Small Business Administration: A Primer on Programs and Funding

Updated January 8, 2020 (RL33243)
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Contents

Tables

Summary

The Small Business Administration (SBA) administers several types of programs to support small businesses, including loan guaranty and venture capital programs to enhance small business access to capital; contracting programs to increase small business opportunities in federal contracting; direct loan programs for businesses, homeowners, and renters to assist their recovery from natural disasters; and small business management and technical assistance training programs to assist business formation and expansion.

Congressional interest in the SBA's loan, venture capital, training, and contracting programs has increased in recent years, primarily because small businesses are viewed as a means to stimulate economic activity and create jobs. Many Members of Congress also regularly receive constituent inquiries about the SBA's programs.

This report provides an overview of the SBA's programs, including

The report also discusses recent programmatic changes resulting from the enactment of legislation (such as P.L. 111-5, the American Recovery and Reinvestment Act of 2009, P.L. 111-240, the Small Business Jobs Act of 2010, P.L. 114-38, the Veterans Entrepreneurship Act of 2015, P.L. 114-88, the Recovery Improvements for Small Entities After Disaster Act of 2015 [RISE After Disaster Act of 2015], P.L. 115-123, the Bipartisan Budget Act of 2018, and P.L. 115-189, the Small Business 7(a) Lending Oversight Reform Act of 2018).

In addition, it provides an overview of the SBA's budget and references other CRS reports that examine these programs in greater detail.


Introduction

Established in 1953, the Small Business Administration's (SBA's) origins can be traced to the Great Depression of the 1930s and World War II, when concerns about unemployment and war production were paramount. The SBA assumed some of the functions of the Reconstruction Finance Corporation (RFC), which had been created by the federal government in 1932 to provide funding for businesses of all sizes during the Depression and later financed war production. During the early 1950s, the RFC was disbanded following charges of political favoritism in the granting of loans and contracts.1

In 1953, Congress passed the Small Business Act (P.L. 83-163), which authorized the SBA. The act specifies that the SBA's mission is to promote the interests of small businesses to enhance competition in the private marketplace:

It is the declared policy of the Congress that the Government should aid, counsel, assist, and protect, insofar as is possible, the interests of small-business concerns in order to preserve free competitive enterprise, to insure that a fair proportion of the total purchases and contracts or subcontracts for property and services for the Government (including but not limited to contracts or subcontracts for maintenance, repair, and construction) be placed with small-business enterprises, to insure that a fair proportion of the total sales of Government property be made to such enterprises, and to maintain and strengthen the overall economy of the Nation.2

The SBA currently administers several types of programs to support small businesses, including loan guaranty and venture capital programs to enhance small business access to capital; contracting programs to increase small business opportunities in federal contracting; direct loan programs for businesses, homeowners, and renters to assist their recovery from natural disasters; and small business management and technical assistance training programs to assist business formation and expansion. Congressional interest in these programs has increased in recent years, primarily because small businesses are viewed as a means to stimulate economic activity and create jobs. Many Members of Congress also regularly receive constituent inquiries about the SBA's programs.

This report provides an overview of the SBA's programs and funding. It also references other CRS reports that examine the SBA's programs in greater detail.3

The SBA's FY2020 congressional budget justification document includes funding and program costs for the following programs and offices:

Table 1 shows the SBA's estimated costs in FY2019 for these program areas. Program costs often differ from new budget authority provided in annual appropriations acts because the SBA has specified authority to carry over appropriations from previous fiscal years. The SBA also has limited, specified authority to shift appropriations among various programs.

Table 1. Major SBA Program Areas, Estimated Program Costs, FY2019

($ in millions)

Program Category

Estimated Costs

Disaster Loan Programs

$298.624

Entrepreneurial Development Programs

$283.645

Capital Access Programs

$185.342

Contracting Programs

$119.022

Regional and District Offices

$51.995

Office of Inspector General

$38.066

Capital Investment Programs

$29.294

Office of Advocacy

$14.408

Executive Direction Programs

$3.696

Total

$1,024.088

Source: U.S. Small Business Administration, FY2020 Congressional Budget Justification and FY2018 Annual Performance Report, pp. 16, 17, at https://www.sba.gov/document/reportcongressional-budget-justification-annual-performance-report.

Notes: Program costs often differ from new budget authority provided in annual appropriations acts because the SBA has specified authority to carry over appropriations from previous fiscal years. The SBA also has limited, specified authority to shift appropriations among various programs.

Disaster Loans

Overview4

SBA disaster assistance is provided in the form of loans, not grants, which must be repaid to the federal government. The SBA's disaster loans are unique in two respects: they are the only loans made by the SBA that (1) go directly to the ultimate borrower and (2) are not limited to small businesses.5

SBA disaster loans are available to individuals, businesses, and nonprofit organizations in declared disaster areas.6 About 80% of the SBA's direct disaster loans are issued to individuals and households (renters and property owners) to repair and replace homes and personal property. In recent years, the SBA Disaster Loan Program has been the subject of regular congressional and media attention because of concerns expressed about the time it takes the SBA to process disaster loan applications. The SBA disbursed $401 million in disaster loans in FY2016, $889 million in FY2017, $3.59 billion in FY2018, and $1.5 billion in FY2019.7

Types of Disaster Loans

The SBA Disaster Loan Program includes the following categories of loans for disaster-related losses: home disaster loans, business physical disaster loans, and economic injury disaster loans.8

Disaster Loans to Homeowners, Renters, and Personal Property Owners

Homeowners, renters, and personal property owners located in a declared disaster area (and in contiguous counties) may apply to the SBA for loans to help recover losses from a declared disaster. Only victims located in a declared disaster area (and contiguous counties) are eligible to apply for disaster loans. Disaster declarations are "official notices recognizing that specific geographic areas have been damaged by floods and other acts of nature, riots, civil disorders, or industrial accidents such as oil spills."9 Five categories of declarations put the SBA Disaster Loan Program into effect. These include two types of presidential major disaster declarations as authorized by the Robert T. Stafford Disaster Relief and Emergency Assistance Act (the Stafford Act)10 and three types of SBA declarations.11

The SBA's Home Disaster Loan Program falls into two categories: personal property loans and real property loans. These loans are limited to uninsured losses. The maximum term for SBA disaster loans is 30 years, but the law restricts businesses with credit available elsewhere to a maximum 7-year term. The SBA sets the installment payment amount and corresponding maturity based upon each borrower's ability to repay.

Personal Property Loans

A personal property loan provides a creditworthy homeowner or renter with up to $40,000 to repair or replace personal property items, such as furniture, clothing, or automobiles, damaged or lost in a disaster. These loans cover only uninsured or underinsured property and primary residences and cannot be used to replace extraordinarily expensive or irreplaceable items, such as antiques or recreational vehicles. Interest rates vary depending on whether applicants are able to obtain credit elsewhere. For applicants who can obtain credit without SBA assistance, the interest rate may not exceed 8% per year. For applicants who cannot obtain credit without SBA assistance, the interest rate may not exceed 4% per year.12

Real Property Loans

A creditworthy homeowner may apply for a real property loan of up to $200,000 to repair or restore his or her primary residence to its predisaster condition.13 The loans may not be used to upgrade homes or build additions, unless upgrades or changes are required by city or county building codes. The interest rate for real property loans is determined in the same way as it is determined for personal property loans.

Disaster Loans to Businesses and Nonprofit Organizations

Several types of loans, discussed below, are available to businesses and nonprofit organizations located in counties covered by a presidential disaster declaration. In certain circumstances, the SBA will also make these loans available when a governor, the Secretary of Agriculture, or the Secretary of Commerce makes a disaster declaration. Physical disaster loans are available to almost any nonprofit organization or business. Other business disaster loans are limited to small businesses.

Physical Disaster Loan

Any business or nonprofit organization, regardless of size, can apply for a physical disaster business loan of up to $2 million for repairs and replacements to real property, machinery, equipment, fixtures, inventory, and leasehold improvements that are not covered by insurance. Physical disaster loans for businesses may use up to 20% of the verified loss amount for mitigation measures in an effort to prevent loss from a similar disaster in the future. Nonprofit organizations that are rejected or approved by the SBA for less than the requested amount for a physical disaster loan are, in some circumstances, eligible for grants from the Federal Emergency Management Agency (FEMA). For applicants that can obtain credit without SBA assistance, the interest rate may not exceed 8% per year. For applicants that cannot obtain credit without SBA assistance, the interest rate may not exceed 4% per year.14

Economic Injury Disaster Loans

Economic injury disaster loans (EIDLs) are limited to small businesses as defined by the SBA's size regulations, which vary from industry to industry.15 If the Secretary of Agriculture designates an agriculture production disaster, small farms and small cooperatives are eligible. EIDLs are available in the counties included in a presidential disaster declaration and contiguous counties. The loans are designed to provide small businesses with operating funds until those businesses recover. The maximum loan is $2 million, and the terms are the same as personal and physical disaster business loans. The loan can have a maturity of up to 30 years and has an interest rate of 4% or less.16

Entrepreneurial Development Programs17

The SBA's entrepreneurial development (ED) noncredit programs provide a variety of management and training services to small businesses. Initially, the SBA provided its own management and technical assistance training programs. Over time, the SBA has come to rely increasingly on third parties to provide that training.

The SBA receives appropriations for seven ED programs and two ED initiatives:

FY2020 appropriations for these programs are: $135 million for SBDCs, $34.5 million for the Microloan Technical Assistance Program, $22.5 million for WBCs, $11.7 million for SCORE, $5.5 million for PRIME, $14 million for Veterans Programs, $2 million for NAO, $5 million for the Entrepreneurial Development Initiative (Regional Innovation Clusters), and $2.5 million for the Entrepreneurship Education Initiative.

Four additional programs are provided recommended funding in appropriations acts under ED programs, but are discussed in other sections of this report because of the nature of their assistance:

The SBA reports that over 1.2 million aspiring entrepreneurs and small business owners receive mentoring and training from an SBA-supported resource partner each year. Some of this training is free, and some is offered at low cost.

SBDCs provide free or low-cost assistance to small businesses using programs customized to local conditions. SBDCs support small business in marketing and business strategy, finance, technology transfer, government contracting, management, manufacturing, engineering, sales, accounting, exporting, and other topics. SBDCs are funded by grants from the SBA and matching funds. There are 63 lead SBDC service centers, one located in each state (four in Texas and six in California), the District of Columbia, Puerto Rico, the Virgin Islands, Guam, and American Samoa. These lead SBDC service centers manage more than 900 SBDC outreach locations.

The SBA's Microloan Technical Assistance program is part of the SBA's Microloan program but receives a separate appropriation. It provides grants to Microloan intermediaries to offer management and technical training assistance to Microloan program borrowers and prospective borrowers.18 There are currently 147 active Microloan intermediaries serving 49 states, the District of Columbia, and Puerto Rico.19

WBCs are similar to SBDCs, except they concentrate on assisting women entrepreneurs. There are currently 116 WBCs, with at least one WBC in most states and territories.20

SCORE was established on October 5, 1964, by then-SBA Administrator Eugene P. Foley as a national, volunteer organization, uniting more than 50 independent nonprofit organizations into a single, national nonprofit organization. SCORE's 320 chapters and more than 800 branch offices are located throughout the United States and partner with more than 11,000 volunteer counselors, who are working or retired business owners, executives, and corporate leaders, to provide management and training assistance to small businesses.21

PRIME provides SBA grants to nonprofit microenterprise development organizations or programs that have "a demonstrated record of delivering microenterprise services to disadvantaged entrepreneurs; an intermediary; a microenterprise development organization or program that is accountable to a local community, working in conjunction with a state or local government or Indian tribe; or an Indian tribe acting on its own, if the Indian tribe can certify that no private organization or program referred to in this paragraph exists within its jurisdiction."22

The SBA's Office of Veterans Business Development (OVBD) administers several management and training programs to assist veteran-owned businesses, including 22 Veterans Business Outreach Centers which provide "entrepreneurial development services such as business training, counseling and resource partner referrals to transitioning service members, veterans, National Guard & Reserve members and military spouses interested in starting or growing a small business."23

The SBA's Office of Native American Affairs provides management and technical educational assistance to Native Americans (American Indians, Alaska natives, native Hawaiians, and the indigenous people of Guam and American Samoa) to start and expand small businesses.

The SBA reports that "regional innovation clusters are on-the-ground collaborations between business, research, education, financing and government institutions that work to develop and grow the supply chain of a particular industry or related set of industries in a geographic region."24 The SBA has supported the Entrepreneurial Development Initiative (Regional Innovation Clusters) since FY2009, and the initiative has received recommended appropriations from Congress since FY2010.

The SBA's Entrepreneurship Education initiative provides assistance to high-growth small businesses in underserved communities through the Emerging Leaders initiative and the SBA Learning Center. The Emerging Leaders initiative is a seven‐month executive leader education series consisting of "more than 100 hours of specialized training, technical support, access to a professional network, and other resources to strengthen their businesses and promote economic development."25 At the conclusion of the training, "participants produce a three‐year strategic growth action plan with benchmarks and performance targets that help them access the necessary support and resources to move forward for the next stage of business growth."26 The Learning Center is the SBA's primary online training service, which offers free online courses on business planning, marketing, government contracting, accounting, and social media, providing learners an "opportunity to access entrepreneurship education resources through toolkits, fact sheets, infographic tip sheets, instructor guides, and audio content."27

Capital Access Programs

Overview

The SBA has authority to make direct loans but, with the exception of disaster loans and loans to Microloan program intermediaries, has not exercised that authority since 1998.28 The SBA indicated that it stopped issuing direct business loans primarily because the subsidy rate was "10 to 15 times higher" than the subsidy rate for its loan guaranty programs.29 Instead of making direct loans, the SBA guarantees loans issued by approved lenders to encourage those lenders to provide loans to small businesses "that might not otherwise obtain financing on reasonable terms and conditions."30 With few exceptions, to qualify for SBA assistance, an organization must be both a business and small.31

What Is a Business?

To participate in any of the SBA programs, a business must meet the Small Business Act's definition of small business. This is a business that

The business may be a sole proprietorship, partnership, corporation, or any other legal form.

What Is Small?34

The SBA uses two measures to determine if a business is small: SBA-derived industry specific size standards or a combination of the business's net worth and net income. For example, businesses participating in the SBA's 7(a) loan guaranty program are deemed small if they either meet the SBA's industry-specific size standards for firms in 1,047 industrial classifications in 18 subindustry activities described in the North American Industry Classification System (NAICS) or do not have more than $15 million in tangible net worth and not more than $5 million in average net income after federal taxes (excluding any carryover losses) for the two full fiscal years before the date of the application. All of the company's subsidiaries, parent companies, and affiliates are considered in determining if it meets the size standard.35

The SBA's industry size standards vary by industry, and they are based on one of the following four measures: the firm's (1) average annual receipts in the previous three years, (2) number of employees, (3) asset size, or (4) for refineries, a combination of number of employees and barrel per day refining capacity. Historically, the SBA has used the number of employees to determine if manufacturing and mining companies are small and average annual receipts for most other industries.

The SBA's size standards are designed to encourage competition within each industry; they are derived through an assessment of the following four economic factors: "average firm size, average assets size as a proxy of start-up costs and entry barriers, the 4-firm concentration ratio as a measure of industry competition, and size distribution of firms."36 The SBA also considers the ability of small businesses to compete for federal contracting opportunities and, when necessary, several secondary factors "as they are relevant to the industries and the interests of small businesses, including technological change, competition among industries, industry growth trends, and impacts of size standard revisions on small businesses."37

Loan Guarantees

Overview

The SBA provides loan guarantees for small businesses that cannot obtain credit elsewhere. Its largest loan guaranty programs are the 7(a) loan guaranty program, the 504/CDC loan guaranty program, international trade and export promotion programs, and the Microloan program.

The SBA's loan guaranty programs require personal guarantees from borrowers and share the risk of default with lenders by making the guaranty less than 100%. In the event of a default, the borrower owes the amount contracted less the value of any collateral liquidated. The SBA can attempt to recover the unpaid debt through administrative offset, salary offset, or IRS tax refund offset. Most types of businesses are eligible for loan guarantees, but a few are not. A list of ineligible businesses (such as insurance companies, real estate investment firms, firms involved in financial speculation or pyramid sales, and businesses involved in illegal activities) is contained in 13 C.F.R. Section 120.110.38 With one exception, nonprofit and charitable organizations are also ineligible.39

As shown in the following tables, most of these programs charge fees to help offset program costs, including costs related to loan defaults. In most instances, the fees are set in statute. For example, for 7(a) loans with a maturity exceeding 12 months, the SBA is authorized to charge lenders an up-front guaranty fee of up to 2% for the SBA guaranteed portion of loans of $150,000 or less, up to 3% for the SBA guaranteed portion of loans exceeding $150,000 but not more than $700,000, and up to 3.5% for the SBA guaranteed portion of loans exceeding $700,000. Lenders with a 7(a) loan that has a SBA guaranteed portion in excess of $1 million can be charged an additional fee not to exceed 0.25% of the guaranteed amount in excess of $1 million.

7(a) loans are also subject to an ongoing servicing fee not to exceed 0.55% of the outstanding balance of the guaranteed portion of the loan.40 In addition, lenders are authorized to collect fees from borrowers to offset their administrative expenses.

In an effort to assist small business owners, the SBA has, from time-to-time, reduced its fees. For example, in FY2019, the SBA waived the annual service fee for 7(a) loans of $150,000 or less made to small businesses located in a rural area or a HUBZone and reduced the up-front one-time guaranty fee for these loans from 2.0% to 0.6667% of the guaranteed portion of the loan.41

In addition, pursuant to P.L. 114-38, the Veterans Entrepreneurship Act of 2015, the SBA is required to waive the up-front, one-time guaranty fee on all veteran loans under the 7(a) SBAExpress program (up to and including $350,000) "except during any upcoming fiscal year for which the President's budget, submitted to Congress, includes a cost for the 7(a) program, in its entirety, that is above zero."42

The SBA's goal is to achieve a zero subsidy rate, meaning that the appropriation of budget authority for new loan guaranties is not required.

As shown in Table 2, the SBA's fees and proceeds from loan liquidations do not always generate sufficient revenue to cover loan losses, resulting in the need for additional appropriations to account for the shortfall.

Table 2. SBA Business Loan Subsidies, Authorized Amounts, FY2010-FY2020

($ in millions)

Fiscal Year

7(a) Loan Guaranty Program

504/CDC Loan Guaranty Program

Microloan Program

Total Subsidy

2010

$80.00

$0.00

$3.00

$83.00

2011a

$79.84

$0.00

$2.99

$82.83

2012

$139.40

$67.70

$3.68

$210.78

2013b

$218.38

$97.87

$3.49

$319.74

2014

$0.00

$107.00

$4.60

$111.60

2015

$0.00

$45.00

$2.50

$47.50

2016

$0.00

$0.00

$3.34

$3.34

2017

$0.00

$0.00

$4.34

$4.34

2018

$0.00

$0.00

$3.44

$3.44

2019

$0.00

$0.00

$4.00

$4.00

2020

$99.00

$0.00

$5.00

$104.00

Sources: SBA, Congressional Budget Justification (Summary of Credit Programs & Revolving Fund), various years, at https://www.sba.gov/about-sba/sba-performance/performance-budget-finances/congressional-budget-justification-annual-performance-report; P.L. 111-117, the Consolidated Appropriations Act, 2010; P.L. 112-10, the Department of Defense and Full-Year Continuing Appropriations Act, 2011; P.L. 112-74, the Consolidated Appropriations Act, 2012; P.L. 112-175, the Continuing Appropriations Resolution, 2013; SBA, "General Statement Regarding the Implications of Sequestration;" P.L. 113-76, the Consolidated Appropriations Act, 2014; P.L. 113-235, the Consolidated and Further Continuing Appropriations Act, 2015; P.L. 114-113, the Consolidated Appropriations Act, 2016; P.L. 115-31, the Consolidated Appropriations Act, 2017; P.L. 115-141, the Consolidated Appropriations Act, 2018; P.L. 116-6, the Consolidated Appropriations Act, 2019; and P.L. 116-93, the Consolidated Appropriations Act, 2020.

a. In FY2011, there was a 0.2% across-the-board rescission. Before the rescission, the authorized subsidy amounts were $80.0 million for the 7(a) program, $0.0 for the 504/ Certified Development Companies (CDC) program, and $3.0 million for the Microloan program.

b. In FY2013, there was a 0.2% across-the-board rescission and sequestration. Before these reductions, the authorized subsidy amounts were $225.5 million for the 7(a) program, $108.1 million for the 504/CDC program, $3.678 million for the Microloan program, and $337.278 million total.

7(a) Loan Guaranty Program43

The 7(a) loan guaranty program is named after the section of the Small Business Act that authorizes it. These are loans made by SBA lending partners (mostly banks but also some other financial institutions) and partially guaranteed by the SBA.

In FY2019, the SBA approved 51,907 7(a) loans totaling $23.2 billion.44 In FY2018, there were 1,810 active lending partners providing 7(a) loans.45

The 7(a) program's current guaranty rate is 85% for loans of $150,000 or less and 75% for loans greater than $150,000 (up to a maximum guaranty of $3.75 million—75% of $5 million). Although the SBA's offer to guarantee a loan provides an incentive for lenders to make the loan, lenders are not required to do so.

Lenders are permitted to charge borrowers fees to recoup specified expenses and are allowed to charge borrowers "a reasonable fixed interest rate" or, with the SBA's approval, a variable interest rate.46 The SBA uses a multistep formula to determine the maximum allowable fixed interest rate for all 7(a) loans (with the exception of the Export Working Capital Program and Community Advantage loans) and periodically publishes that rate and the maximum allowable variable interest rate in the Federal Register.47

Maximum interest rates allowed on variable-rate 7(a) loans are pegged to either the prime rate, the 30-day London Interbank Offered Rate (LIBOR) plus 3%, or the SBA optional peg rate, which is a weighted average of rates that the federal government pays for loans with maturities similar to the guaranteed loan. The allowed spread over the prime rate, LIBOR base rate, or SBA optional peg rate depends on the loan amount and the loan's maturity (under seven years or seven years or more).48 The adjustment period can be no more than monthly and cannot change over the life of the loan.

Table 3 provides information on the 7(a) program's key features, including its eligible uses, maximum loan amount, loan maturity, fixed interest rates, and guarantee fees.

Table 3. Summary of the 7(a) Loan Guaranty Program's Key Features

Key Feature

Program Summary

Use of Proceeds

Fixed assets, working capital, financing of start-ups, or to purchase an existing business; some debt payment allowed, but lender's loan exposure may not be reduced with the Express products. Lines of credit are offered with the Express programs.

Maximum Loan Amount

$5 million.

Maturity

5 years to 7 years for working capital, up to 25 years for equipment and real estate. All other loan purposes have a maximum term of 10 years.

Maximum Fixed Interest Rates

For fixed rate loans of $25,000 or less, prime plus 800 basis points; for fixed rate loans over $25,000 but not exceeding $50,000, prime plus 700 basis points; for fixed rate loans greater than $50,000 but not exceeding $250,000, prime plus 600 basis points; and for fixed rate loans over $250,000, prime plus 500 basis points.

Guaranty Fees

For loans with a maturity of 12 months or less, the SBA normally charges an up-front guaranty fee of 0.25% of the guaranteed portion of the loan (0.25% in FY2020). For loans with maturities of more than 12 months, the SBA is authorized to charge an up-front guaranty fee on the guaranteed portion of the loan of: up to 2% for loans of $150,000 or less (2% in FY2020); up to 3% for loans of $150,001 to $700,000 (3% in FY2020); up to 3.5% for loans of more than $700,000 (3.5% in FY2020); and up to 3.75% for the guaranty portion over $1 million (3.75% in FY2020). The SBA is also allowed to charge an ongoing, annual servicing fee of up to 0.55% (0.55% in FY2020).

Job Creation

No job creation requirements.

Source: Table compiled by CRS from data from the SBA; and U.S. Small Business Administration, "SBA Information Notice: 5000-19026, 7(a) Fees Effective for the Period December 21, 2019 through September 30, 2020," December 26, 2019.

Notes: In FY2019, the SBA waived the annual service fee for 7(a) loans of $150,000 or less made to small businesses located in a rural area or a HUBZone; and reduced the up-front one-time guaranty fee for these loans from 2.0% to 0.6667% of the guaranteed portion of the loan. The SBA also waived the up-front, one-time loan guaranty fee for all veteran loans under the 7(a) SBAExpress program (loans of up to $350,000) because the FY2019 subsidy rate for the 7(a) program was zero.

Variations on the 7(a) Program

The 7(a) program has several specialized programs that offer streamlined and expedited loan procedures for particular groups of borrowers, including the SBAExpress program (for loans of $350,000 or less), the Export Express program (for loans of up to $500,000 for entering or expanding an existing export market), and the Community Advantage pilot program (for loans of $250,000 or less). The SBA also has a Small Loan Advantage program (for loans of $350,000 or less), but it is currently being used as the 7(a) program's model for processing loans of $350,000 or less and exists as a separate, specialized program in name only.

The SBAExpress program was established as a pilot program by the SBA on February 27, 1995, and made permanent through legislation, subject to reauthorization, in 2004 (P.L. 108-447, the Consolidated Appropriations Act, 2005). The program is designed to increase the availability of credit to small businesses by permitting lenders to use their existing documentation and procedures in return for receiving a reduced SBA guarantee on loans. It provides a 50% loan guarantee on loan amounts of $350,000 or less.49 The loan proceeds can be used for the same purposes as the 7(a) program, except participant debt restructuring cannot exceed 50% of the project and may be used for revolving credit. The program's fees and loan terms are the same as the 7(a) program, except the term for a revolving line of credit cannot exceed seven years.

The Community Advantage pilot program began operations on February 15, 2011, and is limited to mission-focused lenders targeting underserved markets. Originally scheduled to cease operations on March 15, 2014, the program has been extended several times and is currently scheduled to operate through September 30, 2022.50 As of September 12, 2018, there were 113 approved CA lenders, 99 of which were actively making and servicing CA loans.51 The SBA placed a moratorium, effective October 1, 2018, on accepting new CA lender applications, primarily as a means to mitigate the risk of future loan defaults.52

Lenders must receive SBA approval to participate in these 7(a) specialized programs.

Special Purpose Loan Guaranty Programs

In addition to the 7(a) loan guaranty program, the SBA has special purpose loan guaranty programs for small businesses adjusting to the North American Free Trade Agreement (NAFTA), to support Employee Stock Ownership Program trusts, pollution control facilities, and working capital.

Community Adjustment and Investment Program. The Community Adjustment and Investment Program (CAIP) uses federal funds to pay the fees on 7(a) and 504/CDC loans to businesses located in communities that have been adversely affected by NAFTA.

Employee Trusts. The SBA will guarantee loans to Employee Stock Ownership Plans (ESOPs) that are used either to lend money to the employer or to purchase control from the owner. ESOPs must meet regulations established by the IRS, Department of the Treasury, and Department of Labor. These are 7(a) loans.

Pollution Control. In 1976, the SBA was provided authorization to guarantee the payment of rentals or other amounts due under qualified contracts for pollution control facilities. P.L. 100-590, the Small Business Reauthorization and Amendment Act of 1988, eliminated the revolving fund for pollution control guaranteed loans and transferred its remaining funds to the SBA's business loan and investment revolving fund. Since 1989, loans for pollution control have been guaranteed under the 7(a) loan guaranty program.

CAPLines. CAPLines are five special 7(a) loan guaranty programs designed to meet the requirements of small businesses for short-term or cyclical working capital. The maximum term is five years.

The 504/CDC Loan Guaranty Program53

The 504/CDC loan guaranty program uses Certified Development Companies (CDCs), which are private, nonprofit corporations established to contribute to economic development within their communities. Each CDC has its own geographic territory. The program provides long-term, fixed-rate loans for major fixed assets such as land, structures, machinery, and equipment. Program loans cannot be used for working capital, inventory, or repaying debt. A commercial lender provides up to 50% of the financing package, which is secured by a senior lien. The CDC's loan of up to 40% is secured by a junior lien. The SBA backs the CDC with a guaranteed debenture.54 The small business must contribute at least 10% as equity.

To participate in the program, small businesses cannot exceed $15 million in tangible net worth and cannot have average net income of more than $5 million for two full fiscal years before the date of application. Also, CDCs must intend to create or retain one job for every $75,000 of the debenture ($120,000 for small manufacturers) or meet an alternative job creation standard if they meet any one of 15 community or public policy goals.

In FY2019, the SBA approved 6,099 504/CDC loans totaling nearly $5.0 billion.55

Table 4 summarizes the 504/CDC loan guaranty program's key features.

Table 4. Summary of the 504/CDC Loan Guaranty Program's Key Features

Key Feature

Program Summary

Use of Proceeds

Fixed assets only—no working capital.

Maximum Loan Amount

Maximum 504/CDC participation in a single project is $5 million and $5.5 million for manufacturers and specified energy-related projects; minimum is $25,000. There is no limit on the project size.

Maturity

10 years for equipment; 20 or 25 years for real estate. Unguaranteed financing may have a shorter term.

Maximum Interest Rates

Fixed rate is established when the debenture backing the loan is sold and is pegged to an increment above the current market rate for 5-year and 10-year U.S. Treasury issues.

Participation Requirements

504/CDC projects generally have three main participants: a third-party lender provides 50% or more of the financing; a CDC provides up to 40% of the financing through a 504/CDC debenture, which is guaranteed 100% by the SBA; and the borrower contributes at least 10% of the financing. For good cause shown, the SBA may authorize an increase in the CDC's percentage of project costs covered up to 50%. No more than 50% of eligible costs can be from federal sources.

Guaranty Fees

The SBA is authorized to charge CDCs a one-time, up-front guaranty fee of up to 0.5% of the debenture (0.5% in FY2020), an annual servicing fee of up to 0.9375% of the unpaid principal balance (0.3205% for regular 504/CDC loans and 0.322% for 504/CDC debt refinance loans in FY2020), a funding fee (not to exceed 0.25% of the debenture), an annual development company fee (0.125% of the debenture's outstanding principal balance), and a one-time participation fee (0.5% of the senior mortgage loan if in a senior lien position to the SBA and the loan was approved after September 30, 1996). In addition, CDCs are allowed to charge borrowers a processing (or packaging) fee of up to 1.5% of the net debenture proceeds and a closing fee, servicing fee, late fee, assumption fee, Central Servicing Agent (CSA) fee, other agent fees, and an underwriters' fee.

Job Creation Requirements

Must intend to create or retain one job for every $75,000 of the debenture ($120,000 for small manufacturers) or meet an alternative job creation standard if it meets any one of 15 community or public policy goals.

Source: Table compiled by CRS from data from the SBA; and U.S. Small Business Administration, "SBA Information Notice: 5000-19017, 504 Fees Effective October 1, 2019," September 16, 2019.

Notes: The maximum loan amount is the total financial package, including the commercial loan and the CDC loan. It does not include the owner's minimum 10% equity contribution. It assumes the CDC loan is 40% of the total package.

International Trade and Export Promotion Programs56

Although any of SBA's loan guaranty programs can be used by firms looking to begin exporting or expanding their current exporting operations, the SBA has three loan programs that specifically focus on trade and export promotion:

In many ways, the SBA's trade and export promotion loan programs share similar characteristics with other SBA loan guaranty programs. For example, the Export Express program resembles the SBAExpress program. The SBAExpress program shares several characteristics with the standard 7(a) loan guarantee program except that the SBAExpress program has an expedited approval process, a lower maximum loan amount, and a smaller percentage of the loan guaranteed. Similarly, the Export Express program shares several of the characteristics of the standard International Trade loan program, such as an expedited approval process in exchange for a lower maximum loan amount ($500,000 compared with $5 million) and a lower percentage of guaranty.

In addition, the SBA administers grants through the State Trade Expansion Program (STEP), which are awarded to states to execute export programs that assist small business concerns (such as a trade show exhibition, training workshops, or a foreign trade mission). Initially, the STEP program was authorized for three years and appropriated $30 million annually in FY2011 and FY2012. Congress approved $8 million in appropriations for STEP in FY2014, $17.4 million in FY2015, $18 million annually in FY2016-FY2019, and $19 million in FY2020.58

The Microloan Program59

The Microloan program provides direct loans to qualified nonprofit intermediary Microloan lenders that, in turn, provide "microloans" of up to $50,000 to small businesses and nonprofit child care centers. Microloan lenders also provide marketing, management, and technical assistance to Microloan borrowers and potential borrowers.

The program was authorized in 1991 as a five-year demonstration project and became operational in 1992. It was made permanent, subject to reauthorization, by P.L. 105-135, the Small Business Reauthorization Act of 1997. Although the program is open to all small businesses, it targets new and early stage businesses in underserved markets, including borrowers with little to no credit history, low-income borrowers, and women and minority entrepreneurs in both rural and urban areas who generally do not qualify for conventional loans or other, larger SBA guaranteed loans.

In FY2019, 5,533 small businesses received a Microloan, totaling $81.5 million.60 The average Microloan was $14,735 and the average interest rate was 7.5%.61

Table 5 summarizes the Microloan program's key features.

Table 5. Summary of the Microloan Program's Key Features

Key Feature

Program Summary

Use of proceeds

Working capital and acquisition of materials, supplies, furniture, fixtures, and equipment. Loans cannot be made to acquire land or property.

Maximum Loan Amount

$50,000.

Maturity

Up to six years.

Maximum Interest Rates

The SBA charges intermediaries an interest rate that is based on the five-year Treasury rate, adjusted to the nearest one-eighth percent (called the Base Rate), less 1.25% if the intermediary maintains a historic portfolio of Microloans averaging more than $10,000 and less 2.0% if the intermediary maintains a historic portfolio of Microloans averaging $10,000 or less. The Base Rate, after adjustment, is called the Intermediary's Cost of Funds. The Intermediary's Cost of Funds is initially calculated one year from the date of the note and is reviewed annually and adjusted as necessary (called recasting). The interest rate cannot be less than zero.

On loans of more than $10,000, the maximum interest rate that can be charged to the borrower is the interest rate charged by the SBA on the loan to the intermediary, plus 7.75%. On loans of $10,000 or less, the maximum interest rate that can be charged to the borrower is the interest charged by the SBA on the loan to the intermediary, plus 8.5%. Rates are negotiated between the borrower and the intermediary and typically range from 7% to 9%.

Guaranty Fees

The SBA does not charge intermediaries up-front or ongoing service fees under the Microloan program.

Job Creation Requirements

No job creation requirements.

Source: Table compiled by CRS from data from the SBA.

Contracting Programs62

Several SBA programs assist small businesses in obtaining and performing federal contracts and subcontracts. These include various prime contracting programs; subcontracting programs; and other assistance (e.g., contracting technical training assistance, the federal goaling program, federal Offices of Small and Disadvantaged Business Utilization, and the Surety Bond Guarantee program).

Prime Contracting Programs

Several contracting programs allow small businesses to compete only with similar firms for government contracts or receive sole-source awards in circumstances in which such awards could not be made to other firms. These programs, which give small businesses a chance to win government contracts without having to compete against larger and more experienced companies, include the following:

Subcontracting Programs for Small Disadvantaged Businesses

Other federal programs promote subcontracting with small disadvantaged businesses (SDBs). SDBs include 8(a) participants and other small businesses that are at least 51% unconditionally owned and controlled by socially or economically disadvantaged individuals or groups. Individuals owning and controlling non-8(a) SDBs may have net worth of up to $750,000 (excluding ownership interests in the SDB firm and equity in their primary personal residence). Otherwise, however, SDBs must generally satisfy the same eligibility requirements as 8(a) firms, although they do not apply to the SBA to be designated SDBs in the same way that 8(a) firms do.

Federal agencies must negotiate "subcontracting plans" with the apparently successful bidder or offeror on eligible prime contracts prior to awarding the contract. Subcontracting plans set goals for the percentage of subcontract dollars to be awarded to SDBs, among others, and describe efforts that will be made to ensure that SDBs "have an equitable opportunity to compete for subcontracts." Federal agencies may also consider the extent of subcontracting with SDBs in determining to whom to award a contract or give contractors "monetary incentives" to subcontract with SDBs.

As of January 8, 2020, the SBA's Dynamic Small Business Search database included 1,580 SBA-certified SDBs and 132,046 self-certified SDBs.72

The 7(j) Management and Technical Assistance Program

The SBA's 7(j) Management and Technical Assistance program provides "a wide variety of management and technical assistance to eligible individuals or concerns to meet their specific needs, including: (a) counseling and training in the areas of financing, management, accounting, bookkeeping, marketing, and operation of small business concerns; and (b) the identification and development of new business opportunities."73 Eligible individuals and businesses include "8(a) certified firms, small disadvantaged businesses, businesses operating in areas of high unemployment, or low income or firms owned by low income individuals."74

In FY2018, the 7(j) Management and Technical Assistance program assisted 6,483 small businesses.75

Surety Bond Guarantee Program76

The SBA's Surety Bond Guarantee program is designed to increase small businesses' access to federal, state, and local government contracting, as well as private-sector contracts, by guaranteeing bid, performance, and payment bonds for small businesses that cannot obtain surety bonds through regular commercial channels.77 The program guarantees individual contracts of up to $6.5 million and up to $10 million for federal contracts if a federal contracting officer certifies that such a guarantee is necessary. The SBA's guarantee ranges from not to exceed 80% to not to exceed 90% of the surety's loss if a default occurs.78 In FY2018, the SBA guaranteed 10,866 bid and final surety bonds with a total contract value of nearly $6.6 billion.79

A surety bond is a three-party instrument between a surety (someone who agrees to be responsible for the debt or obligation of another), a contractor, and a project owner. The agreement binds the contractor to comply with the terms and conditions of a contract. If the contractor is unable to successfully perform the contract, the surety assumes the contractor's responsibilities and ensures that the project is completed. The surety bond reduces the risk associated with contracting.80

Surety bonds are viewed as a means to encourage project owners to contract with small businesses that may not have the credit history or prior experience of larger businesses and are considered to be at greater risk of failing to comply with the contract's terms and conditions.81

Goaling Program

Since 1978, federal agency heads have been required to establish federal procurement contracting goals, in consultation with the SBA, "that realistically reflect the potential of small business concerns" to participate in federal procurement. Each agency is required, at the conclusion of each fiscal year, to report its progress in meeting these goals to the SBA.82

In 1988, Congress authorized the President to annually establish government-wide minimum participation goals for procurement contracts awarded to small businesses and small businesses owned and controlled by socially and economically disadvantaged individuals. Congress required the government-wide minimum participation goal for small businesses to be "not less than 20% of the total value of all prime contract awards for each fiscal year" and "not less than 5% of the total value of all prime contract and subcontract awards for each fiscal year" for small businesses owned and controlled by socially and economically disadvantaged individuals.83

Each federal agency was also directed to "have an annual goal that presents, for that agency, the maximum practicable opportunity for small business concerns and small business concerns owned and controlled by socially and economically disadvantaged individuals to participate in the performance of contracts let by such agency."84 The SBA was also required to report to the President annually on the attainment of the goals and to include the information in an annual report to Congress.85 The SBA negotiates the goals with each federal agency and establishes a small business eligible baseline for evaluating the agency's performance.86 The agency head is required to "make consistent efforts to annually expand participation by small business concerns from each industry category."87 If the SBA and the agency cannot agree on the goals, the agency may submit the case to the Office of Management and Budget (OMB) Office of Federal Procurement Policy (OFPP) for resolution.88

The small business eligible baseline excludes certain contracts that the SBA has determined do not realistically reflect the potential for small business participation in federal procurement (such as those awarded to mandatory and directed sources), contracts funded predominately from agency-generated sources (i.e., nonappropriated funds), contracts not covered by Federal Acquisition Regulations, acquisitions on behalf of foreign governments, and contracts not reported in the General Services Administration's (GSA's) Federal Procurement Data System—Next Generation, or FPDS-NG (such as contracts valued below $10,000 and government procurement card purchases).89 These exclusions typically account for 18% to 20% of all federal prime contracts each year.

The SBA then evaluates the agencies' performance against their negotiated goals and presents the results in the SBA's annual Small Business Procurement Scorecards. The SBA uses FPDS-NG data, which are published in GSA's annual Small Business Goaling Report. Each agency that fails to achieve any proposed prime or subcontract goal is required to submit a justification to the SBA on why it failed to achieve a proposed or negotiated goal with a proposed plan of corrective action.90

Over the years, federal government-wide procurement contracting goals have been established for small businesses generally (P.L. 100-656, the Business Opportunity Development Reform Act of 1988, and P.L. 105-135, the HUBZone Act of 1997—Title VI of the Small Business Reauthorization Act of 1997), small businesses owned and controlled by socially and economically disadvantaged individuals (P.L. 100-656, the Business Opportunity Development Reform Act of 1988), women (P.L. 103-355, the Federal Acquisition Streamlining Act of 1994), small businesses located within a HUBZone (P.L. 105-135, the HUBZone Act of 1997—Title VI of the Small Business Reauthorization Act of 1997), and small businesses owned and controlled by a service disabled veteran (P.L. 106-50, the Veterans Entrepreneurship and Small Business Development Act of 1999).

The current federal small business contracting goals are

There are no punitive consequences for not meeting these goals. However, the SBA's Small Business Procurement Scorecards and GSA's Small Business Goaling Report are distributed widely, receive media attention, and heighten public awareness of the issue of small business contracting. For example, agency performance as reported in the SBA's Small Business Procurement Scorecards is often cited by Members during their questioning of federal agency witnesses during congressional hearings.

As shown in Table 6, the FY2018 Small Business Goaling Report indicates that federal agencies met the federal procurement goal for small businesses generally, small disadvantaged businesses, and service-disabled veteran-owned small businesses in FY2018.

Table 6 also provides, for comparative purposes, the percentage of total reported federal contracts (without exclusions) awarded to those small businesses in FY2018.

Table 6. Federal Contracting Goals and Percentage of FY2018 Federal Contract Dollars Awarded to Small Businesses, by Type

Business Type

Federal Goal

Percentage of FY2018 Federal Contracts

 

 

Small Business Eligible

All Reported Contracts

Small Businesses

23.0%

25.06%

22.43%

Small Disadvantaged Businesses

5.0%

9.65%

8.62%

Women-Owned Small Businesses

5.0%

4.75%

4.21%

HUBZone Small Businesses

3.0%

2.05%

1.78%

Service-Disabled Veteran-Owned Small Businesses

3.0%

4.27%

4.07%

Sources: SBA, "Statutory Guidelines," at https://www.sba.gov/content/statutory-guidelines-0 (federal goals); U.S. General Services Administration, Federal Procurement Data System—Next Generation, "Small Business Goaling Report: Fiscal Year 2018," at https://www.fpds.gov/downloads/top_requests/FPDSNG_SB_Goaling_FY_2018.pdf; and GSA, FPDS-NG, at https://www.fpds.gov/fpdsng/ (contract dollars).

Notes: The Small Business Goaling Report for FY2018 reports that small business eligible contracts, as of June 25, 2019, totaled $482.4 billion and that $120.9 billion was awarded to small businesses, $46.5 billion to small disadvantaged businesses, $22.9 billion to women-owned small businesses, $9.9 billion to SBA-certified HUBZone small businesses, and $20.6 billion to service-disabled veteran-owned small businesses. The Small Business Goaling Report for FY2018 does not indicate the total amount of federal contracts reported in the FPDS-NG on June 25, 2019. The percentages provided in the column for all reported contracts in FY2018 were calculated using FPDS-NG data for all contracts as reported on July 1, 2019: $555.5 billion in total contracts; $124.6 billion to small businesses, $47.9 billion to small disadvantaged businesses, $23.4 billion to women-owned small businesses, $9.9 billion to SBA-certified HUBZone small businesses, and $22.6 billion to service-disabled veteran-owned small businesses.

Office of Small and Disadvantaged Business Utilization

Government agencies with procurement authority have an Office of Small and Disadvantaged Business Utilization (OSDBU) to advocate within the agency for small businesses, as well as assist small businesses in their dealings with federal agencies (e.g., obtaining payment).

Regional and District Offices

As mentioned previously, the SBA provides funding to third parties, such as SBDCs, to provide management and training services to small business owners and aspiring entrepreneurs. The SBA also provides management, training, and outreach services to small business owners and aspiring entrepreneurs through its 68 district offices. These offices are overseen by the SBA Office of Field Operations and 10 regional offices.

SBA district offices conduct more than 20,000 outreach events annually with stakeholders and resource partners that include "lender training, government contracting, marketing events in emerging areas, and events targeted to high-growth entrepreneurial markets, such as exporting."92 SBA district offices focus "on core SBA programs concerning contracting, capital, technical assistance, and exporting."93 They also perform annual program eligibility and compliance reviews on 100% of the 8(a) business development firms in the SBA's portfolio and each year conduct on-site examinations of about 10% of all HUBZone certified firms (529 in FY2018) to validate compliance with the HUBZone program's geographic requirement for principal offices.94

Office of Inspector General95

The Office of Inspector General's (OIG's) mission is "to improve SBA management and effectiveness, and to detect and deter fraud in the Agency's programs."96 It serves as "an independent and objective oversight office created within the SBA by the Inspector General Act of 1978 [P.L. 95-452], as amended."97 The Inspector General, who is nominated by the President and confirmed by the Senate, directs the office. The Inspector General Act provides the OIG with the following responsibilities:

Capital Investment Programs

The SBA has several programs to improve small business access to capital markets, including the Small Business Investment Company program, the New Market Venture Capital Program (now inactive), two special high technology contracting programs (the Small Business Innovative Research and Small Business Technology Transfer programs), and the growth accelerators initiative.

The Small Business Investment Company Program99

The Small Business Investment Company (SBIC) program enhances small business access to venture capital by stimulating and supplementing "the flow of private equity capital and long-term loan funds which small-business concerns need for the sound financing of their business operations and for their growth, expansion, and modernization, and which are not available in adequate supply."100

The SBA works with 300 privately owned and managed SBICs licensed by the SBA to provide financing to small businesses with private capital the SBIC has raised and with funds the SBIC borrows at favorable rates because the SBA guarantees the debenture (loan obligation).

SBICs provide equity capital to small businesses in various ways, including by

The SBIC program currently has invested or committed about $30.5 billion in small businesses, with the SBA's share of capital at risk about $13.8 billion.105 In FY2019, the SBA provided SBICs $1.93 billion in leverage to SBICs and SBICs invested another $3.94 billion from private capital for a total of nearly $5.9 billion in financing for 1,191 small businesses.106

Table 7. Summary of Small Business Investment Company Program's Key Features

Key Feature

Program Summary

Use of Proceeds

To purchase small business equity securities, make loans to small businesses, purchase debt securities from small businesses, and provide, subject to limitations, small businesses a guarantee of their monetary obligations to creditors not associated with the SBIC.

Maximum Leverage Amount

A licensed SBIC in good standing with a demonstrated need for funds may apply to the SBA for financial assistance (called leverage) of up to 300% of its private capital. However, most SBICs are approved for a maximum of 200% of their private capital, and no fund management team may exceed the allowable maximum amount of leverage, currently $175 million per SBIC and $350 million for two or more licenses under common control.

Maturity

SBA-guaranteed debenture participation certificates can have a term of up to 15 years, although currently only one outstanding SBA-guaranteed debenture participation certificate has a term exceeding 10 years and all recent public offerings have specified a term of 10 years. SBA-guaranteed debentures provide for semiannual interest payments and a lump sum principal payment to investors at maturity. SBICs are allowed to prepay SBA-guaranteed debentures without penalty. However, a SBA-guaranteed debenture must be prepaid in whole and not in part and can only be prepaid on a semiannual payment date. Also, low-to-moderate income area (LMI) debentures are available in two maturities, for 5 years and 10 years (plus the stub period).

Maximum Interest Rates

The debenture's coupon (interest) rate is determined by market conditions and the interest rate of 10-year Treasury securities at the time of the sale.

Guaranty Fees

The SBA requires the SBIC to pay a 3% origination fee for each debenture issued (1% at commitment and 2% at draw), an annual fee on the leverage drawn, which is fixed at the time of the leverage commitment, and other administrative and underwriting fees, which are adjusted annually.

Job Creation Requirements

No job creation requirements.

Source: Table compiled by CRS from data from the SBA.

New Market Venture Capital Program107

The now inactive New Market Venture Capital (NMVC) program encourages equity investments in small businesses in low-income areas that meet specific statistical criteria established by regulation. The program operates through public-private partnerships between the SBA and newly formed NMVC investment companies and existing Specialized Small Business Investment Companies (SSBICs) that operate under the Small Business Investment Company program.

The NMVC program's objective is to serve the unmet equity needs of local entrepreneurs in low-income areas by providing developmental venture capital investments and technical assistance, helping to create quality employment opportunities for low-income area residents, and building wealth within those areas.

The SBA's role is essentially the same as with the SBIC program. The SBA selects participants for the NMVC program, provides funding for their investments and operational assistance activities, and regulates their operations to ensure public policy objectives are being met. The SBA requires the companies to provide regular performance reports and have annual financial examinations by the SBA.

The NMVC program was appropriated $21.952 million in FY2001 to support up to $150 million in SBA-guaranteed debentures and $30 million to fund operational assistance grants for FY2001 through FY2006. The funds were provided in a lump sum in FY2001 and were to remain available until expended. In 2003, the unobligated balances of $10.5 million for the NMVC debenture subsidies and $13.75 million for operational assistance grants were rescinded. The program continued to operate, with the number and amount of financing declining as the program's initial investments expired and NMVC companies increasingly engaged only in additional follow-on financings with the small businesses in their portfolios. The NMVC program's active unpaid principal balance (which is composed of the SBA guaranteed portion and the unguaranteed portion of the NMVC companies' active unpaid principal balance) peaked at $68.1 million in FY2008, and then fell each year thereafter until reaching $0 in FY2018.

Small Business Innovation Research Program108

The Small Business Innovation Research (SBIR) program is designed to increase the participation of small, high technology firms in federal research and development (R&D) endeavors, provide additional opportunities for the involvement of minority and disadvantaged individuals in the R&D process, and result in the expanded commercialization of the results of federally funded R&D.109 Current law requires that every federal department with an R&D budget of $100 million or more establish and operate a SBIR program. Currently, 11 federal agencies participate in the SBIR program. A set percentage of that agency's applicable extramural R&D budget—originally set at not less than 0.2% in FY1983 and currently not less than 3.2%—is to be used to support mission-related work in small businesses.110

Agency SBIR efforts involve a three-phase process. Phase I awards, normally up to $150,000, for six months are made to evaluate a concept's scientific or technical merit and feasibility. The project must be of interest to and coincide with the mission of the supporting organization. Phase I awards are capped at $256,580, but higher amounts may be awarded with SBA approval. Projects that demonstrate potential after the initial endeavor may compete for Phase II awards lasting one to two years.111 Phase II awards, normally up to $1 million, are for the performance of the principal R&D by the small business. Phase II awards are capped at $1.71 million, but higher amounts may be awarded with SBA approval. Phase III funding, directed at the commercialization of the product or process, is expected to be generated in the private sector. Federal dollars may be used if the government perceives that the final technology or technique will meet public needs.

Eight departments and three other federal agencies currently have SBIR programs, including the Departments of Agriculture, Commerce, Defense, Education, Energy, Health and Human Services, Homeland Security, and Transportation; the Environmental Protection Agency; the National Aeronautics and Space Administration (NASA); and the National Science Foundation (NSF).112 Each agency's SBIR activity reflects that organization's management style. Individual departments select R&D interests, administer program operations, and control financial support. Funding can be disbursed in the form of contracts, grants, or cooperative agreements. Separate agency solicitations are issued at established times.

The SBA is responsible for establishing the broad policy and guidelines under which individual departments operate their SBIR programs. The SBA monitors and reports to Congress on the conduct of the separate departmental activities.

Small Business Technology Transfer Program

The Small Business Technology Transfer program (STTR) provides funding for research proposals that are developed and executed cooperatively between a small firm and a scientist in a nonprofit research organization and meet the mission requirements of the federal funding agency.113 Phase I financing, normally up to $150,000, is available for approximately one year to fund the exploration of the scientific, technical, and commercial feasibility of an idea or technology. Phase 1 financing is capped at $256,580, but higher amounts may be awarded with SBA approval. Phase II awards, normally up to $1 million, may be made for two years, during which time the developer performs R&D work and begins to consider commercial potential. Phase II awards are capped at $1.71 million, but higher amounts may be awarded with SBA approval.114 Only Phase I award winners are considered for Phase II. Phase III funding, directed at the commercialization of the product or process, is expected to be generated in the private sector. The small business must find funding in the private sector or other non-STTR federal agency.

The STTR program is funded by a set-aside, initially set at not less than 0.05% in FY1994 and now at not less than 0.45%, of the extramural R&D budget of departments that spend more than $1 billion per year on this effort.115 The Departments of Energy, Defense, and Health and Human Services participate in the STTR program, as do NASA and NSF.

The SBA is responsible for establishing the broad policy and guidelines under which individual departments operate their STTR programs. The SBA monitors and reports to Congress on the conduct of the separate departmental activities.

Growth Accelerator Initiative

The SBA describes growth accelerators as "organizations that help entrepreneurs start and scale their businesses."116 Growth accelerators are typically run by experienced entrepreneurs and help small businesses access seed capital and mentors. The SBA claims that growth accelerators "help accelerate a startup company's path towards success with targeted advice on revenue growth, job, and sourcing outside funding."117

The SBA's Growth Accelerator Initiative began in FY2014 when Congress recommended in its appropriations report that the initiative be provided $2.5 million. Congress subsequently recommended that it receive $4 million in FY2015; $1 million in FY2016, FY2017, and FY2018; $2 million in FY2019; and $2 million in FY2020.

The Growth Accelerator Initiative provides $50,000 matching grants each year to universities and private sector accelerators to support the development of accelerators and their support of startups in parts of the country where there are fewer conventional sources of access to capital (i.e., venture capital and other investors).

The SBA announced the award of 80 growth accelerator grants on August 4, 2015 ($4 million), 68 growth accelerator grants on August 31, 2016 ($3.4 million), 20 growth accelerator grants on October 30, 2017 ($1 million), and 60 growth accelerator grants on September 26, 2019 ($3 million).118 The SBA did not issue a competitive announcement for Growth Accelerator awards in FY2018.

Office of Advocacy119

The SBA's Office of Advocacy is "an independent voice for small business within the federal government."120 The Chief Counsel for Advocacy, who is nominated by the President and confirmed by the Senate, directs the office. The Office of Advocacy's mission is to "encourage policies that support the development and growth of American small businesses" by

Executive Direction Programs

The SBA's executive direction programs consist of the National Women's Business Council, the Office of Ombudsman, and Faith-Based Initiatives.

The National Women's Business Council

The National Women's Business Council is a bipartisan federal advisory council created to serve as an independent source of advice and counsel to the President, Congress, and the SBA on economic issues of importance to women business owners. The council's mission "is to promote bold initiatives, policies, and programs designed to support women's business enterprises at all stages of development in the public and private sector marketplaces—from start-up to success to significance."122

Office of Ombudsman123

The National Ombudsman's mission "is to assist small businesses when they experience excessive or unfair federal regulatory enforcement actions, such as repetitive audits or investigations, excessive fines, penalties, threats, retaliation or other unfair enforcement action by a federal agency."124 The Office of Ombudsman works with federal agencies that have regulatory authority over small businesses to provide a means for entrepreneurs to comment about enforcement activities and encourage agencies to address those concerns promptly. It also receives comments from small businesses about unfair federal compliance or enforcement activities and refers those comments to the Inspector General of the affected agency in appropriate circumstances. In addition, the National Ombudsman files an annual report with Congress and affected federal agencies that rates federal agencies based on substantiated comments received from small business owners. Affected agencies are provided an opportunity to comment on the draft version of the annual report to Congress before it is submitted.125

Faith-Based Initiatives

The SBA sponsors several faith-based initiatives For example, the SBA, in cooperation with the National Association of Government Guaranteed Lenders (NAGGL), created the Business Smart Toolkit, "a ready-to-use workshop toolkit that equips faith-based and community organizations to help new and aspiring entrepreneurs launch and build businesses that are credit ready."126

Legislative Activity

During the 111th Congress

During the 112th Congress, the SBA's statutory authorization expired (on July 31, 2011).128 Since then, the SBA has been operating under authority provided by annual appropriations acts. Prior to July 31, 2011, the SBA's authorization had been temporarily extended 15 times since 2006.

P.L. 112-239, the National Defense Authorization Act for Fiscal Year 2013, increased the SBA's surety bond limit from $2 million to $6.5 million (and up to $10 million if a federal contracting officer certifies that such a guarantee is necessary); required the SBA to oversee and establish standards for most federal mentor-protégé programs and establish a mentor-protégé program for all small business concerns; required the SBA's Chief Counsel for Advocacy to enter into a contract with an appropriate entity to conduct an independent assessment of the small business procurement goals, including an assessment of which contracts should be subject to the goals; and addressed the SBA's recent practice of combining size standards within industrial groups as a means to reduce the complexity of its size standards by requiring the SBA to make available a justification when establishing or approving a size standard that the size standard is appropriate for each individual industry classification.

During the 113th Congress, P.L. 113-76, the Consolidated Appropriations Act, 2014, increased the SBA's SBIC program's annual authorization amount to $4 billion from $3 billion.

During the 114th Congress

During the 115th Congress

During the 116th Congress

P.L. 116-93, the Consolidated Appropriations Act, 2020, among other provisions, provided the SBA $998.46 million in FY2020, including $99 million for 7(a) program loan credit subsidies.

Appropriations131

The SBA received an appropriation of $871.042 million for FY2016, $1.337 billion for FY2017, $2.360 billion for FY2018, $715.370 million for FY2019, and $998.463 million for FY2020.

As shown in Table 8, the SBA's FY2020 appropriation includes

Table 8. SBA Appropriations, FY2016-FY2020

($ in millions)

Program Account

FY2016

FY2017

FY2018

FY2019

FY2020

Salaries and Expenses

$268.000

$269.500

$268.500

$267.500

$270.157

Entrepreneurial Development

$231.100

$245.100

$247.100

$247.700

$261.000

Business Loan Administration

$152.726

$152.726

$152.782

$155.150

$155.150

Business Loan Credit Subsidy

$3.338

$4.338

$3.438

$4.000

$104.000

Office of Inspector General

$19.900

$19.900

$26.900

$21.900

$21.900

Office of Advocacy

$9.120

$9.220

$9.120

$9.120

$9.120

Disaster Assistance

$186.858

$185.977

$0.000

$10.000

$177.136

Disaster Assistance Supplemental

$0.000

$450.000

$1,652.000

$0.000

$0.000

Total

$871.042

$1,336.761

$2,359.840

$715.370

$988.463

Sources: P.L. 113-76, the Consolidated Appropriations Act, 2014, P.L. 113-235, the Consolidated and Further Continuing Appropriations Act, 2015; P.L. 114-113, the Consolidated Appropriations Act, 2016; P.L. 115-31, the Consolidated Appropriations Act, 2017; P.L. 115-56, the Continuing Appropriations Act, 2018 and Supplemental Appropriations for Disaster Relief Requirements Act, 2017; P.L. 115-123, the Bipartisan Budget Act of 2018; P.L. 115-141, the Consolidated Appropriations Act, 2018; P.L. 116-6, the Consolidated Appropriations Act, 2019; and P.L. 116-93, the Consolidated Appropriations Act, 2020.

Notes: The sum of the amounts appropriated for each of the program accounts may not equal the total amount appropriated for that fiscal year due to rounding. P.L. 115-123 provided the Office of the Inspector General $7 million in supplemental funding for FY2018 for disaster assistance oversight.

Author Contact Information

Robert Jay Dilger, Senior Specialist in American National Government ([email address scrubbed], [phone number scrubbed])
Sean Lowry, Analyst in Public Finance ([email address scrubbed], [phone number scrubbed])

Footnotes

1.

U.S. Congress, Senate Committee on Expenditures, Subcommittee on Investigations, Influence in Government Procurement, 82nd Cong., 1st sess., September 13-15, 17, 19-21, 24-28, October 3-5, 1951 (Washington: GPO, 1951) and U.S. Congress, Senate Banking and Currency, RFC Act Amendments of 1951, hearing on bills to amend the Reconstruction Finance Corporation Act, 82nd Cong., 1st sess., April 27, 30, May 1, 2, 22, 23, 1951 (Washington: GPO, 1951).

2.

P.L. 83-163, the Small Business Act of 1953 (as amended), see https://legcounsel.house.gov/Comps/Small%20Business%20Act.pdf.

3.

The Small Business Administration's (SBA's) programs have detailed rules on program requirements and administration that are not covered in this report. More detailed information concerning the SBA's programs is available in the CRS reports referenced later in this report, on the SBA's website at https://www.sba.gov/, in 15 U.S.C. §631 et seq., and in Title 13 of the Code of Federal Regulations, see https://www.govinfo.gov/content/pkg/CFR-2019-title13-vol1/pdf/CFR-2019-title13-vol1-chapI.pdf.

4.

For additional information and analysis, see CRS Report R41309, The SBA Disaster Loan Program: Overview and Possible Issues for Congress, by Bruce R. Lindsay.

5.

13 C.F.R. §123.200.

6.

13 C.F.R. §123.105 and 13 §123.203.

7.

SBA, Office of Legislative and Congressional Affairs, "WDS Report Amount Fiscal Year 2019, Table 1.4 Disbursements by Program," October 18, 2019.

8.

The SBA also offers military reservist economic injury disaster loans. These loans are available when economic injury is incurred as a direct result of a business owner or an essential employee being called to active duty. Generally, these loans are not associated with disasters. See CRS Report R42695, SBA Veterans Assistance Programs: An Analysis of Contemporary Issues, by Robert Jay Dilger and Sean Lowry.

9.

13 C.F.R. §123.2.

10.

P.L. 93-288, Disaster Relief Act Amendments and 42 U.S.C. §5721 et seq.

11.

Disaster declarations are published in the Federal Register and can also be found on the SBA website at https://disasterloan.sba.gov/ela/Declarations/Index.

12.

13 C.F.R. §123.105(a)(1).

13.

13 C.F.R. §123.105(a)(2). For mitigation measures implemented after a disaster has occurred to protect the damaged property from a similar disaster in the future, a homeowner can request that the approved loan amount be increased by the lesser of the cost of the mitigation measure or up to 20% of the verified loss (before deducting compensation from other sources), to a maximum of $200,000. 13 C.F.R. §127.

14.

13 C.F.R. §123.203.

15.

See 13 C.F.R. §123.300 for eligibility requirements. Size standards vary according to a variety of factors, including industry type, average firm size, and start-up costs and entry barriers. Size standards can be located in 13 C.F.R. 121. For further information and analysis, see CRS Report R40860, Small Business Size Standards: A Historical Analysis of Contemporary Issues, by Robert Jay Dilger.

16.

13 C.F.R. §123.302.

17.

For further information and analysis, see CRS Report R41352, Small Business Management and Technical Assistance Training Programs, by Robert Jay Dilger.

18.

For further analysis of the SBA's Microloan program, see CRS Report R41057, Small Business Administration Microloan Program, by Robert Jay Dilger.

19.

SBA, FY2020 Congressional Budget Justification and FY2018 Annual Performance Report, p. 38, at https://www.sba.gov/sites/default/files/2019-04/SBA%20FY%202020%20Congressional%20Justification_final%20508%20%204%2023%202019.pdf. As of June 27, 2018, there were no Microloan intermediaries serving Alaska. An intermediary may not operate in more than one state unless the SBA determines that it would be in the best interests of the small business community for it to operate across state lines. For example, a Microloan intermediary located in Taunton, Massachusetts is allowed to serve small businesses located in Rhode Island because of its proximity to the state and there are currently no Microloan intermediaries located in Rhode Island.

20.

SBA, "Find Local Assistance: Women's Business Center," at https://www.sba.gov/local-assistance/find/?type=Women%27s%20Business%20Center&pageNumber=1.

21.

SCORE, "Find a Location," at https://www.score.org/content/find-location.

22.

P.L. 106-102, the Gramm-Leach-Bliley Act, Section 173. Establishment of Program and Section 175. Qualified Organizations.

23.

SBA, "Office of Veterans Business Development: Resources," at https://www.sba.gov/offices/headquarters/ovbd/resources/1548576.

24.

SBA, FY2017 Congressional Budget Justification and FY2015 Annual Performance Report, p. 64, at https://www.sba.gov/sites/default/files/FY17-CBJ_FY15-APR.pdf.

25.

SBA, FY2019 Congressional Budget Justification and FY2017 Annual Performance Report, p. 89, at https://www.sba.gov/sites/default/files/aboutsbaarticle/SBA_FY_2019_CBJ_APR_2_12_post.pdf.

26.

SBA, FY2014 Congressional Budget Justification and FY2012 Annual Performance Report, p. 71, at https://www.sba.gov/sites/default/files/files/1-508-Compliant-FY-2014-CBJ%20FY%202012%20APR.pdf.

27.

SBA, FY2019 Congressional Budget Justification and FY2017 Annual Performance Report, p. 88, at https://www.sba.gov/sites/default/files/aboutsbaarticle/SBA_FY_2019_CBJ_APR_2_12_post.pdf.

28.

Prior to October 1, 1985, the SBA provided direct business loans to qualified small businesses. From October 1, 1985, to September 30, 1994, SBA direct business loan eligibility was limited to qualified small businesses owned by individuals with low incomes or located in areas of high unemployment, owned by Vietnam-era or disabled veterans, owned by the handicapped or certain organizations employing them, and certified under the minority small business capital ownership development program. Microloan program intermediaries were also eligible. On October 1, 1994, SBA direct loan eligibility was limited to Microloan program intermediaries and small businesses owned by the handicapped. Funding to support direct loans to the handicapped through the Handicapped Assistance (renamed the Disabled Assistance) Loan program ended in 1996. The last loan under the Disabled Assistance Loan program was issued in FY1998. See U.S. Congress, House Committee on Small Business, Summary of Activities, 105rd Cong., 2nd sess., January 2, 1999, H.Rept. 105-849 (Washington: GPO, 1999), p. 8.

29.

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.

30.

SBA, Fiscal Year 2010 Congressional Budget Justification, p. 30, at https://www.sba.gov/sites/default/files/Congressional_Budget_Justification_2010.pdf.

31.

The SBA provides financial assistance to nonprofit organizations to provide training to small business owners and to provide loans to small businesses through the SBA Microloan program. Also, nonprofit child care centers are eligible to participate in SBA's Microloan program.

32.

13 C.F.R. §121.105.

33.

P.L. 111-240, the Small Business Jobs Act of 2010, requires the SBA to conduct a detailed review of not less than one-third of the SBA's industry size standards every 18 months beginning on the new law's date of enactment (September 27, 2010) and ensure that each size standard is reviewed at least once every five years.

34.

For additional information and analysis, see CRS Report R40860, Small Business Size Standards: A Historical Analysis of Contemporary Issues, by Robert Jay Dilger.

35.

13 C.F.R. §121.201 and P.L. 111-240, the Small Business Act of 2010, §1116. Alternative Size Standards.

36.

SBA, Office of Government Contracting and Business Development, "SBA Size Standards Methodology," April 2019, p. 29, at https://www.sba.gov/document/support--size-standards-methodology-white-paper.

37.

Ibid., p. 1.

38.

Title 13 of the Code of Federal Regulations can be viewed at https://www.gpo.gov/fdsys/browse/collectionCfr.action?selectedYearFrom=2016&go=Go.

39.

P.L. 105-135, the Small Business Reauthorization Act of 1997, expanded the SBA's Microloan program's eligibility to include borrowers establishing a nonprofit child care business.

40.

15 U.S.C. §636(a)(23)(a).

41.

SBA, "SBA Information Notice: 7(a) Fees Effective on October 1, 2018," at https://www.sba.gov/document/information-notice-5000-180010-7a-fees-effective-october-1-2018.

42.

The SBA had waived the up-front, one-time guaranty fee on all veteran loans under the 7(a) SBAExpress program from January 1, 2014, through the end of FY2015. P.L. 114-38 made the SBAExpress program's veteran fee waiver permanent, except during any upcoming fiscal year for which the President's budget, submitted to Congress, includes a cost for the 7(a) program, in its entirety, that is above zero. The SBA waived the fee, pursuant to P.L. 114-38, in FY2016, FY2017, FY2018, and FY2019.

43.

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

44.

SBA, "SBA Lending Statistics for Major Programs (as of 9/30/2019)," at https://www.sba.gov/sites/default/files/2019-10/WebsiteReport_asof_20190930.pdf.

45.

SBA, FY2020 Congressional Budget Justification and FY2018 Annual Performance Report, p. 162, at https://www.sba.gov/document/report--congressional-budget-justification-annual-performance-report.

46.

13 C.F.R. §120.213.

47.

SBA, "Maximum Allowable 7(a) Fixed Interest Rates," 83 Federal Register 55478, November 6, 2018. For the previously used fixed interest rates formula, see SBA, "Business Loan Program Maximum Allowable Fixed Rate," 74 Federal Register 50263-50264, September 30, 2009. The SBA has a separate formula for Community Advantage loan interest rates and does not prescribe interest rates for the Export Working Capital Loans, but it does monitor the rates charged for reasonableness.

48.

SBA, "SOP 50 10 5(K): Lender and Development Company Loan Programs," (effective April 1, 2019), p. 153, at https://www.sba.gov/document/sop-50-10-5-lender-development-company-loan-programs.

49.

P.L. 111-240, the Small Business Jobs Act of 2010, temporarily increased the SBAExpress program's loan limit to $1 million for one year following enactment (through September 26, 2011).

50.

SBA, "Community Advantage Pilot Program," 77 Federal Register 67433, November 9, 2012; SBA, "Community Advantage Pilot Program," 80 Federal Register 80873, December 28, 2015; and SBA, "Community Advantage Pilot Program," 83 Federal Register 46238, September 12, 2018.

51.

SBA, "Community Advantage Pilot Program," 83 Federal Register 46238, September 12, 2018.

52.

The SBA indicated that "Given the increased risk of CA loans as compared to other 7(a) loans, the need for more resource-intensive oversight of CA Lenders, and the fact that the CA Pilot Program already includes a sufficient number of geographically dispersed CA Lenders, SBA has decided to place a moratorium on acceptance of new CA Lender applications. Effective October 1, 2018, SBA will no longer accept CA Lender Applications (SBA Form 2301)." See SBA, "Community Advantage Pilot Program," 83 Federal Register 46239, September 12, 2018.

53.

For further information and analysis, see CRS Report R41184, Small Business Administration 504/CDC Loan Guaranty Program, by Robert Jay Dilger.

54.

A debenture is a bond that is not secured by a lien on specific collateral.

55.

SBA, "SBA Lending Statistics for Major Programs (as of 9/30/2019)," at https://www.sba.gov/sites/default/files/2019-10/WebsiteReport_asof_20190930.pdf.

56.

For further information and analysis, see CRS Report R43155, Small Business Administration Trade and Export Promotion Programs, by Sean Lowry.

57.

The International Trade loan program limits its guaranty for working capital to $4 million ($4.444 million gross loan amount).

58.

P.L. 114-125, the Trade Facilitation and Trade Enforcement Act of 2015, provided the STEP program explicit statutory authorization and authorized to be appropriated $30 million for STEP grants from FY2016 through FY2020. The act also included provisions intended to improve coordination between the federal government and the states, among other provisions.

59.

For further information and analysis, see CRS Report R41057, Small Business Administration Microloan Program, by Robert Jay Dilger.

60.

SBA, "Nationwide Microloan Report, October 1, 2018 through September 30, 2019," October 10, 2019.

61.

Ibid.

62.

These programs apply government-wide but are implemented under the authority of the Small Business Act, pursuant to regulations promulgated by the SBA that determine, in part, eligibility for the programs.

63.

For additional information and analysis, see CRS Report R44844, SBA's "8(a) Program": Overview, History, and Current Issues, by Robert Jay Dilger.

64.

Section 8(a) of the Small Business Act, P.L. 85-536, as amended, can be found at 15 U.S.C. §637(a). Regulations are in 13 C.F.R. §124.

65.

GSA, Federal Procurement Data System—Next Generation, accessed on July 1, 2019, at https://www.fpds.gov/fpdsng/.

66.

For additional information and analysis, see CRS Report R41268, Small Business Administration HUBZone Program, by Robert Jay Dilger.

67.

GSA, FPDS-NG, accessed on July 1, 2019, at https://www.fpds.gov/fpdsng/.

68.

Veteran-owned small businesses and service-disabled veteran-owned small businesses are eligible for separate preferences in procurements conducted by the Department of Veterans Affairs under the authority of the Veterans Benefits, Health Care, and Information Technology Act, as amended by the Veterans' Benefits Improvements Act of 2008.

69.

GSA, FPDS-NG, accessed on July 1, 2019, at https://www.fpds.gov/fpdsng/.

70.

P.L. 113-291, the Carl Levin and Howard P. "Buck" McKeon National Defense Authorization Act for Fiscal Year 2015.

71.

GSA, FPDS-NG, accessed on July 1, 2019, at https://www.fpds.gov/fpdsng/.

72.

SBA, "Dynamic Small Business Search," at http://dsbs.sba.gov/dsbs/search/dsp_dsbs.cfm.

73.

13 C.F.R. §124.702.

74.

SBA, FY2018 Congressional Budget Justification and FY2016 Annual Performance Report, p. 44, at https://www.sba.gov/sites/default/files/aboutsbaarticle/FINAL_SBA_FY_2018_CBJ_May_22_2017c.pdf.

75.

SBA, FY2020 Congressional Budget Justification and FY2018 Annual Performance Report, p. 76, at https://www.sba.gov/document/report--congressional-budget-justification-annual-performance-report.

76.

For additional information and analysis, see CRS Report R42037, SBA Surety Bond Guarantee Program, by Robert Jay Dilger.

77.

Ancillary bonds are also eligible if they are incidental and essential to a contract for which the SBA has guaranteed a final bond. A reclamation bond is eligible if it is issued to reclaim an abandoned mine site and for a project undertaken for a specific period of time.

78.

P.L. 114-92, the National Defense Authorization Act for Fiscal Year 2016, includes a provision that increased the Preferred Surety Bond Guarantee Program's guarantee rate from not to exceed 70% to not to exceed 90% of losses starting one year from enactment (effective November 25, 2016). For additional information and analysis, see CRS Report R42037, SBA Surety Bond Guarantee Program, by Robert Jay Dilger.

79.

SBA, FY2020 Congressional Budget Justification and FY2018 Annual Performance Report, p. 67, at https://www.sba.gov/document/report--congressional-budget-justification-annual-performance-report.

80.

SBA, "Surety Bonds," at https://www.sba.gov/category/navigation-structure/loans-grants/bonds/surety-bonds.

81.

Ibid.

82.

P.L. 95-507, a bill to amend the Small Business Act and the Small Business Investment Act of 1958.

83.

P.L. 100-656, the Business Opportunity Development Reform Act of 1988.

84.

Ibid.

85.

Ibid.

86.

According to a 2001 GAO report, the SBA began to specify what types of contracts the Federal Procurement Data System would exclude when determining agency compliance with federal contracting goals in FY1998. Prior to FY1998, "agencies reported their small business achievements directly to SBA and excluded from their calculations certain types of contracts, such as those for which small businesses had a limited or no chance to compete. SBA then published an annual report summarizing each agency's achievements. SBA officials said that in some cases they were not aware of all exclusions the agencies made when reporting their numbers." GAO, Small Business: More Transparency Needed in Prime Contract Goal Program, GAO-01-551, August 1, 2001, pp. 9-10, at http://www.gao.gov/assets/240/231854.pdf.

87.

15 U.S.C. §644(g)(2).

88.

SBA, Office of Policy, Planning and Liaison, Office of Government Contracting and Business Development, "FY 2019 Goaling Guidelines," August 2018, p. 5, at https://www.sba.gov/document/report--sba-goaling-guidelines.

89.

Ibid., p. 4, at https://www.sba.gov/document/report--sba-goaling-guidelines; and GSA, FPDS-NG, "What's in FPDS-NG," at https://www.fpds.gov/wiki/index.php/FPDS-NG_FAQ.

90.

SBA, Office of Policy, Planning and Liaison, Office of Government Contracting and Business Development, "FY 2019 Goaling Guidelines," August 2018, p. 6, at https://www.sba.gov/document/report--sba-goaling-guidelines.

91.

15 U.S.C. §644(g)(1)-(2).

92.

SBA, FY2018 Congressional Budget Justification and FY2016 Annual Performance Report, p. 104, at https://www.sba.gov/sites/default/files/aboutsbaarticle/FINAL_SBA_FY_2018_CBJ_May_22_2017c.pdf.

93.

Ibid.

94.

SBA, FY2019 Congressional Budget Justification and FY2017 Annual Performance Report, p. 73, at https://www.sba.gov/sites/default/files/aboutsbaarticle/SBA_FY_19_508Final5_1.pdf; and SBA, FY2020 Congressional Budget Justification and FY2018 Annual Performance Report, p. 76, at https://www.sba.gov/document/report--congressional-budget-justification-annual-performance-report.

95.

For additional information and analysis, see CRS Report R44589, SBA's Office of Inspector General: Overview, Impact, and Relationship with Congress, by Robert Jay Dilger.

96.

SBA, "Office of Inspector General," at https://www.sba.gov/office-of-inspector-general.

97.

SBA, "Office of the Inspector General Strategic Plan for FY 2012–2017," p. 3, at https://www.sba.gov/sites/default/files/oig/SBA-OIG%202012-2017%20Strategic%20Plan%20.pdf.

98.

Ibid.

99.

For further information and analysis, see CRS Report R41456, SBA Small Business Investment Company Program, by Robert Jay Dilger.

100.

15 U.S.C. §661.

101.

13 C.F.R. §107.800. The SBIC is not allowed to become a general partner in any unincorporated business or become jointly or severally liable for any obligations of an unincorporated business.

102.

13 C.F.R. §107.810 and 13 C.F.R. §107.840.

103.

13 C.F.R. §107.815. Debt securities are instruments evidencing a loan with an option or any other right to acquire equity securities in a small business or its affiliates, or a loan which by its terms is convertible into an equity position, or a loan with a right to receive royalties that are excluded from the cost of money.

104.

13 C.F.R. §107.820.

105.

SBA, "Small Business Investment Company (SBIC) Program Overview, as of September 30, 2019," at https://www.sba.gov/article/2019/nov/18/fiscal-year-data-period-ending-september-30-2019.

106.

Ibid.

107.

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

108.

For further information and analysis of the SBIR program, see CRS Report R43695, Small Business Innovation Research and Small Business Technology Transfer Programs, by John F. Sargent Jr.

109.

See P.L. 97-219, the Small Business Innovation Development Act of 1982 and 15 U.S.C. §638.

110.

The percentage of each designated agency's applicable extramural research and development budget to be used to support mission-related work in small businesses was scheduled to increase to not less than 2.7% in FY2013, not less than 2.8% in FY2014, not less than 2.9% in FY2015, not less than 3.0% in FY2016, and not less than 3.2% in FY2017 and each fiscal year thereafter. See P.L. 112-81, the National Defense Authorization Act for Fiscal Year 2012 and SBA, "Small Business Innovation Research Program Policy Directive," 77 Federal Register 46806-46855.

111.

See SBA, "About SBIR: Dollar Amount of Awards Adjusted for Inflation," at https://www.sbir.gov/about/about-sbir. Agencies may exceed these award amounts with SBA approval prior to the release of the solicitation, award, or modification to the award.

112.

See SBA, "About SBIR: SBIR Participating Agencies," at https://www.sbir.gov/about/about-sbir.

113.

See P.L. 102-564, the Small Business Research and Development Enhancement Act of 1992 and 15 U.S.C. §638.

114.

See SBA, "About STTR: Dollar Amount of Awards Adjusted for Inflation," at https://www.sbir.gov/about/about-sttr.

115.

The STTR program's set-aside was not less than 0.4% in FY2015, and was increased to 0.45% in FY2016 and each fiscal year thereafter. See P.L. 112-81, the National Defense Authorization Act for Fiscal Year 2012 and SBA, "Small Business Technology Transfer Program Policy Directive," 77 Federal Register 46855-46908.

116.

SBA, FY2018 Congressional Budget Justification and FY2016 Annual Performance Report, p. 75, at https://www.sba.gov/sites/default/files/aboutsbaarticle/FINAL_SBA_FY_2018_CBJ_May_22_2017c.pdf.

117.

Ibid.

118.

SBA, "SBA Growth Accelerator Fund Competition: $3 Million for High Tech, Small Business Focused Accelerators in 2019," at https://www.sba.gov/node/1428931/leadership/.

119.

For further information and analysis of the Office of Advocacy, see CRS Report R43625, SBA Office of Advocacy: Overview, History, and Current Issues, by Robert Jay Dilger.

120.

SBA, "Office of Advocacy: About Us," at https://www.sba.gov/category/advocacy-navigation-structure/about-us-0.

121.

SBA, Office of Advocacy, FY2013 Congressional Budget Justification, p. 2, at https://www.sba.gov/sites/default/files/files/1-508%20Compliant%20FY%202013%20CBJ%20FY%202011%20APR%281%29.pdf.

122.

The National Women's Business Council, "About the Council," Washington, DC, at https://www.nwbc.gov/about/.

123.

For further information and analysis see CRS Report R45071, SBA Office of the National Ombudsman: Overview, History, and Current Issues, by Robert Jay Dilger.

124.

SBA, "Office of the National Ombudsman," at https://www.sba.gov/ombudsman.

125.

SBA, "National Ombudsman's Fiscal Year Reports to Congress," at https://www.sba.gov/ombudsman/national-ombudsmans-fiscal-year-reports-congress.

126.

SBA, "SBA and NAGGL Launch Business Smart Toolkit," September 4, 2015, at https://www.sba.gov/about-sba/sba-newsroom/press-releases-media-advisories/sba-and-naggl-launch-business-smart-toolkit.

127.

P.L. 111-240, the Small Business Jobs Act of 2010, made several changes relating to the SBA's loan guaranty programs. The legislation increased loan limits for the 7(a) program from $2 million to $5 million and raised the 504/CDC program's loan limits from $2 million to $5 million for standard borrowers and from $4 million to $5.5 million for manufacturers. It temporarily expanded for two years the eligibility for low-interest refinancing under the SBA's 504/CDC program for qualified debt. It also amended the SBAExpress program, the SBA Microloan program, the SBA secondary market program, the SBA size standards, and the SBA International Trade Finance program. For further information and analysis concerning P.L. 111-240, see CRS Report R40985, Small Business: Access to Capital and Job Creation, by Robert Jay Dilger.

128.

P.L. 112-17, the Small Business Additional Temporary Extension Act of 2011.

129.

The act redefined a BRAC base closure area under the HUBZone program to include the lands within the external boundaries of the closed base and the census tract or nonmetropolitan county in which the lands of the closed base are wholly contained, intersect it, or are contiguous to it.

130.

P.L. 114-125 also included provisions intended to improve coordination between the federal government and the states, among other provisions.

131.

For further information concerning SBA appropriations, see CRS Report R43846, Small Business Administration (SBA) Funding: Overview and Recent Trends, by Robert Jay Dilger.

132.

P.L. 116-93, the Consolidated Appropriations Act, 2020.