The SBA’s Small Business Development Centers Program

The SBA’s Small Business Development Centers Program

May 19, 2023
The SBA’s Small Business Development Centers Program
Overview
Aside from SBDCs, the SBA also funds technical
The Small Business Administration’s (SBA) Small
assistance at Women’s Business Centers (WBCs), Veteran
Business Development Centers (SBDCs) provide free
Business Outreach Centers (VBOCs), and SCORE chapters
counseling, training, and resources to small business
(a mentoring program formerly known as the Service Corps
owners and entrepreneurs. SBDCs operate in partnership
of Retired Executives). Collectively, these providers seek to
with state governments and higher education institutions.
improve access to entrepreneurial education and assist with
This flagship technical assistance program evolved from
business formation and expansion.
when the SBA began operating in 1953, when the agency
directly provided management and training services. The
History
provision of these services through third party partners
The SBA created the University Business Development
began in the 1970s. Congress authorized the SBDC
Center pilot program in 1976 to provide counseling and
program in 1980 in the Small Business Development
training for small businesses at centers within universities.
Centers Act of 1980 (P.L. 96-302 P.L. 96-302).
P.L. 96-302, the Small Business Development Center Act
of 1980 (Act), provided statutory authorization to the
The services currently offered by SBDCs include:
SBDC program. According to discussions in Senate
committee hearings, SBDCs were meant to “rely on the
• One-on-one counseling: SBDCs offer individualized
private sector primarily, and the university community, in
counseling sessions with business advisors who have
partnership with the SBA and its other programs, to fill
experience in a range of industries. These advisors help
gaps in making quality management assistance available to
business owners with tasks such as developing a
the small business owner.” Although most SBDCs have
business plan or finding funding sources and identifying
continued to be affiliated with universities, the act
growth opportunities. Some SBDCs offer virtual
authorized the SBA to provide funding to state governments
counseling services accessible via phone, email, or
and agencies, and to partnership entities formed by
video conference.
universities and state agencies.
• Training and workshops: SBDCs offer a variety of
In 1984, the Small Business Development Center
training programs and workshops to help entrepreneurs
Improvement Act of 1984 (P.L. 98-395), required SBDCs,
and small business owners build their skills and
as a condition of receiving SBA funding, to contribute a
knowledge. These programs cover topics such as
matching amount equal to the grant amount. The match
marketing, finance, and human resources.
must be provided by nonfederal sources and be comprised
of not less than 50% cash and not more than 50% of
• Access to resources: SBDCs provide access to a range
indirect costs and in-kind contributions.
of resources, including market research data, industry
reports, and other business tools.
In 2015, the RISE After Disaster Act of 2015 (P.L. 114-88)
expanded the SBDC program’s reach by authorizing
To access SBDC services, small business owners can visit
SBDCs to provide assistance outside an SBDC’s state,
the SBA’s website to find their local SBDC and schedule an
without regard to geographical proximity to the SBDC, if a
appointment with a business counselor.
small business requiring assistance is located in a
presidentially-declared major disaster area. The law also
According to the SBA’s FY2024 Congressional Budget
authorized the SBA to provide additional financial
Justification, there are “62 recipient organizations” or lead
assistance to SBDCs, on a competitive basis, to assist small
SBDCs, that receive grant funds from the SBA. There is at
businesses in a presidentially-declared major disaster area.
least one lead center in each state (with four centers located
in Texas and five in California), the District of Columbia,
Federal Funding and Management
Puerto Rico, the Virgin Islands, Guam, American Samoa,
The SBA’s Associate Administrator for Small Business
and the Commonwealth of the Northern Mariana Islands.
Development Centers is responsible for general
Seventeen lead centers are located at Minority Serving
management and oversight of the SBDC program, through
Institutions (MSIs), including, Historically Black Colleges
a cooperative agreement with each institution of higher
and Universities (HBCUs) and Hispanic Serving
education or state agency that receives federal funds to
Institutions (HSIs). A lead center is tasked with establishing
operate an SBDC.
“a network of partner service centers to cover its service
area.” There are currently more than 900 service centers.
Federal funding is provided in the form of grants to
institutions of higher education or state agencies (“resource
partners”) that operate SBDCs. Grantees receive “initial”
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link to page 2 The SBA’s Small Business Development Centers Program
funding grants that have 24-month project periods, and may
adversely affected by the pandemic. The CARES Act
renew grants by submitting a “Letter of Intent to Renew” to
provided $192 million for SBDCs; $48 million for WBCs;
a Program Manager at the SBA’s Office of Small Business
and $25 million for a new SBA Resource Partner
Development Centers. The SBA typically intends to award
Association Grant program to establish a single, online
continuation funding to SBDCs unless there are
centralized hub for COVID-19 information and a COVID-
performance issues, such as improperly used funds, for
19-related training program for SBDC, WBC, SCORE, and
example.
VBOC counselors.
As codified at 15 U.S.C. §648(a)(4)(C), overall program
Outcomes and Performance
funding is allocated on a pro rata basis among the states
To measure the effectiveness of SBDC services, the SBA
(including the District of Columbia, Puerto Rico, the Virgin
typically tracks client outreach and levels of service, such
Islands, Guam, American Samoa, and the Commonwealth
as numbers of clients served and training events held, as
of the Northern Mariana Islands). There is a statutory
well as the number of new businesses started and jobs
formula to allocate program dollars, “based on the
supported as a result of SBDC activities. It has recently also
percentage of the population of each State, as compared to
tracked the satisfaction of SBDC clients served.
the population of the United States.” If SBDC funding
exceeds $90 million, the minimum funding level is “the
The SBA’s FY2022 performance metrics in its FY2024
sum of $500,000, plus a percentage of $500,000 equal to
Congressional Budget Justification state that “the SBA
the percentage amount by which the amount made available
helped clients start more than 20,000 new businesses,
exceeds $90 million.” The Consolidated Appropriations Act
counseled more than 306,000 unique clients, and assisted
of 2023, P.L. 117-328, appropriated $140 million for grants
clients in obtaining $7.86 billion in capital for their
for the SBDC program.
businesses, supporting over 1.28 million jobs.”
Table 1. SBDC Program Appropriations
Considerations for Congress
FY2019-FY2023
In the past, Congress has expressed interest in the potential
duplication among various technical assistance programs
Fiscal
SBDC Grant Program
and services. In addition to funding SBDCs, the SBA
Year
Appropriations
provides financial support to more than 140 WBCs, 22
VBOCs, and more than 250 chapters of the mentoring
FY2019
$131 Mil ion
program, SCORE, which also provide technical assistance
FY2020
$327 Mil iona
services to small business owners. In 2021, the SBA’s
Community Navigator Pilot Program funded 51 grantees,
FY2021
$136 Mil ion
which work with 450 organizations providing outreach and
FY2022
$138 Mil ion
technical assistance to underserved small business owners.
Technical assistance is also associated with other SBA
FY2023
$140 Mil ion
initiatives, such as the Program for Investment in Micro-
Source: P.L. 116-6, the Consolidated Appropriations Act, 2019; P.L.
entrepreneurs (PRIME) and 7(j) Management and
116-93, the Consolidated Appropriations Act, 2020; P.L. 116-136, the
Technical Assistance.
Coronavirus Aid, Relief, and Economic Security Act (CARES Act);
P.L. 116-260, the Consolidated Appropriations Act, 2021; P.L. 177-
While some stakeholders have argued that merging the
103, the Consolidated Appropriations Act, 2022, P.L. 117-328, the
SBA’s technical assistance programs could improve the
Consolidated Appropriations Act, 2023.
efficiency of services, others have contended that there
should be separate programs tailored to specific subsets of
Notes: FY2020 appropriations reflect increases in funding to assist
business owners. Some have also advocated for improved
smal businesses adversely affected by the novel coronavirus
coordination among funding recipients and suggested
(COVID-19) pandemic.
greater program oversight.
a. SBDCs were appropriated $135 mil ion by the Consolidated
As online learning and teleservices gain importance and
Appropriations Act, 2020, and an additional $192 mil ion by the
popularity, Congress may be interested in how accessible
CARES Act.
virtual technical assistance services are for business owners
and how well virtual services meet small business owner
According to the SBA’s FY2024 Congressional Budget
needs. The agency now measures how many business
Justification, the cost to administer the SBDC program was
owners are utilizing these services. The SBA currently has
just under $183 million in FY2023. These costs included
two main online offerings for small businesses: “Learning
Center” courses that consist of videos and worksheets, and
direct operations costs, such as contracts, compensation and
the “Ascent for Women” platform that presents various
benefits, and agency-wide costs, such as rent and
telecommunications.
business start-up and management topics. These can be
completed through the SBA’s website.
Following the emergence of the Coronavirus Disease 2019
(COVID-19) pandemic, the CARES Act (P.L. 116-136),
R. Corinne Blackford, Analyst in Small Business and
appropriated an additional $265 million for the SBA’s
Economic Development Policy
training programs in FY2020, with funding remaining
available through FY2021, to assist small businesses
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The SBA’s Small Business Development Centers Program

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