through March 4, 2011, or until available funding is
exhausted.
On January 3, 2011, the SBA announced that funding for the fee subsidies and 90% maximum
loan guaranty percentage had been exhausted.47
ARRA also included 11 tax relief provisions that have the potential to benefit small businesses in
a broad range of industries.48 By reducing costs, it could be argued that providing tax relief for
small businesses may lead to increased demand for small business loans because small business

47 SBA, “Jobs Act Supported More Than $12 Billion in SBA Lending to Small Businesses in Just Three Months,”
January 3, 2011, at https://www.sba.gov/content/jobs-act-supported-more-12-billion-sba-lending-small-businesses-just-
three-months.
48 For further analysis, see CRS Report R40728, Small Business Tax Benefits and the American Recovery and
Reinvestment Act of 2009
, by Gary Guenther.
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owners have additional resources available to invest in their business. The following five ARRA
tax provisions provided about $5.7 billion in tax relief and were targeted at small businesses,
whereas the other ARRA tax provisions were available to businesses of all sizes:
 allowed businesses with $15 million or less in average annual gross receipts in
the past three years to carry back net operating losses from 2008 for up to five
years instead of two years.
 extended through 2009 the enhanced expensing allowance, which allows
businesses to deduct up to $250,000 of the cost of eligible assets placed in
service in 2009, within certain limits.
 increased the exclusion of the gain on the sale of small business stock to 75%
(instead of 50%) of any gain realized on the sale of eligible small business stock
acquired between February 18, 2009, and December 31, 2010.
 reduced the recognition period from 10 years to 7 years for corporate tax on sale
of appreciated assets in 2009 or 2010 by S corporations that once were organized
as C corporations.
 allowed individuals who had an adjusted gross income in 2008 of less than
$500,000 and can prove that over half their income came from a small business
to base their estimated tax payments for 2009 on 90% of their tax liability for
2008.
P.L. 111-240 was designed to increase the demand for SBA loans by providing $505 million (plus
an additional $5 million for related administrative expenses) to temporarily subsidize SBA’s fees
and increase the 7(a) program’s maximum loan guaranty percentage to 90%. The act also required
the SBA to establish an alternative size standard for the SBA’s 7(a) and 504/CDC loan guaranty
programs that uses maximum net worth and average net income as an alternative to the use of
industry standards. It also established the following interim alternative size standard for both the
7(a) and 504/CDC programs: the business qualifies as small if it does not have a tangible net
worth in excess of $15 million and does not have an average net income after federal taxes
(excluding any carry-over losses) in excess of $5 million for two full fiscal years before the date
of application. These changes were designed to increase the demand for small business loans by
increasing the number of small businesses that are eligible for SBA assistance.49
P.L. 111-240 also provided small businesses with about $12 billion in tax relief. The act
 raised the exclusion of gains on the sale or exchange of qualified small business
stock from the federal income tax to 100%, with the full exclusion applying only
to stock acquired the day after the date of enactment through the end of 2010;
 increased the deduction for qualified start-up expenditures from $5,000 to
$10,000 in 2010, and raised the phaseout threshold from $50,000 to $60,000 for
2010;
 placed limitations on the penalty for failure to disclose reportable transactions
based on resulting tax benefits;
 allowed general business credits of eligible small businesses for 2010 to be
carried back five years;

49 For further analysis, see CRS Report R40860, Small Business Size Standards: A Historical Analysis of Contemporary
Issues
, by Robert Jay Dilger.
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 exempted general business credits of eligible small businesses in 2010 from the
alternative minimum tax;
 allowed a temporary reduction in the recognition period for built-in gains tax;
 increased expensing limitations for 2010 and 2011 and allows certain real
property to be treated as Section 179 property;
 allowed additional first-year depreciation for 50% of the basis of certain qualified
property; and
 removed cellular telephones and similar telecommunications equipment from
listed property so their cost can be deducted or depreciated like other business
property.50
As mentioned earlier, P.L. 114-38 authorized and made permanent the Obama Administration’s
waiver of the up-front, one-time loan guaranty fee for veteran loans under the SBAExpress loan
guaranty program beginning on or after October 1, 2015, except during any upcoming fiscal year
for which the President’s budget, submitted to Congress, includes a credit subsidy cost for the
7(a) program, in its entirety, that is above zero.51 The fee waiver is designed to encourage
veterans to apply for a small business loan. The act also increased the supply of 7(a) loans by
increasing the program’s FY2015 authorization limit of $18.75 billion (on disbursements) to
$23.5 billion.
Discussion
As mentioned previously, congressional interest in the SBA’s access to capital programs has
increased in recent years, primarily because assisting small business in accessing capital is
viewed as a means to enhance job creation and economic growth. Some, including President
Obama, have argued that the SBA should be provided additional resources to assist small
businesses in acquiring capital necessary to start, continue, or expand operations and create
jobs.52 Others worry about the long-term adverse economic effects of spending programs that
increase the federal deficit. They also point to surveys of small business firms conducted by the
National Federation of Independent Business (NFIB) which suggest that small business owners
consistently place financing issues near the bottom of their most pressing concerns.53 Instead of
increasing federal funding for the SBA, they advocate small business tax reduction, reform of

50 For further analysis of the Small Business Jobs Act of 2010’s, tax provisions, see CRS Report R41385, Small
Business Legislation During the 111th Congress, by Robert Jay Dilger and Gary Guenther.
51 U.S. Congress, House Committee on Small Business, Veterans Entrepreneurship Act of 2015, report to accompany
H.R. 2499, 114th Cong., 1st sess., June 25, 2015, H.Rept. 114-187 (Washington: GPO, 2015), p. 9.
52 Rep. Nydia Velázquez, “Small Business Financing and Investment Act of 2009,” House debate, Congressional
Record
, daily edition, vol. 155, no. 159 (October 29, 2009), pp. H12074, H12075; Sen. Mary Landrieu, “Statements on
Introduced Bills and Joint Resolutions,” remarks in the Senate, Congressional Record, daily edition, vol. 155, no. 185
(December 10, 2009), p. S12910; and The White House, “Remarks by the President on Job Creation and Economic
Growth,” December 8, 2009, at https://www.whitehouse.gov/the-press-office/remarks-president-job-creation-and-
economic-growth.
53 Bruce D. Phillips and Holly Wade, Small Business Problems and Priorities (Washington, DC: NFIB Research
Foundation, June 2008), p. 5, at http://www.nfib.com/Portals/0/ProblemsAndPriorities08.pdf; Holly Wade, Small
Business Problems and Priorities (Washington, DC: NFIB Research Foundation, August 2012), pp. 2, 5, 14, at
http://www.nfib.com/research-foundation/priorities; and NFIB, “Small Business Economic Trends,” at
http://www.nfib.com/surveys/small-business-economic-trends/.
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financial credit market regulation, and federal fiscal restraint as the best means to assist small
business and foster increased levels of economic growth and job creation.54
Some advocates of providing additional resources to the SBA have argued that the federal
government should enhance small business access to capital by creating a SBA direct lending
program for small businesses.55 During the 111th Congress, H.R. 3854, the Small Business
Financing and Investment Act of 2009, was passed by the House on October 29, 2009, by a vote
of 389-32. It would have authorized a temporary SBA direct lending program.56 Also, during the
112th Congress, H.R. 3007, the Give Credit to Main Street Act of 2011, introduced on September
21, 2011, and referred to the House Committee on Small Business, would have authorized the
SBA to provide direct loans to small businesses that have been in operation as a small business
for at least two years prior to its application for a direct loan. The maximum loan amount would
have been the lesser of 10% of the firm’s annual revenues or $500,000. Also, H.R. 5835, the
Veterans Access to Capital Act of 2012, introduced on May 18, 2012, and referred to the House
Committee on Small Business, would have authorized the SBA to provide up to 20% of the
annual amount available for guaranteed loans under the 7(a) and 504/CDC loan guaranty
programs, respectively, in direct loans to veteran-owned and -controlled small businesses.
During the 113th Congress, H.R. 2451, the Strengthening Entrepreneurs’ Economic Development
Act of 2013, introduced on June 20, 2013, and referred to the House Committee on Small
Business, would authorize the SBA to establish a direct lending program for small businesses that
have less than 20 employees. Under the bill, each loan would be limited to $150,000 and have a
term of six years or less. Before issuing a direct loan, the SBA would be required to make the
loan available to eligible lenders within 50 miles of the applicant’s principal office. If no local
lenders agree to originate, underwrite, close, and service the loan within five business days, the
SBA would make the loan available to lenders in the Preferred Lender program. If still no lenders
agree to originate, underwrite, close, and service the loan, the SBA shall, within 10 business days,
consider the application for a direct loan.
The SBA has authority to make direct loans, both for disaster relief and for business purposes.
The SBA limited the eligibility for direct business loans in 1984, 1994, and 1996 as a means to
reduce costs. Until 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 income or located in an
area of high unemployment, owned by Vietnam-era or disabled veterans, owned by the
handicapped or certain organizations employing them, or certified under the minority small
business capital ownership development program. Microloan program intermediaries were also
eligible.57 On October 1, 1994, SBA direct loan eligibility was limited to Microloan program

54 Susan Eckerly, “NFIB Responds to President’s Small Business Lending Initiatives,” Washington, DC, October 21,
2009, at http://www.nfib.com/newsroom/newsroom-item/cmsid/50080/; NFIB, “Government Spending,” Washington,
DC, at http://www.nfib.com/issues-elections/issues-elections-item/cmsid/49051/; and National Federation of
Independent Business, “Payroll Tax Holiday,” at http://www.nfib.com/issues-elections/issues-elections-item/cmsid/
49039/.
55 U.S. Congress, House Committee on Small Business, Small Business Financing and Investment Act of 2009,
committee print, 111th Cong., 1st sess., October 26, 2009, H.Rept. 111-315 (Washington: GPO, 2009), pp. 13-20,
26, 27.
56 H.R. 3854, the Small Business Financing and Investment Act of 2009 (111th Congress), §111. Capital Backstop
Program.
57 U.S. Congress, House Committee on Small Business, Summary of Activities, 103rd Cong., 2nd sess., January 2, 1995,
H.Rept. 103-885 (Washington: GPO, 1995), p. 8; and 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,
(continued...)
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intermediaries and to 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 issued under the Disabled Assistance Loan program took
place in FY1998.58 The SBA currently offers direct business loans only to Microloan program
intermediaries.
Advocates for a small business direct lending program have argued that such a program would
provide “rapid access to much-needed capital without having to face the administrative delays
posed by the current Small Business Administration lending process.”59 Advocates of a temporary
SBA direct lending program argued that such a program was necessary during periods of
economic difficulty because
In prosperous times, small businesses are able to shop around to different lenders to find
the best available terms and conditions for a loan. But in times of economic downturns,
those same lenders aren’t as willing to lend to small businesses. More than ever during
these times, it’s the government’s responsibility to step in to help small businesses access
the loans they need to keep their businesses running and workers employed.60
Opponents of a small business direct lending program argue that the SBA’s mission is to augment
the private sector by guaranteeing loans, not compete with it by providing direct loans to small
businesses.61 They also argue that these loans hold greater risk than most; otherwise the private
sector would accept them. They worry that SBA defaults may increase, resulting in added
expense, either to taxpayers in the form of additional appropriations or to other small business
borrowers in the form of higher fees, to cover the defaults.62 They argue that the SBA stopped
offering direct loans in 1995, primarily because the subsidy rate was “10 to 15 times higher than
that of our guaranty programs.”63 They also assert that providing direct loans to small businesses
might invite corruption. They note that the Reconstruction Finance Corporation (RFC), the SBA’s
predecessor, made direct loans to business and was accused of awarding loans based on the
applicant’s political connections or personal ties with RFC loan officers.64 Opponents also argue
that the SBA does not have the human, physical, and technical resources to make direct loans.

(...continued)
1994, S. Hrg. 103-583 (Washington: GPO, 1994), p. 20.
58 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.
59 Dan Gerstein, “Big Stimulus For Small Business, A new direct lending program would benefit millions,”
Forbes.com, January 14, 2009; Sharon McLoone, “Landrieu: Small Business to Benefit from Economic Plan,” The
Washington Post
, February 6, 2009; George Dooley, “ASTA Renews Call For SBA Direct Lending Program,”
American Society of Travel Agents, Washington, DC, February 18, 2009; and Anne Kim, Ryan McConaghy, and Tess
Stovall, “Federal Direct Loans to Small Businesses,” Third Way Idea Brief, Washington, DC, April 2009.
60 Anne Kim, Ryan McConaghy, and Tess Stovall, “Federal Direct Loans to Small Businesses,” Third Way Idea Brief,
Washington, DC, April 2009.
61 Sue Malone, Myth: The SBA will make direct loans under the stimulus bill, Strategies For Small Business, Danville,
CA, March 12, 2009.
62 Representative Jeff Flake, “Providing for Consideration of H.R. 3854, Small Business Financing and Investment Act
of 2009,” House debate, Congressional Record, daily edition, vol. 155, no. 159 (October 29, 2009), pp. H12070, H
12072.
63 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.
64 Representative Jeff Flake, “Providing for Consideration of H.R. 3854, Small Business Financing and Investment Act
of 2009,” House debate, Congressional Record, daily edition, vol. 155, no. 159 (October 29, 2009), pp. H12070, H
12072.
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Still others argue that providing additional funding for SBA programs is largely a symbolic
gesture because the SBA’s guaranteed loan programs account for a relatively small fraction of
small business lending.65 They argue that, in a typical year, no more than 1% of small businesses
receive an SBA-guaranteed loan, and those loans account for less than 3% or 4% of the total
amount loaned to small businesses.66 They assert that “these numbers show that the private
banking system finances most loans and that the SBA is therefore largely irrelevant in the capital
market.”67
SBA Funding
As mentioned previously, some, including President Obama, have argued that the SBA should be
provided additional funding to assist small businesses in acquiring capital necessary to start,
continue, or expand operations and create jobs. Others worry about the long-term adverse
economic effects of spending programs that increase the federal deficit. They advocate fiscal
restraint as the best means to assist small business and foster increased levels of economic growth
and job creation. Both of these views have been reflected in recent SBA budget discussions as
Congress has focused on ways to reduce the SBA’s budget while not compromising the SBA’s
ability to assist small businesses access capital and assist individuals and businesses of all sizes
cope with damages caused by natural disasters.
As shown in Table 2, the SBA’s appropriations have varied significantly since FY2000, ranging
from a high of $2.233 billion in FY2006 to a low of $571.8 million in FY2007.68 Much of this
volatility has resulted from significant increases in appropriations for disaster assistance in
response to major hurricanes; increases in appropriations for business loan credit subsidies
following recessions; and significant, temporary increases in appropriations for the SBA’s other
programs in FY2009 ($724.0 million) and FY2010 ($962.5 million) that were designed to
enhance small businesses’ access to capital following the Great Recession.69
The SBA’s appropriations are separated into three categories in Table 2 (disaster assistance,
business loan credit subsidies, and other programs) because the need for disaster assistance is
largely beyond congressional control and expenditures for business loan credit subsidies tend to
vary with changes in the national economy. As a result, it could be argued that comparisons of
SBA appropriations over time can be made more meaningful if those comparisons include
appropriations for all three categories of spending.

65 U.S. Congress, Senate Committee on Homeland Security and Governmental Affairs, Subcommittee on Federal
Financial Management, Government Information, Federal Services, and International Security, The Effectiveness of the
Small Business Administration
, 109th Cong., 2nd sess., April 6, 2006, S. Hrg. 109-492 (Washington: GPO, 2006), p. 92;
and Discover Financial Services, “Discover® Small Business WatchSM: Small Business Economic Outlook Remains
Cautious,” Riverwoods, IL, October 26, 2009, at http://investorrelations.discoverfinancial.com/phoenix.zhtml?c=
204177&p=irol-newsArticle&ID=1346088&highlight=.
66 Raymond J. Keating, “Keating: Obama’s policies will hurt, not help,” Long Island Business News, The Debate
Room
, October 30, 2009, at http://libn.com/thedebateroom/2009/10/30/keating-obama%e2%80%99s-policies-will-hurt-
not-help/.
67 U.S. Congress, Senate Committee on Homeland Security and Governmental Affairs, Subcommittee on Federal
Financial Management, Government Information, Federal Services, and International Security, The Effectiveness of the
Small Business Administration
, 109th Cong., 2nd sess., April 6, 2006, S.Hrg. 109-492 (Washington: GPO, 2006), p. 92.
68 Program costs and expenditures typically differ from new budget authority provided by appropriations due to the
carryover of budget authority either from the previous fiscal year or into the next fiscal year or to program transfers.
69 For further information and analysis concerning congressional action in recent Congresses to address small business
access to capital, see CRS Report R40985, Small Business: Access to Capital and Job Creation, by Robert Jay Dilger.
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For example, the SBA’s FY2015 appropriation of $887.6 million is less than the appropriation
provided to the agency in FY2012, FY2013, and FY2014.70 It could be argued that the reduction
in the SBA’s appropriation in recent years could be evidence of a possible decline in
congressional support for the SBA’s programs. However, the SBA’s appropriation for other
programs in FY2015 of $653.2 million is higher than the appropriation for other programs in
FY2012, FY2013, and FY2014. It could be argued that the increased appropriation for the SBA’s
other programs is evidence of a possible increase in congressional support for the SBA’s
programs, not a decrease.
Table 2. Small Business Administration Appropriations, FY2000-FY2016
(millions of $)
Business
Disaster
Loan Credit
Other
Fiscal Year
Assistance
Subsidies
Programs
Appropriation
2016 request
$186.9
$3.3
$669.9
$860.1
2015
$186.9
$47.5
$653.2
$887.6
2014
$191.9
$111.6
$625.4
$928.9
2013
$851.2
$319.7
$583.6
$1,754.5a
2012
$117.3
$210.8
$590.7
$918.8
2011
$45.4
$82.8
$601.5
$729.7b
2010
$78.2
$83.0
$1,625.3c
$1,786.5
2009
$0.0d
$8.5e
$1,336.7f
$1,345.2
2008
$1,052.8
$2.0
$579.9
$1,634.7
2007
$114.9
$1.3
$455.6
$571.8g
2006
$1,700.0
$1.3
$532.1
$2,233.4h
2005
$1,040.8
$1.4
$498.0
$1,540.2i
2004
$198.9
$80.2
$507.1
$786.2j
2003
$190.3
$88.5
$507.5
$786.3k
2002
$284.7
$154.9
$478.4
$918.0l
2001
$284.1
$165.0
$550.4
$999.5m
2000
$317.3
$137.8
$459.5
$914.6n
Sources: U.S. Small Business Administration (SBA), Congressional Budget Justification, [FY2002-FY2009]; SBA,
Congressional Budget Justification, [FY2010-FY2016], at https://www.sba.gov/about-sba/sba-performance/
performance-budget-finances/congressional-budget-justification-annual-performance-reports; P.L. 106-113, the
Consolidated Appropriations Act, 2000; P.L. 106-554, the Consolidated Appropriations Act, 2001; P.L. 107-206,
the 2002 Supplemental Appropriations Act for Further Recovery From and Response to Terrorist Attacks on
the United States; P.L. 108-7, the Consolidated Appropriations Resolution, 2003; P.L. 108-199, the Consolidated
Appropriations Act, 2004; P.L. 108-447, the Consolidated Appropriations Act, 2005; P.L. 109-108, the Science,
State, Justice, Commerce, and Related Agencies Appropriations Act, 2006; P.L. 109-148, the Department of
Defense, Emergency Supplemental Appropriations to Address Hurricanes in the Gulf of Mexico, and Pandemic
Influenza Act, 2006; P.L. 110-5, the Revised Continuing Appropriations Resolution, 2007; P.L. 110-161, the
Consolidated Appropriations Act, 2008; P.L. 111-5, the American Recovery and Reinvestment Act of 2009; P.L.

70 P.L. 114-53, the Continuing Appropriations Act, 2016, provided, on an annualized basis, $885.7 million to the SBA
to continue operations through December 11, 2015.
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111-118, the Department of Defense Appropriations Act, 2010; P.L. 111-144, the Temporary Extension Act of
2010; P.L. 111-157, the Continuing Extension Act of 2010; P.L. 111-240, the Small Business Jobs and Credit Act
of 2010; P.L. 111-150, to permit the use of previously appropriated funds to extend the Small Business Loan
Guarantee Program; P.L. 112-10, the Department of Defense and Ful -Year Continuing Appropriations Act,
2011; P.L. 112-25, the Budget Control Act of 2011; P.L. 112-74, the Consolidated Appropriations Act, 2012; P.L.
112-175, the Continuing Appropriations Resolution, 2013; P.L. 113-2, the Disaster Relief Appropriations Act,
2013; P.L. 113-6, the Consolidated and Further Continuing Appropriations Act, 2013; P.L. 113-76, the
Consolidated Appropriations Act, 2014; and P.L. 113-235, the Consolidated and Further Continuing
Appropriations Act, 2015.
a. Implementation of P.L. 112-25 and P.L. 113-6 imposed a federal government-wide sequestration process and
a required 0.2% across-the-board rescission in FY2013. The SBA’s FY2013 appropriation was reduced by
$92.681 mil ion under sequestration and $2.091 mil ion by the rescission. Prior to these reductions, the
SBA’s FY2013 appropriation was $897.3 mil ion for disaster assistance, $337.3 mil ion for loan credit
subsidies, $615.7 mil ion for other programs, and $1,850.3 mil ion in total.
b. The SBA’s FY2011 appropriation of $731.201 mil ion ($45.5 mil ion for SBA disaster assistance, $83.0
mil ion for business loan subsidies, and $602.7 mil ion for other SBA programs) was reduced to $729.738
mil ion by a 0.2% across-the-board rescission imposed on most appropriations accounts by P.L. 112-10.
c. The initial appropriation for other programs in FY2010 was $662.8 mil ion. An additional $962.5 mil ion was
provided: $775.0 mil ion in temporary funding for 7(a) and 504/Certified Development Company (CDC)
loan guaranty program fee subsidies and loan modifications and $187.5 mil ion for other SBA programs. P.L.
111-118 provided $125 mil ion; P.L. 111-144 provided $60 mil ion; P.L. 111-157 provided $80 mil ion; and
P.L. 111-240 provided $510 mil ion to provide temporary fee subsidies for the SBA’s 7(a) and 504/CDC
loan guaranty programs and to temporarily increase the 7(a) program’s maximum loan guaranty percentage
from up to 85% of loans of $150,000 or less and up to 75% of loans exceeding $150,000 to 90% for all 7(a)
loans. P.L. 111-240 extended the subsidies and 90% loan guaranty through December 31, 2010, and
provided $187.5 mil ion for other SBA programs that remained available through FY2011. Also, P.L. 111-150
authorized the SBA to use $40 mil ion in previously appropriated funds for fee subsidies and the 7(a) loan
modification.
d. SBA disaster assistance funding in FY2009 was carried over from the previous fiscal year.
e. The initial appropriation for business loan credit subsidies in FY2009 was $2.5 mil ion for direct (Microloan)
lending. P.L. 111-5 provided another $6 mil ion for credit subsidies for the Microloan program to remain
available through September 30, 2010.
f.
The initial appropriation for other programs in FY2009 was $612.7 mil ion. P.L. 111-5 provided $6 mil ion
for Microloan credit subsidies and $724 mil ion for other SBA programs, including $375 mil ion for loan fee
subsidies and loan modifications for the 7(a) and 504/CDC programs and $255 mil ion for a new, temporary
small business stabilization program, later named the America’s Recovery Capital (ARC) Loan program.
g. Includes reductions by P.L. 109-108 and P.L. 110-5, which rescinded $13.5 mil ion of unobligated balances
from the SBA ($6.192 mil ion from unobligated disaster assistance administrative expenses, $5.031 mil ion
from unobligated balances in the (7a) general business loan guaranty program, and $2.323 mil ion from
unobligated balances in the direct loans program).
h. Includes reductions by P.L. 109-148, which imposed a rescission of 1.0% on federal agencies, resulting in a
reduction of $6.992 mil ion from the SBA ($0.017 mil ion from business loan subsidies, $5.160 mil ion from
salaries and expenses, $1.600 from business loan administration, $0.178 mil ion from the OIG, and $0.037
mil ion from the surety bond program).
i.
Includes reductions by P.L. 108-447, which imposed a 0.8% rescission on federal agencies, resulting in a
reduction of $8.277 mil ion from the SBA ($1.395 mil ion from disaster assistance, $0.019 mil ion from
business loan subsidies, $4.951 mil ion from salaries and expenses, $1.692 from business loan administration,
$0.181 mil ion from the OIG, and $0.039 mil ion from the surety bond program).
j.
Includes reductions by P.L. 108-199, which imposed a rescission of 0.59% on federal agencies, resulting in a
reduction of $8.042 mil ion from the SBA ($1.700 mil ion from disaster assistance, $0.853 mil ion from
business loan subsidies, $4.001 mil ion from salaries and expenses, $1.347 from business loan administration,
and $0.141 mil ion from the OIG).
k. Includes reductions by P.L. 108-7, which imposed a rescission of 0.65% on federal agencies, resulting in a
reduction of $5.144 mil ion from the SBA ($1.244 mil ion from disaster assistance, $0.579 mil ion from
business loan subsidies, $2.401 mil ion from salaries and expenses, $0.839 from business loan administration,
and $0.081 mil ion from the OIG).
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l.
Includes reductions by P.L. 107-206, which imposed a rescission on federal agencies’ administrative and
travel accounts, resulting in a reduction of $0.485 mil ion from the SBA ($0.164 mil ion from disaster
assistance, $0.315 mil ion from salaries and expenses, and $0.006 mil ion from the OIG).
m. Includes reductions by P.L. 106-554, which imposed a rescission of 0.22% on federal agencies, resulting in a
reduction of $1.983 mil ion from the SBA ($0.406 mil ion from disaster assistance, $0.364 mil ion from
business loan subsidies, 0.903 mil ion from salaries and expenses, $0.284 mil ion from business loan
administration, and $0.026 mil ion from the OIG).
n. Includes reductions by P.L. 106-113, which imposed a rescission of 0.38% on federal agencies, resulting in a
reduction of $3.280 mil ion from the SBA ($3.185 mil ion from salaries and expenses and $0.095 mil ion
from the OIG).
As shown in Table 2, the SBA’s FY2015 appropriation of $887.6 million includes $186.9 million
for the SBA’s disaster loan programs, $47.5 million for business loan credit subsidies, and $653.2
million for all other SBA programs ($257.0 million for salaries and expenses; $220.0 million for
entrepreneurial development programs, such as SCORE, Small Business Development Centers,
and Women Business Centers; $147.7 million for administrative expenses related to the SBA’s
business loan programs; $19.4 million of the Office of Inspector General; and $9.1 million for the
Office of Advocacy).
Concluding Observations
Congress approved many changes during the 111th Congress to enhance small business access to
capital. For example, P.L. 111-240 authorized the Secretary of the Treasury to establish a $30
billion Small Business Lending Fund (SBLF) to make capital investments in eligible community
banks ($4 billion was issued).71 It authorized a $1.5 billion State Small Business Credit Initiative
Program to be administered by the Department of the Treasury.72 It made numerous changes to
SBA programs in an attempt to make them more accessible to small businesses, such as
increasing maximum loan amounts, creating an alternative size standard so more businesses can
qualify for assistance, waiving some matching requirements, and temporarily expanding
refinancing options under the 504/CDC program. It provided funding to extend SBA fee subsidies
and the 7(a) program’s 90% maximum loan guaranty percentage, made several changes to federal
contracting law to increase small business opportunities in federal contracting, and provided
about $12 billion in tax relief for small businesses. In addition, Congress approved legislation to
temporarily reduce, for calendar years 2011 and 2012, payroll taxes by two percentage points for
workers (including self-employed small business owners) who pay into Social Security.73 The
NFIB has long advocated a reduction of federal payroll taxes as a means to reduce small business
expenses.74

71 P.L. 111-240, the Small Business Jobs Act of 2010, §4103. Small Business Lending Fund.
72 For further analysis, see CRS Report R41385, Small Business Legislation During the 111th Congress, by Robert Jay
Dilger and Gary Guenther.
73 P.L. 111-312, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, temporarily
reduced the payroll tax by two percentage points for calendar year 2011. P.L. 112-78, the Temporary Payroll Tax Cut
Continuation Act of 2011, extended the two percentage point payroll tax reduction through the first two months of
2012. P.L. 112-96, the Middle Class Tax Relief and Job Creation Act of 2012, extended the two percentage point
payroll tax reduction through the end of calendar year 2012.
74 National Federation of Independent Business, “Payroll Tax Holiday,” Washington, DC, at http://www.nfib.com/
issues-elections/issues-elections-item/cmsid/49039/; and National Federation of Independent Business, “Tax Package
Compromise Represents a Big Victory for Small Business,” Washington, DC, at http://www.nfib.com/issues-elections/
issues-elections-item?cmsid=55506.
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During the 112th Congress, Congress passed legislation designed to enhance small business
contracting opportunities, expand access to the SBA’s surety bond guarantee program, amend the
SBA’s size standard practices, require a review and reassessment of the federal procurement small
business goaling program, expand small business mentor-protégé programs, and establish a
regulatory structure for startups and small businesses to raise capital through securities offerings
using the Internet through crowdfunding.75
During the 113th Congress, P.L. 113-76 increased the annual authorization amount for the SBA’s
SBIC program to $4 billion from $3 billion and P.L. 114-38 authorized and made permanent the
Obama Administration’s waiver of the up-front, one-time loan guaranty fee for veteran loans
under the SBAExpress loan guaranty program.
The question before the 114th Congress is what, if any, additional action should the federal
government take to enhance small business access to capital? Should Congress decide to take
further action, three not necessarily mutually exclusive options are readily apparent.
First, Congress could adopt a wait-and-see strategy that focuses on congressional oversight of the
programmatic changes to the SBA’s programs that were enacted during the 111th, 112th, and 113th
Congresses. Advocates of this approach could argue that small business credit markets have
generally improved over the past several years, the SBA’s lending now exceeds pre-recession
levels, and the demand for small business loans is increasing. Therefore, it could be argued that
evaluating the impact of the programmatic changes to the SBA’s programs that have been enacted
over the past several years, especially given that economic conditions appear to be improving,
should take place before taking further congressional action to improve small business access to
capital.
Second, Congress could consider additional changes to the SBA’s programs in an effort to
enhance small business access to capital, such as considering a direct lending program, providing
additional funding for SBA fee subsidies and loan modifications, or increasing funding for SBA
programs. For example, during the 111th Congress, S. 3967, the Small Business Investment and
Innovation Act of 2010, would have authorized funding increases for the SBA’s training and
technical assistance programs, established a Rural Small Business Technology Pilot Program,
increased maximum loan limits for the SBA’s home and business disaster loan programs,
increased surety bond limits, and expanded eligibility for the SBA’s State Trade and Export
Promotion Grant Program to cities and other major metropolitan areas. Advocates of this
approach could argue that although small business credit markets have generally improved over
the past several years, job growth is still a concern. In their view, assisting small businesses
access capital would help to create and retain jobs.
Third, Congress could consider the repeal of portions of the Small Business Jobs Act of 2010, or
other SBA programs. For example, on March 15, 2011, the House Committee on Small Business
approved its views and estimates for the concurrent resolution on the budget for FY2012. The
committee recommended that the SBA’s budget be “cut nearly $100 million.”76 The committee
recommended that 14 programs, including several management and technical assistance training
programs, be defunded “because they duplicate existing programs at the SBA or at other
agencies” or “where there is an absence of any evidence that they will help small businesses

75 P.L. 112-239, the National Defense Authorization Act for Fiscal Year 2013; and P.L. 112-106, the Jumpstart Our
Business Startups Act (JOBS Act).
76 Representative Sam Graves, “Opening Statement for Views and Estimates Markup,” Washington, DC, March 15,
2011, at http://www.smallbusiness.house.gov/Calendar/EventSingle.aspx?EventID=227626.
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create new jobs.”77 In its views and estimates letter for the FY2013 budget, the House Committee
on Small Business recommended, on March 7, 2012, that funding be reduced for several SBA
programs, including funding for 7(j) technical assistance, microloan technical assistance, and the
National Women’s Business Council. It also recommended that funding be eliminated for
Women’s Business Centers, Veterans Business Centers, Prime Technical Assistance, HUBZone
outreach, the Office of Native American Affairs, and the Office of International Trade. It also
recommended that funding be eliminated for several SBA initiatives, including the Drug-Free
Workplace, Clusters, and National Veterans Entrepreneurial Training Program.78
Advocates of this option argue that instead of increasing federal funding for the SBA, the federal
government should focus on small business tax reduction and federal fiscal restraint as the best
means to assist small business and foster increased levels of economic growth and job creation.79

77 Ibid. For further information concerning the funding recommendations contained in the House Committee on Small
Business views and estimates for the concurrent resolution on the budget for FY2012 see U.S. Congress, House
Committee on Small Business, “Views and Estimates of the Committee on Small Business on Matters to be set forth in
the Concurrent Resolution on the Budget for FY2012, communication to the Chairman, House Committee on the
Budget,” 112th Cong., 1st sess., March 17, 2011, at http://smbiz.house.gov/UploadedFiles/
March_17_Views_and_Estimates_Letter.pdf.
78 U.S. Congress, House Committee on Small Business, “Views and Estimates of the Committee on Small Business on
Matters to be set forth in the Concurrent Resolution on the Budget for FY2013, communication to the Chairman, House
Committee on the Budget,” 112th Cong., 1st sess., March 7, 2012 at http://smallbusiness.house.gov/uploadedfiles/
views_and_estimates_fy_2013.pdf.
79 Susan Eckerly, “NFIB Responds to President’s Small Business Lending Initiatives,” Washington, DC, October 21,
2009, at http://www.nfib.com/newsroom/newsroom-item/cmsid/50080/; NFIB, “Government Spending,” Washington,
DC, at http://www.nfib.com/issues-elections/issues-elections-item/cmsid/49051/; and National Federation of
Independent Business, “Payroll Tax Holiday,” at http://www.nfib.com/issues-elections/issues-elections-item/cmsid/
49039/.
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Appendix. Selected Provisions in the Small
Business Jobs Act of 2010

Table A-1. Selected Provisions, the Small Business Jobs Act of 2010
Issue/Program
The Small Business Jobs Act of 2010
SBA 7(a) Program
increased the 7(a) Program’s loan limit from $2 mil ion to
$5 mil ion.
SBA 504 Program
increased the 504/CDC Program’s loan limits from
$1.5 mil ion to $5 mil ion for “regular” borrowers, from
$2 mil ion to $5 mil ion if the loan proceeds are directed
toward one or more specified public policy goals, and from
$4 mil ion to $5.5 mil ion for manufacturers; and
temporarily expanded for two years the eligibility for low-
interest refinancing under the SBA’s 504/CDC program for
qualified debt.
SBA Express Program
temporarily increased for one year the Express Program’s
loan limit from $350,000 to $1 mil ion (expired on
September 26, 2011).
SBA Microloan Program
increased the Microloan Program’s loan limit for borrowers
from $35,000 to $50,000; and increased the loan limits for
Microloan intermediaries after their first year in the
program from $3.5 mil ion to $5 mil ion.
Temporary SBA fee subsidies and loan modifications
temporarily increased the SBA’s guaranty on 7(a) loans to
90% and provided for the elimination of selected fees on
the SBA’s 7(a) and 504 loans through December 31, 2010.
SBA secondary market
extended the SBA’s secondary market lending authority
under ARRA from 2 years from enactment to 2 years from
the first sale of a pool of first lien position 504 loans
guaranteed under this authority investor (which took place
on September 24, 2010).
SBA size standards
authorized the SBA to establish an alternative size standard
for the SBA’s 7(a) and 504 programs that would use
maximum tangible net worth and average net income; and
to established an interim alternative size standard of not
more than $15 mil ion in tangible net worth and not more
than $2 mil ion in average net income for the two ful fiscal
years before the date of the application.
SBA International Trade Finance Program
increased the International Trade Finance Program’s loan
limit from $1.75 mil ion, of which not more than
$1.25 mil ion may be used for working capital, supplies, or
financings, to $4.5 mil ion.
State Trade and Export Promotion Grant Program
established an associate administrator for the SBA’s Office
of International Trade and a state trade and export
promotion grant program.
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Issue/Program
The Small Business Jobs Act of 2010
Federal contracting
imposed contract bundling accountability measures directing
federal agencies to include in each solicitation for any
contract award above the agency’s substantial bundling
threshold a provision soliciting bids by small business teams
and joint ventures;
required federal agencies to publish on its website its policy
on contract bundling and consolidation, as well as a
rationale for any bundled contract solicited or awarded;
repealed the small business competitiveness demonstration
program; and
provided parity among the small business contracting
programs (including striking “shal ” and inserting “may” in
15 U.S.C. 657a(b)(2)(B), which refers to the agency’s
discretion to provide contracting preference to HUBZone
small businesses).
Small Business Lending Fund
authorized the U.S. Treasury to make up to $30 bil ion of
capital investments ($4 bil ion was issued);
CBO estimated the program would raise $1.1 bil ion over
10 years.
State Small Business Credit Initiative Program
authorized $1.5 bil ion for the State Small Business Credit
Initiative Program.
SBA Intermediary Lending Pilot Program
authorized a three-year Intermediary Lending Pilot Program
to allow the SBA to make direct loans to not more than 20
eligible nonprofit lending intermediaries each year totaling
not more than $20 mil ion. The intermediaries, in turn,
would be allowed to make loans to new or growing small
businesses, not to exceed $200,000 per business.
Capital gains taxation
temporarily raised to 100% the exclusion of gains on certain
small business stock from enactment to end of calendar
year.
Limitation on penalties for failure to disclose
placed limitations on the penalty for failure to disclose
reportable transactions
reportable transactions based on resulting tax benefits.
Deduction for start-up expenditures
increased the deduction for qualified start-up expenditures
from $5,000 to $10,000 in 2010, and the phaseout
threshold from $50,000 to $60,000 for 2010.
Business carry back
allowed general business credits of eligible small businesses
for 2010 to be carried back 5 years.
Alternative Minimum Tax
exempted general business credits of eligible small
businesses in 2010 from the alternative minimum tax.
Recognition period for built-In gains tax
allowed a temporary reduction in the recognition period for
built-in gains tax.
Expensing and Section 179 property
increased expensing limitations for 2010 and 2011; and
allowed certain real property to be treated as Section 179
property.
Depreciation
allowed additional first-year depreciation for 50% of the
basis of certain qualified property.
Deduction for health insurance costs
allowed the deduction for health insurance costs in
computing self-employment taxes in 2010.
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Issue/Program
The Small Business Jobs Act of 2010
Deduction for cellular telephones
removed cel ular telephones and similar
telecommunications equipment from listed property so
their cost can be deducted or depreciated like other
business property.
Crude tall oil
made crude tall oil ineligible for the cel ulosic biofuel
producer credit.
Section 561 of the Hiring Incentives to Restore
increased the percentage under Section 561 of the Hiring
Employment Act
Incentives to Restore Employment Act by 36 percentage
points.
Rental income reporting
required taxpayers that receive rental income from leasing
real property to file information returns to the IRS and to
service providers that report receiving payments of $600 or
more during the tax year for rental property expenses
(repealed by P.L. 112-9, the Comprehensive 1099 Taxpayer
Protection and Repayment of Exchange Subsidy
Overpayments Act of 2011).
Penalties for failing to file information returns to the
increased the penalties for failing to file information returns
IRS
to the IRS and to payees in a timely manner.
Treasury Department authority to apply a continuous
expanded the Treasury Department’s authority to apply a
levy on federal contractors
continuous levy to government payments to federal
contractors that owe the IRS for unpaid taxes to include
payments for property such as a new office building.
Current law allows the levy to be applied to payments for
goods and services only.
Predictive modeling to identify Medicaid waste, fraud,
authorized the use of predictive modeling to identify and
and abuse
prevent waste, fraud, and abuse in the Medicare fee-for-
service program.
Roth Retirement Accounts
allowed participants in government Section 457 plans to
treat elective deferrals as Roth contributions; and
allowed rol overs from elective deferral plans to designated
Roth accounts.
Nonqualified annuities
allowed holders of nonqualified annuities (i.e., annuity
contracts held outside of a tax-qualified retirement plan or
IRA) to elect to receive a portion of the contract in the
form of a stream of annuity contracts, leaving the remainder
of the contract to accumulate income on a tax-deferred
basis.
Source: P.L. 111-240, the Small Business Jobs Act of 2010.

Author Contact Information

Robert Jay Dilger

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

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