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




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

Updated July 11, 2022
Congressional Research Service
https://crsreports.congress.gov
R43083




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

Summary
The Small Business Administration (SBA) administers several programs to support small
businesses, including loan guaranty and venture capital programs to enhance small business
access to capital; contracting programs to increase small business opportunities in federal
contracting; direct loan programs for businesses, homeowners, and renters to assist their recovery
from natural disasters; and small business management and technical assistance training programs
to assist business formation and expansion.
Congressional interest in these programs, and the SBA’s assistance provided to small business
startups in particular (defined as new businesses that meet the SBA’s criteria as small), has
increased in recent years, primarily because these programs are viewed by many as a means to
stimulate economic activity and create jobs.
Economists generally do not view job creation as a justification for providing federal assistance to
small businesses. They argue that in the long term such assistance will likely reallocate jobs
within the economy, not increase them. In their view, jobs arise primarily from the size of the
labor force, which depends largely on population, demographics, and factors that affect the choice
of home versus market production (e.g., the entry of women in the workforce). However,
economic theory does suggest that increased federal spending on small business assistance
programs may result in additional jobs in the short term.
Congressional interest in assistance to business startups is derived primarily from economic
research suggesting that startups play a very important role in job creation. That research suggests
that business startups create many new jobs, but have a more limited effect on net job creation
over time because fewer than half of all startups remain in business after five years. However,
that research also suggests that the influence of small business startups on net job creation varies
by firm size. Startups with fewer than 20 employees tend to have a negligible effect on net job
creation over time whereas startups with 20-499 employees tend to have a positive employment
effect, as do surviving younger businesses of all sizes (in operation for one year to five years).
This report examines small business startups’ experiences with the SBA’s 7(a), 504/CDC, and
Microloan lending programs; and the SBA’s Small Business Investment Company (SBIC)
venture capital program. Although data collected by the SBA concerning these programs’ impact
on economic activity and job creation are somewhat limited and subject to methodological
challenges concerning their validity as reliable performance measures, most small business
owners who have participated in these programs report in surveys sponsored by the SBA that the
programs were useful. Given the data limitations, however, it is difficult to determine the cost
effectiveness of these programs.
The report also discusses the SBA’s growth accelerators initiative, which targets entrepreneurs
looking to “start and scale their business” by helping them access “seed capital, mentors, and
networking opportunities for customers and partners,” and the recently sunset SBIC early stage
debenture program, which focused on providing venture capital to startups.
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Contents
The SBA’s Missions ........................................................................................................................ 1
Small Business Startups and Job Creation ...................................................................................... 2
Report Overview ............................................................................................................................. 3
SBA Lending Programs ................................................................................................................... 4
The SBA’s 7(a), 504/CDC, and Microloan Programs............................................................... 5
7(a) Loan Guaranty Program .............................................................................................. 5
504 Certified Development Company Loan Guaranty Program......................................... 5
The Microloan Program ...................................................................................................... 7
Program Performance ................................................................................................................ 8
Extent of SBA Lending Assistance, by Developmental Stage ............................................ 8
SBA Venture Capital Programs ....................................................................................................... 8
The SBIC Program .................................................................................................................... 9
Extent of SBIC Financial Assistance, by Developmental Stage ....................................... 10
Early Stage Debenture SBIC Initiative ............................................................................. 10

The SBA’s Growth Accelerators Initiative .................................................................................... 12
Concluding Observations .............................................................................................................. 14

Contacts
Author Information ........................................................................................................................ 15

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

The SBA’s Missions
The Small Business Administration (SBA) administers several programs to support small
businesses, including the 7(a), 504/CDC, and Microloan lending programs to enhance small
business access to capital; the Small Business Investment Company (SBIC) program to enhance
small business access to venture capital; contracting programs to increase small business
opportunities in federal contracting; direct loan programs for businesses, homeowners, and
renters to assist their recovery from natural disasters; and small business management and
technical assistance training programs to assist business formation and expansion.1 Congressional
interest in these programs, and the SBA’s assistance to small business startups in particular
(defined as new businesses that meet the SBA’s criteria as small), has increased in recent years,
primarily because these programs are viewed by many as a means to stimulate economic activity
and create jobs.
The Small Business Act specifies four missions for the SBA:
It is the declared policy of the Congress that the Government should aid, counsel, assist,
and protect, insofar as is possible, the interests of small-business concerns in order to
preserve free competitive enterprise, to insure that a fair proportion of the total purchases
and contracts or subcontracts for property and services for the Government (including but
not limited to contracts or subcontracts for maintenance, repair, and construction) be placed
with small-business enterprises, to insure that a fair proportion of the total sales of
Government property be made to such enterprises, and to maintain and strengthen the
overall economy of the Nation.2
As part of its mission to maintain and strengthen the overall economy of the nation, the SBA has
always been interested in promoting job creation and job retention.3 For example, the SBA
currently gathers data from its clients concerning the number of jobs either created or retained as
a result of the assistance they receive from the SBA. The SBA refers to these self-reported data as
the number of “jobs supported.”4 The SBA also regularly sponsors research on the role of small
businesses in job creation and retention, and considers that research when designing its programs.
Economists generally do not view job creation as a justification for providing federal assistance to
small businesses. They argue that in the long term such assistance will likely reallocate jobs
within the economy, not increase them. In their view, jobs arise primarily from the size of the

1 For further analysis of the SBA’s loan guaranty programs, see CRS Report R41146, Small Business Administration
7(a) Loan Guaranty Program
, by Robert Jay Dilger and Anthony A. Cilluffo; CRS Report R41184, Small Business
Administration 504/CDC Loan Guaranty Program
, by Robert Jay Dilger and Anthony A. Cilluffo; and CRS Report
R41057, Small Business Administration Microloan Program, by Robert Jay Dilger and Anthony A. Cilluffo. For
further analysis of the SBA’s Small Business Investment Company program, see CRS Report R41456, SBA Small
Business Investment Company Program
, by Robert Jay Dilger and Anthony A. Cilluffo. For further analysis of the
SBA’s disaster loan programs, see CRS Report R41309, The SBA Disaster Loan Program: Overview and Possible
Issues for Congress
, by Bruce R. Lindsay. For further analysis of the SBA’s contracting programs, see CRS Report
R45576, An Overview of Small Business Contracting, by Robert Jay Dilger and R. Corinne Blackford.
2 15 U.S.C. §631; and P.L. 83-163, the Small Business Act of 1953 (as amended).
3 U.S. Senate, Select Committee on Small Business, Citation of Statement by Wendell B. Barnes, SBA Administrator,
Annual Report, 83rd Cong., 2nd sess., March 25, 1954, H.Rept. 83-1092 (Washington: GPO, 1954), p. 60.
4 The SBA reports that in FY2021 the 7(a) loan guarantee program supported 593,277 jobs, the 504/CDC loan
guarantee program supported 84,176 jobs, the Microloan lending program supported 17,531 jobs, and the Small
Business Investment Company venture-capital program supported 126,431 jobs. SBA, Fiscal Year 2023 Congressional
Budget Justification FY2021 Annual Performance Report
, pp. 32, 34, 36, and 45, at https://www.sba.gov/document/
report-congressional-budget-justification-annual-performance-report.
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SBA Assistance to Small Business Startups: Client Experiences and Program Impact

labor force, which depends largely on population, demographics, and factors that affect the choice
of home versus market production (e.g., the entry of women in the workforce). However,
economic research does suggest that increased federal spending on small business assistance
programs may result in additional jobs in the short term.5
Small Business Startups and Job Creation
The SBA’s interest, and congressional interest, in providing assistance to small business startups
is derived primarily from economic research indicating that startups play an important role in job
creation.6 That research suggests that startups create many, and in some years almost all, net jobs
in the national economy.
Although there is a consensus that startups have an important role in job creation and retention,
economic research suggests that startups have a more limited effect on net job creation over time
because fewer than half of all startups are still in business after five years. That research also
suggests that the influence of startups on net job creation varies by firm size. Startups with fewer
than 20 employees tend to have a negligible effect on net job creation over time whereas startups
with 20-499 employees tend to have a positive employment effect, as do surviving younger
businesses of all sizes (in operation for one year to five years).7
Given the relatively high rate of firm deaths among startups, providing SBA assistance to
startups, especially in the form of a SBA guaranteed loan or venture capital investment, is
generally viewed as a relatively “high risk-high reward” endeavor, with advocates focusing on the
possibility of job creation and opponents focusing on the risk of default. For example, opponents
point to the SBA’s experiences with its SBIC Participating Securities program as an example of
the risk in providing venture capital to startups. The SBIC Participating Securities program was
established in 1994, with congressional authorization, to encourage the formation of participating
securities SBICs that would make equity investments in startup and early stage small businesses.8

5 For further information concerning economic research and small business assistance, see CRS Report RL32254,
Small Business Tax Benefits: Current Law, by Gary Guenther and CRS Report R41523, Small Business Administration
and Job Creation
, by Robert Jay Dilger. For an economic argument to repeal the SBA, see Veronique de Rugy, Why
the Small Business Administration’s Loan Programs Should Be Abolished
, American Enterprise Institute for Public
Policy Research, AEI Working Paper #126, April 13, 2006, at http://www.aei.org/wp-content/uploads/2011/10/
20060414_wp126.pdf.
6 Charles Brown, James Hamilton, and James Medoff, Employers Large and Small (Cambridge: Harvard University
Press, 1990); Zoltan Acs, William Parsons, and Spencer Tracy, “High-Impact Firms: Gazelles Revisited,” SBA, Office
of Advocacy, June 2008, at http://www.massmac.org/newsline/0902/high_impact_firms.pdf; Dane Stangler and Robert
E. Litan, “Where Will The Jobs Come From?” Kaufman Foundation Research Series: Firm Formation and Economic
Growth, November 2009, at https://www.kauffman.org/-/media/kauffman_org/research-reports-and-covers/2009/11/
where_will_the_jobs_come_from.pdf; and Dane Stangler and Paul Kedrosky, “Neutralism and Entrepreneurship: The
Structural Dynamics of Startups, Young Firms, and Job Creation,” Kaufman Foundation Research Series: Firm
Formation and Economic Growth, September 2010, at https://www.kauffman.org/-/media/kauffman_org/research-
reports-and-covers/2010/09/firmformationneutralism.pdf.
7 Zoltan Acs, William Parsons, and Spencer Tracy, “High-Impact Firms: Gazelles Revisited,” SBA, Office of
Advocacy, June 2008, at http://www.massmac.org/newsline/0902/high_impact_firms.pdf; Dane Stangler and Robert E.
Litan, “Where Will The Jobs Come From?” Kaufman Foundation Research Series: Firm Formation and Economic
Growth, November 2009, at https://www.kauffman.org/-/media/kauffman_org/research-reports-and-covers/2009/11/
where_will_the_jobs_come_from.pdf; John Haltiwanger, Ron S. Jarmin, and Javier Miranda, “Who Creates Jobs?
Small vs. Large vs. Young,” Cambridge, MA: National Bureau of Economic Research, Working Paper 16300, August
2010, at http://www.nber.org/papers/w16300; and Ian Hathaway, “Small Business and Job Creation: The
Unconventional Wisdom,” Bloomberg Government, October 31, 2011.
8 P.L. 102-366, the Small Business Credit and Business Opportunity Enhancement Act of 1992 (Title IV, the Small
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The SBA created the program to fill a perceived investment gap created by the SBIC debenture
program’s focus on investments in mid- and later-stage small businesses.9 The program provided
nearly $6.7 billion in leverage to participating securities SBICs from February 22, 1995, through
February 23, 2005.10 The SBA stopped issuing new commitments for participation securities on
October 1, 2004, following relatively major losses (exceeding $2.7 billion in losses on
investments of just over $6 billion) in the program following the burst of the “technology stock
market bubble” from 2000 to 2002.11 The SBA’s action began a process to end the program. The
amount of SBA capital at risk in the participating securities program was reduced each year and
reached $0 at the end of FY2020.12
Report Overview
This report examines startups’ experiences with the SBA’s 7(a), 504/CDC, and Microloan lending
programs; and the SBA’s SBIC venture capital program. The SBA’s growth accelerators
initiative, which targets entrepreneurs looking to “start and scale their business” by helping them
access “seed capital, mentors, and networking opportunities for customers and partners,” and the
recently sunset SBIC early stage debenture program, which focused on providing venture capital
to startups, are also discussed.13
With some notable exceptions, such as the Microloan lending program and SBA’s growth
accelerators initiative, these programs are designed to assist small businesses at all developmental
stages, as opposed to targeting startups for special attention. Nonetheless, all of these programs
provide assistance to startups, and report both outcome data (e.g., the number of small businesses
receiving training and the number and amount of loans and venture capital provided) and
performance data (e.g., the usefulness of the training and the number of jobs supported by the
loan) based on the age of the business. As a result, the experiences of startups can be compared
with the experiences of older firms both within and across the SBA’s programs. For example, as
will be shown, the SBA programs that specifically target startups for special attention provide a
relatively larger share of its assistance to startups than other SBA programs.
Although the data collected by the SBA concerning these programs’ impact on economic activity
and job creation are somewhat limited and subject to methodological challenges concerning their

Business Equity Enhancement Act of 1992). For further information and analysis of the SBIC program, see CRS
Report R41456, SBA Small Business Investment Company Program, by Robert Jay Dilger and Anthony A. Cilluffo.
9 Debenture SBICs are required to pay interest and SBA annual charges semiannually on their debentures through
maturity. As a result, although debenture SBICs make a broad range of equity investments, they generally invest in
later-stage and mezzanine companies which demonstrate an ability to make early and regular payments on the
investment. Participating securities SBICs were not required to make these semiannual payments to encourage
investments in firms, such as startups, which had not yet established an ability to make early and regular payments on
the investment.
10 SBA, “Small Business Investment Companies, Guaranteed 5.038% Debenture Participation Certificates, Series SBIC
2005-10 A,” March 15, 2005, p. 7, at https://www.sba.gov/article/2010/oct/20/sbic-2005-10-cusip-831641-dx0.
11 U.S. Congress, House Committee on Small Business, Proposed Legislative Remedy for the Participating Securities
Program
, 109th Cong., 1st sess., July 27, 2005, Serial No. 109-27 (Washington: GPO, 2005), p. 3; and SBA, Office of
Inspector General, “The SBIC Program: At Significant Risk For Losses,” May 24, 2004, at https://www.sba.gov/sites/
default/files/oig/oig_4-21.pdf.
12 SBA, “Small Business Investment Company (SBIC) Program Overview Report for the Quarter Ending March 31,
2021,” at https://www.sba.gov/document/report-small-business-investment-company-sbic-program-overview-report-
quarter-ending-march-31-2021.
13 SBA, Fiscal Year 2018 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.
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SBA Assistance to Small Business Startups: Client Experiences and Program Impact

validity as reliable performance measures, most small business owners who have participated in
these programs report in surveys sponsored by the SBA that the programs were useful. Given the
data limitations, however, it is difficult to determine the cost effectiveness of these programs.
SBA Lending Programs
The SBA’s business lending programs are designed to encourage lenders to provide loans to
small businesses “that might not otherwise obtain financing on reasonable terms and
conditions.”14 Historically, the SBA’s lending programs have been justified on the grounds that
small businesses can be at a disadvantage, compared with other businesses, when trying to obtain
access to sufficient capital and credit.15 As an economist explained,
Growing firms need resources, but many small firms may have a hard time obtaining loans
because they are young and have little credit history. Lenders may also be reluctant to lend
to small firms with innovative products because it might be difficult to collect enough
reliable information to correctly estimate the risk for such products. If it’s true that the
lending process leaves worthy projects unfunded, some suggest that it would be good to
fix this “market failure” with government programs aimed at improving small businesses’
access to credit.16
In FY2021, the SBA enhanced small business access to capital by approving over $44.7 billion in
general business loans to small businesses through the 7(a) loan guaranty program ($36.5 billion)
and the 504/CDC loan guaranty program ($8.2 billion).17 In addition, the SBA’s Microloan
program, which includes startups among its targeted audiences, provides direct loans to 155
active nonprofit intermediary Microloan lenders to provide “microloans” of up to $50,000 to
small business owners, entrepreneurs, and nonprofit child care centers. The Microloan program
provided $74.6 million in loans to small businesses in FY2021.18

14 SBA, Fiscal Year 2010 Congressional Budget Justification, p. 30, at https://www.sba.gov/sites/default/files/
aboutsbaarticle/Congressional_Budget_Justification_2010.pdf.
15 Proponents of providing federal funding for the SBA’s loan guarantee programs also argue that small business can
promote competitive markets. See P.L. 83-163, §2(a), as amended; and 15 U.S.C. §631a.
16 Veronique de Rugy, Why the Small Business Administration’s Loan Programs Should Be Abolished, American
Enterprise Institute for Public Policy Research, AEI Working Paper #126, April 13, 2006, at http://www.aei.org/wp-
content/uploads/2011/10/20060414_wp126.pdf. Also, see U.S. Government Accountability Office, Small Business
Administration: 7(a) Loan Program Needs Additional Performance Measures
, GAO-08-226T, November 1, 2007, pp.
3, 9-11, at http://www.gao.gov/new.items/d08226t.pdf.
17 SBA, “2021 Weekly Lending Reports, as of September 30, 2021,” at https://www.sba.gov/sites/default/files/2021-10/
WebsiteReport_asof_20210930.pdf. The SBA also approved over 6.6 million Paycheck Protection Program forgivable
loans totaling over $277.7 billion in 2021. See SBA, “Paycheck Protection Program Weekly Reports 2021,” at
https://www.sba.gov/document/report-paycheck-protection-program-weekly-reports-2021. For additional information
and analysis of the Paycheck Protection Program, see CRS Report R46284, COVID-19 Relief Assistance to Small
Businesses: Issues and Policy Options
, by Robert Jay Dilger and Bruce R. Lindsay.
18 SBA, “SBA Approvals by Congressional District as of October 31, 2021,” at https://data.sba.gov/dataset/a63fdba2-
8290-4ef8-8435-56aa482703fb/resource/d46e1e99-95bd-48f3-9dc8-29b0723f3d11/download/sba-approvals-by-
congressional-district-as-of-211031.xlsx.
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The SBA’s 7(a), 504/CDC, and Microloan Programs
7(a) Loan Guaranty Program19
The SBA’s 7(a) loan guaranty program is considered the agency’s flagship loan guaranty
program.20 It is named from Section 7(a) of the Small Business Act of 1953 (P.L. 83-163, as
amended), which authorizes the SBA to provide business loans to American small businesses.
The SBA provides participating, certified lenders a guaranty of repayment in the case of a default
of up to 85% of qualified loan amounts of $150,000 or less and up to 75% of qualified loan
amounts exceeding $150,000 to the program’s loan limit of $5 million.
Proceeds from 7(a) loans may be used to establish a new business or to assist in the operation,
acquisition, or expansion of an existing business. Specific uses include to acquire land (by
purchase or lease); improve a site (e.g., grading, streets, parking lots, and landscaping); purchase,
convert, expand, or renovate one or more existing buildings; construct one or more new
buildings; acquire (by purchase or lease) and install fixed assets; purchase inventory, supplies,
and raw materials; finance working capital; and refinance certain outstanding debts.21
504 Certified Development Company Loan Guaranty Program22
The SBA’s 504 Certified Development Company (504/CDC) loan guaranty program provides
long-term fixed rate financing for major fixed assets, such as land, buildings, equipment, and
machinery. A 504/CDC loan cannot be used for working capital or inventory. It is named from
Section 504 of the Small Business Investment Act of 1958 (P.L. 85-699, as amended), which
authorized the sale of debentures pursuant to Section 503 of the act, which previously authorized
the program.23
The 504/CDC program is administered through nonprofit CDCs. Of the total project costs, a
third-party lender must provide at least 50% of the financing, the CDC provides up to 40% of the
financing backed by a 100% SBA-guaranteed debenture, and the applicant provides at least 10%
of the financing.
The SBA’s debenture is backed with the full faith and credit of the United States and is sold to
underwriters who form debenture pools. Investors purchase interests in the debenture pools and
receive certificates representing ownership of all or part of the pool. The SBA and CDCs use
various agents to facilitate the sale and service of the certificates and the orderly flow of funds

19 For further information and analysis concerning the SBA’s 7(a) program, see CRS Report R41146, Small Business
Administration 7(a) Loan Guaranty Program
, by Robert Jay Dilger and Anthony A. Cilluffo.
20 U.S. Congress, House Committee on Small Business, Subcommittee on Finance and Tax, Subcommittee Hearing on
Improving the SBA’s Access to Capital Programs for Our Nation’s Small Business
, 110th Cong., 2nd sess., March 5,
2008, H.Hrg. 110-76 (Washington: GPO, 2008), p. 2.
21 13 C.F.R. §120.120.
22 For further information and analysis of the SBA’s 504/CDC program, see CRS Report R41184, Small Business
Administration 504/CDC Loan Guaranty Program
, by Robert Jay Dilger and Anthony A. Cilluffo.
23 The 504/CDC program was preceded by a 501 state development company program (1958-1982), a 502 local
development company program (1958-1995), and a 503/CDC program (1980-1986). The 504/CDC program started in
1986. There are a small number of for-profit CDCs that participated in these predecessor programs that have been
grandfathered into the current 504/CDC program. See SBA, “SOP 50 10 5(G): Lender and Development Company
Loan Programs,” (effective October 1, 2014), p. 43, at https://www.sba.gov/sites/default/files/sops/
SOP%2050%2010%205%20G%20FINALWEB%20VERSION%20-%20CLEAN%20Eff,%2010-1-2014.pdf.
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among the parties.24 After a 504/CDC loan is approved and disbursed, accounting for the loan is
set up at the Central Servicing Agent (CSA, currently PricewaterhouseCoopers Public Sector
LLP), not the SBA. The SBA guarantees the timely payment of the debenture. If the small
business is behind in its loan payments, the SBA pays the difference to the investor on every
semiannual due date.
The 504/CDC program is somewhat unique in that borrowers must meet one of two specified
economic development objectives. First, borrowers, other than small manufacturers, must create
or retain at least one job for every $75,000 of project debenture. Borrowers who are small
manufacturers must create or retain one job per $120,000 of project debenture. The jobs created
do not have to be at the project facility, but 75% of the jobs must be created in the community
where the project is located.25 Using job retention to satisfy this requirement is allowed only if the
CDC “can reasonably show that jobs would be lost to the community if the project was not
done.”26
Second, if the borrower does not meet the job creation or retention requirement, the borrower can
retain eligibility by meeting
 any 1 of 5 community development goals,27
 any 1 of 10 public policy goals,28 or
 any 1 of 3 energy reduction goals provided that the CDC’s overall portfolio of
outstanding debentures meets or exceeds the job creation or retention criteria of
at least 1 job opportunity created or retained for every $75,000 in project
debenture (or for every $85,000 in project debenture for projects located in
special geographic areas such as Alaska, Hawaii, state-designated enterprise
zones, empowerment zones, enterprise communities, labor surplus areas, or

24 13 C.F.R. §120.801. 504/CDC debentures are normally sold and proceeds disbursed on the Wednesday after the
second Sunday of each month. See SBA, “SOP 50 10 5(I): Lender and Development Company Loan Programs,”
(effective January 1, 2017), pp. 295-297, at https://www.sba.gov/sites/default/files/sops/
SOP_50_10_5_I_FINAL_Clean_Highlighted_Changes.pdf.
25 SBA, “Development Company Loan Program - Job Creation and Retention Requirements; Additional Areas for
Higher Portfolio Average,” 83 Federal Register 55225-55226, November 2, 2018. Previously, P.L. 108-447, the Small
Business Reauthorization and Manufacturing Assistance Act of 2004, had set these thresholds as at least one job
opportunity per every $50,000 guaranteed by the Administration and per every $75,000 guaranteed by the
Administration for small manufactures. P.L. 111-5, the American Recovery and Reinvestment Act of 2009, increased
the $50,000 threshold to every $65,000 guaranteed by the Administration.
26 SBA, “SOP 50 10 5(J): Lender and Development Company Loan Programs,” (effective January 1, 2018), p. 297, at
https://www.sba.gov/sites/default/files/2017-12/
SOP%2050%2010%205%28J%29_Technical%20Corrections%20%28FINAL%29_1.pdf.
27 The five community development goals are improving, diversifying, or stabilizing the economy of the locality;
stimulating other business development; bringing new income into the community; assisting manufacturing firms; and
assisting businesses in labor surplus areas as defined by the U.S. Department of Labor.
28 The 10 public policy goals are revitalizing a business district of a community with a written revitalization or
redevelopment plan; expanding exports; expanding the development of women-owned and -controlled small
businesses; expanding small businesses owned and controlled by veterans (especially service-disabled veterans);
expanding minority enterprise development; aiding rural development; increasing productivity and competitiveness
(e.g., retooling, robotics, modernization, and competition with imports); modernizing or upgrading facilities to meet
health, safety, and environmental requirements; assisting businesses in or moving to areas affected by federal budget
reductions, including base closings, either because of the loss of federal contracts or the reduction in revenues in the
area due to a decreased federal presence; and reducing unemployment rates in labor surplus areas, as defined by the
U.S. Department of Labor.
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opportunity zones).29 Loans to small manufacturers are excluded from the
calculation of this average.30
The Microloan Program31
The SBA’s Microloan program was authorized in 1991 (P.L. 102-140, the Departments of
Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1992) as a
five-year demonstration program to address the perceived disadvantages faced by very small
businesses in gaining access to capital. The program became operational in 1992, and it was made
permanent, subject to reauthorization, in 1997 (P.L. 105-135, the Small Business Reauthorization
Act of 1997). Its stated purpose is
to assist women, low-income, veteran ... and minority entrepreneurs and business owners
and other individuals possessing the capability to operate successful business concerns; to
assist small business concerns in those areas suffering from a lack of credit due to economic
downturns; ... to make loans to eligible intermediaries to enable such intermediaries to
provide small-scale loans, particularly loans in amounts averaging not more than $10,000,
to start-up, newly established, or growing small business concerns for working capital or
the acquisition of materials, supplies, or equipment; [and] to make grants to eligible
intermediaries that, together with non-Federal matching funds, will enable such
intermediaries to provide intensive marketing, management, and technical assistance to
microloan borrowers.32
The maximum Microloan amount is $50,000 and no borrower may owe an intermediary more
than $50,000 at any one time.33 Microloan proceeds may be used only for working capital and
acquisition of materials, supplies, furniture, fixtures, and equipment. Loans cannot be made to
acquire land or property, and must be repaid within seven years.34 Within these parameters, loan
terms vary depending on the loan’s size, the planned use of funds, the requirements of the

29 The three energy reduction goals are reducing existing energy consumption by at least 10%; increasing the use of
sustainable designs, including designs that reduce the use of greenhouse gas-emitting fossil fuels or low-impact design
to produce buildings that reduce the use of nonrenewable resources and minimize environmental impact; and upgrading
plant, equipment, and processes involving renewable energy sources such as the small-scale production of energy for
individual buildings’ or communities’ consumption, commonly known as micropower, or renewable fuel producers
including biodiesel and ethanol producers.
30 A job opportunity is defined as a full-time (or equivalent) permanent, or contracted, job created within two years of
receipt of 504/CDC funds or retained in the community because of a 504/CDC loan. See SBA, “SOP 50 10 5(J):
Lender and Development Company Loan Programs,” effective January 1, 2018, p. 256, at https://www.sba.gov/
document/sop-50-10-5-lender-development-company-loan-programs.
31 For further information and analysis concerning the SBA’s Microloan program, see CRS Report R41057, Small
Business Administration Microloan Program
, by Robert Jay Dilger and Anthony A. Cilluffo.
32 15 U.S.C. §636(m)(1)(A).
33 13 C.F.R. §120.707. P.L. 111-240, the Small Business Jobs Act of 2010, increased the loan limit for borrowers from
$35,000 to $50,000.
34 13 C.F.R. §120.707. The SBA increased the Microloan program’s maximum loan term for borrowers from six years
to seven years, effective March 11, 2020, in an interim final rule that included changes to numerous SBA lending
programs. See SBA, “Express Loan Programs; Affiliation Standards,” 85 Federal Register 7632, February 10, 2020.
That interim final rule was rescinded in P.L. 116-136, the Coronavirus Aid, Relief, and Economic Security Act
(CARES Act), §1102(e), for reasons not related to the Microloan program’s maximum loan term for borrowers. P.L.
116-260, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division N, Title III of the
Consolidated Appropriations Act of 2021, §329), temporarily increased the Microloan program’s maximum loan term
to eight years for new borrowers and allowed existing borrowers to extend their loan term to up to eight years during
FY2021. The act directed the SBA to set the Microloan program’s maximum loan term at seven years “or such other
amount established by the Administrator,” starting on October 1, 2021.
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intermediary lender, and the needs of the small business borrower. Interest rates are negotiated
between the borrower and the intermediary (within statutory limits), and typically range from 6%
to 9%.35 Each intermediary establishes its own lending and credit requirements. However,
borrowers are generally required to provide some type of collateral, and a personal guarantee to
repay the loan. The SBA does not review the loan for creditworthiness.36
Program Performance
The SBA maintains a relatively extensive output database for its business lending programs (e.g.,
number and amount of loans approved and disbursed by program and by year; number and
amount of loans approved and disbursed by program and by year to various demographic groups,
including startups; number and amount of loans approved and disbursed by program by state;
amount of loan purchases and recoveries by program and by year). It also asks borrowers to
report information concerning the impact the loans have on job creation and retention.
As will be shown, these data suggest that the SBA provides lending support to small businesses at
all stages of development, but to varying degrees, with the Microloan program providing a
relatively higher share of its lending to startups than the 7(a) and 504/CDC programs. The data
also suggest that these programs have a generally positive impact on job creation and retention,
but, as will be discussed, the data are self-reported and subject to methodological limitations.
Extent of SBA Lending Assistance, by Developmental Stage
As expected given their missions, the Microloan program provides a greater percentage of its loan
proceeds to startups (36.9% of total loan disbursements in FY2021) than do the 7(a) program
(14.5% of total approved loan amounts in FY2021) and the 504/CDC program (9.8% of total
approved loan amounts in FY2021).37
SBA Venture Capital Programs
The SBA has two venture capital programs. The SBIC program, authorized by P.L. 85-699, the
Small Business Investment Act of 1958, as amended, is the SBA’s flagship venture capital
program.38 It is designed to “improve and stimulate the national economy in general and the small
business segment thereof in particular” by stimulating and supplementing “the flow of private
equity capital and long-term loan funds which small business concerns need for the sound
financing of their business operations and for their growth, expansion, and modernization, and
which are not available in adequate supply.”39
The SBA also sponsors the much smaller New Markets Venture Capital Program, which is not
discussed here given its relatively small size ($1.65 million in financing to four small businesses

35 In FY2021, Microloan borrowers were charged, on average, an interest rate of 6.551%. See SBA, “Microloan
Nationwide Loan Report, October 1, 2020, through September 30, 2021,” December 13, 2021.
36 SBA, “Microloan Program,” at https://www.sba.gov/content/microloan-program.
37 SBA, “Microloan Nationwide Loan Report, October 1, 2020 through September 30, 2021,” December 13, 2021; and
SBA, “2021 Weekly Lending Reports as of September 30, 2021,” at https://www.sba.gov/sites/default/files/2021-10/
WebsiteReport_asof_20210930.pdf.
38 For further information and analysis of the SBA’s SBIC program, see CRS Report R41456, SBA Small Business
Investment Company Program
, by Robert Jay Dilger and Anthony A. Cilluffo.
39 15 U.S.C. §661.
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in FY2015, and no new financing since then). It is designed to promote economic development
and the creation of wealth and job opportunities in low-income geographic areas by addressing
the unmet equity investment needs of small businesses located in those areas.
The SBIC Program
The SBA does not make direct investments in small businesses. It partners with privately owned
and managed SBICs licensed by the SBA to provide financing to small businesses with private
capital the SBIC has raised (called regulatory capital) and with funds (called leverage) the SBIC
borrows at favorable rates because the SBA guarantees the debenture (loan obligation). As of
March 30, 2022, there were 294 licensed SBICs participating in the SBIC program.40
A licensed debenture SBIC in good standing, with a demonstrated need for funds, may apply to
the SBA for financial assistance (leverage) of up to 300% of its private capital. However, the SBA
has traditionally approved debenture SBICs for a maximum of 200% of their private capital and
no fund management team may exceed the allowable maximum amount of leverage of $175
million per SBIC and $350 million for two or more licenses under common control.41
SBICs pursue investments in a broad range of industries, geographic areas, and stages of
investment. Some SBICs specialize in a particular field or industry, while others invest more
generally. Most SBICs concentrate on a particular stage of investment (i.e., startup, expansion, or
turnaround) and geographic area.
SBICs provide equity capital to small businesses in various ways, including by
 purchasing small business equity securities (e.g., stock, stock options, warrants,
limited partnership interests, membership interests in a limited liability company,
or joint venture interests);42
 making loans to small businesses, either independently or in cooperation with
other private or public lenders, that have a maturity of no more than 20 years;43
 purchasing debt securities from small businesses;44 and
 providing small businesses (subject to limitations) a guarantee of their monetary
obligations to creditors not associated with the SBIC.45
The SBIC program currently has invested or committed about $35.4 billion in small businesses,
with the SBA’s share of capital at risk about $15.0 billion. In FY2021, the SBA provided SBICs

40 SBA, “Small Business Investment Company (SBIC) Program Overview Report as of March 30, 2022,” at
https://www.sba.gov/document/report-small-business-investment-company-sbic-program-overview-report-quarter-
ending-march-31-2022.
41 13 C.F.R. §107.1120; 13 C.F.R. §107.1150; P.L. 114-113, the Consolidated Appropriations Act, 2016, which
increased the multiple licenses/family of funds limit to $350 million from $225 million; and P.L. 115-187, the Small
Business Investment Opportunity Act of 2017, which increased the maximum amount of leverage for individual SBICs
to $175 million from $150 million.
42 13 C.F.R. §107.800. A SBIC is not allowed to become a general partner in any unincorporated business or become
jointly or severally liable for any obligations of an unincorporated business.
43 13 C.F.R. §107.810; and 13 C.F.R. §107.840.
44 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.
45 13 C.F.R. §107.820.
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$2.4 billion in leverage and SBICs invested nearly $4.7 billion from private capital for a total of
over $7.1 billion in financing for 1,080 small businesses.46
Extent of SBIC Financial Assistance, by Developmental Stage
The SBIC program provides financing to small businesses at all developmental stages, with most
of its financing provided to businesses that have been in operation for at least five years. The
amount of SBIC financing provided to startups (defined as being in operation for one year or less)
as a share of SBIC financing has increased somewhat since FY2014 (16.5% in FY2014, 17.9% in
FY2015, 15.3% in FY2016, 19.3% in FY2017, 23.0% in FY2018, and 20.6% in FY2019).47
Early Stage Debenture SBIC Initiative
In 2012, the Obama Administration established the early stage debenture SBIC initiative to
encourage additional SBIC investments in startups (up to $150 million in SBIC leverage in
FY2012, and up to $200 million in SBIC leverage per fiscal year thereafter until the initiative’s
$1 billion limit was reached).48 Early stage debenture SBICs are required to invest at least 50% of
their financings in early stage small businesses, defined as small businesses that have never
achieved positive cash flow from operations in any fiscal year.49
In recognition of the higher risk associated with investments in early stage small businesses, the
initiative includes “several new regulatory provisions intended to reduce the risk that an early
stage SBIC would default on its leverage and to improve SBA’s recovery prospects should a
default occur.”50 For example, early stage debenture SBICs are required to raise more regulatory
capital (at least $20 million) than debenture SBICs (at least $5 million). They are also subject to
special distribution rules to require pro rata repayment of SBA leverage when making
distributions of profits to their investors. In addition, early stage debenture SBICs are also
provided less leverage (up to 100% of regulatory capital, $50 million maximum) than debenture
SBICs (up to 200% of regulatory capital, $150 million maximum per SBIC and $225 million for
two or more SBICs under common control).
On May 1, 2012, the SBA announced its first annual call for venture capital fund managers to
submit an application to become a licensed early stage debenture SBIC.51 Thirty-three venture
capital funds submitted preliminary application materials. After these materials were examined

46 SBA, “Small Business Investment Company (SBIC) Program Overview Report as of March 30, 2022,” at
https://www.sba.gov/document/report-small-business-investment-company-sbic-program-overview-report-quarter-
ending-march-31-2022.
47 SBA Office of Congressional and Legislative Affairs, “Correspondence with the author,” December 20, 2018 and
March 26, 2019.
48 SBA, “Small Business Investment Companies - Early Stage SBICs,” 77 Federal Register 25043, 25050, April 27,
2012.
49 SBA, “Small Business Investment Companies - Early Stage SBICs,” 77 Federal Register 25051, 25053, April 27,
2012.
50 SBA, “Small Business Investment Companies - Early Stage SBICs,” 77 Federal Register 25043, April 27, 2012.
51 The deadline for completing the four-step application process for applicants with signed commitments for at least
$15 million in regulatory capital and evidence of their ability to raise the remaining $5 million in regulatory capital was
July 30, 2012. The deadline for all other applicants was May 15, 2013. Applicants must first complete a Management
Assessment Questionnaire (MAQ), then, if invited, complete an interview process, then receive a Green Light letter,
and, finally, submit the SBIC license application, consisting of SBA Form 2181 and SBA Form 2182. See SBA, “Small
Business Investment Companies—Early Stage SBICs,” 77 Federal Register 25775-25779, May 1, 2012.
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and interviews held, the SBA announced on October 23, 2012, that it had issued Green Light
letters to six funds, formally inviting them to file license applications.52
The SBA’s second, third, fourth, and fifth annual calls for venture capital fund managers to
submit an application to become a licensed early stage debenture SBIC took place on December
18, 2012, February 4, 2014, January 12, 2015, and February 2, 2016, respectively.53
Five of the 63 investment funds that applied to participate in the program were granted an early
stage SBIC license.54 As of September 30, 2020, the five early stage SBICs had outstanding
private capital of $170 million, outstanding SBA-guaranteed leverage of $87.2 million, no
outstanding commitments, and invested $334 million in 92 small businesses. In FY2020, early
stage SBICs invested $26.9 million in 30 small businesses.55
On September 19, 2016, the SBA published a notice of proposed rulemaking in the Federal
Register
, which included proposed changes to the early stage SBIC initiative to “make material
improvements to the program” and “attract more qualified early stage fund managers.”56 The
SBA, at that time, indicated its intention to continue the initiative beyond its initial five-year
term.57 However, the SBA, under the Trump Administration, stopped accepting new applications
for the early stage SBIC initiative in 2017. In addition, on June 11, 2018, the SBA withdrew the
September 19, 2016, proposed rule that included provisions designed to encourage qualified
SBICs to participate in the initiative.58 The SBA indicated that it took this action “because very
few qualified funds applied to the Early Stage SBIC initiative, the costs were not commensurate
with the results, and the comments to the proposed rule did not demonstrate broad support for a
permanent Early Stage SBIC program.”59

52 SBA, “SBA’s Growth Capital Program Sets Record For Third Year in a Row $2.95 Billion in Financing for Small
Businesses in FY12,” at https://www.sba.gov/content/sbas-growth-capital-program-sets-record-third-year-row; and
SBA, “The Small Business Investment Company (SBIC) Program: Annual Report FY2012,” p. 20, at
https://www.sba.gov/sites/default/files/files/SBIC%20Program%20FY%202012%20Annual%20Report.pdf.
53 SBA, “Small Business Investment Companies—Early Stage SBICs,” 77 Federal Register 74908-74913, December
18, 2012; SBA, “Small Business Investment Companies—Early Stage SBICs,” 79 Federal Register 6665, February 4,
2014; SBA, “Small Business Investment Companies—Early Stage SBICs,” 79 Federal Register 18750, April 3, 2014;
SBA, “Small Business Investment Companies—Early Stage SBICs,” 80 Federal Register 1575-1579, January 12,
2015; and SBA, “Small Business Investment Companies—Early Stage SBICs,” 81 Federal Register 5508-5511,
February 2, 2016.
54 SBA, “Small Business Investment Companies‒Early Stage,” 80 Federal Register 14034, March 18, 2015; and SBA,
Office of Innovation and Investment, slides, “SBIC Early Stage Innovation Program,” at https://www.sba.gov/sites/
default/files/articles/OII_Early_Stage_Slide_Deck_January_2016.pdf.
55 SBA, Office of Congressional and Legislative Affairs, “Correspondence with the author,” February 18, 2021.
56 SBA, “Small Business Investment Companies (SBIC); Early Stage Initiative,” 81 Federal Register 64075-64080,
September 19, 2016. The proposed changes were based in part on feedback received on an earlier, advance notice of
proposed rulemaking. See SBA, “Small Business Investment Companies‒Early Stage,” 80 Federal Register 14034,
March 18, 2015. The proposed changes would have allowed early stage applicants to apply at any time, similar to other
SBIC applicants, instead of only during limited time frames identified in the Federal Register (which the SBA has
published on an annual basis since 2012); allowed early stage SBICs to obtain an unsecured line of credit without SBA
approval under specified conditions; allowed an application from an applicant under common control with an existing
early stage SBIC that has outstanding debentures or debenture commitments; and increased the initiative’s maximum
leverage commitment of 100% of regulatory capital or $50 million, whichever is less, to 100% of regulatory capital or
$75 million, whichever is less.
57 SBA, “Small Business Investment Companies (SBIC); Early Stage Initiative,” 81 Federal Register 64075,
September 19, 2016.
58 SBA, “Small Business Investment Companies (SBIC); Early Stage Initiative,” 83 Federal Register 26875, June 11,
2018.
59 SBA, “Small Business Investment Companies (SBIC); Early Stage Initiative,” 83 Federal Register 26875, June 11,
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It is too early to determine the extent to which the SBA’s decision to stop accepting new
applications for the early stage debenture initiative may affect the share and amount of total SBA
financing provided to startups.
The SBA’s Growth Accelerators Initiative
Growth accelerators are organizations that help entrepreneurs start and scale their business.
Accelerators are typically run by experienced entrepreneurs and help small businesses, especially
startups, “access seed capital, mentors, and networking opportunities” and provide “targeted
advice on revenue growth, job growth, and sourcing outside funding.”60 In 2012, the SBA hosted
four regional events (Northeast, Midwest, South, and Mid-Atlantic), which were attended by
representatives “from over 100 universities and accelerators to discuss working with high-growth
entrepreneurs.”61 These meetings “culminated in a White House event co-hosted by the SBA and
the Department of Commerce which will help formalize the network of universities and
accelerators, provide a series of ‘train the trainer’ events on various government programs that
benefit high-growth entrepreneurs, and provide a playbook of best practices on engaging
universities on innovation and entrepreneurship.”62
The Obama Administration requested $5 million, and Congress recommended an appropriation of
$2.5 million, for the SBA’s growth accelerator initiative for FY2014. The SBA proposed to use
the funding to provide matching grants to universities and private-sector accelerators “to start a
new accelerator program (based on successful models) or scale an existing program.”63 The SBA
also indicated that it planned to request funding for five years ($25 million in total funding) and
feature a required 4:1 private-sector match.64 However, because it received half of its budget
request ($2.5 million), the SBA decided to reconsider the program’s requirements. As part of that
reconsideration, the SBA dropped the 4:1 private-sector match in an effort to enable the program
to have a larger effect.65
On May 12, 2014, the SBA announced the availability of 50 growth accelerator grants of $50,000
each. It received more than 800 applications by the August 2, 2014, deadline. The 50 awards were
announced in September 2014.66

2018.
60 SBA, FY2016 Congressional Budget Justification and FY2014 Annual Performance Report, p. 81, at
https://www.sba.gov/sites/default/files/1-FY%202016%20CBJ%20FY%202014%20APR.PDF.
61 SBA, FY2014 Congressional Budget Justification and FY2012 Annual Performance Report, p. 59, at
http://www.sba.gov/sites/default/files/files/1-FY%202014%20CBJ%20FY%202012%20APR.PDF (hereinafter SBA,
FY2014 Congressional Budget Justification).
62 SBA, FY2014 Congressional Budget Justification, pp. 59-60.
63 SBA, FY2014 Congressional Budget Justification, p. 60.
64 SBA, FY2014 Congressional Budget Justification.
65 SBA, Office of Congressional and Legislative Affairs, “Correspondence with the author,” May 6, 2014.
66 SBA, “SBA Launches Accelerator Competition to Award $2.5 million for Small Business Startups,” May 12, 2014,
at https://www.sba.gov/content/sba-launches-accelerator-competition-award-25-million-small-business-startups-0;
SBA, “More than 800 Small Business Startups Compete for 50 Cash Prizes in SBA’s Growth Accelerator
Competition,” August 4, 2014, at https://www.sba.gov/content/more-800-small-business-startups-compete-50-cash-
prizes-sbas-growth-accelerator-competition; and SBA, “SBA Spurs Economic Growth, Announces 50 Awards to
Accelerators,” September 4, 2014, at https://www.sba.gov/content/sba-spurs-economic-growth-announces-50-awards-
accelerators.
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Congress subsequently recommended that the program receive $4 million in FY2015; $1 million
in FY2016, FY2017, and FY2018; $2 million in FY2019, FY2020, and FY2021; and $3 million
in FY2022.67 Congress also directed the SBA in its explanatory statements accompanying P.L.
113-235 and P.L. 114-113 to “require $4 of matching funds for every $1 awarded under the
growth accelerators program.”68
The SBA has awarded 387 $50,000 growth accelerator awards: 50 in 2014, 88 in 2015, 85 in
2016, 20 in 2017, 60 in 2019, and 84 in 2021, totaling $19.35 million.69
The SBA did not issue a competitive announcement for growth accelerator awards in FY2018 and
FY2020.
Reports from the first round of awardees indicated that more than 1,000 small businesses
graduated from the accelerators initiative, with each accelerator graduating about 10 small

67 Rep. Harold Rogers, “Explanatory Statement Submitted by Mr. Rogers of Kentucky, Chairman of the House
Committee on Appropriations Regarding the House Amendment to the Senate Amendment on H.R. 83,” Congressional
Record
, vol. 160, part 151 (December 11, 2014), p. H9740; Rep. Harold Rogers, “Explanatory Statement Submitted By
Mr. Rogers of Kentucky, Chairman of the House Committee on Appropriations Regarding House Amendment No. 1 to
the Senate Amendment on H.R. 2029 Consolidated Appropriations Act,” Congressional Record, vol. 161, no. 184-
Book II (December 17, 2015), p. H10139; Rep. Rodney Frelinghuysen, “Explanatory Statement Submitted By Mr.
Frelinghuysen of New Jersey, Chairman of the House Committee on Appropriations Regarding the House Amendment
to the Senate Amendments on H.R. 244 [the Consolidated Appropriations Act, 2017],” Congressional Record, vol. 163,
no. 76-Book II (May 3, 2017), p. H3786; “Explanatory Statement Submitted by Mr. Frelinghuysen, Chairman of the
House Committee on Appropriations Regarding the House Amendment to the Senate Amendments on H.R. 1625 [the
Consolidated Appropriations Act, 2018] (Division E – Financial Services and General Government Appropriations Act,
2018),” p. 87, at http://docs.house.gov/billsthisweek/20180319/
DIV%20E%20FSGG%20SOM%20FY18%20OMNI.OCR.pdf; P.L. 116-6, the Consolidated Appropriations Act, 2019,
H.Rept. 116-9, conference report accompanying the Consolidated Appropriations Act, 2019; Rep. Nita M. Lowey,
“Explanatory Statement Submitted by Mrs. Lowey, Chair-Woman of the House Committee on Appropriations
Regarding H.R. 1158, Consolidated Appropriations Act, 2020,” House debate, Congressional Record, vol. 165, part
No. 204-Book II (December 17, 2019), p. H10994; “Explanatory Statement Submitted by Mrs. Lowey, Chairwoman of the
House Committee on Appropriations Regarding H.R. 133, Consolidated Appropriations Act, 2021 (Division E – Financial
Services and General Government Appropriations Act, 2021),” p. 52, at https://docs.house.gov/billsthisweek/20201221/
BILLS-116RCP68-JES-DIVISION-E.pdf; and Rep. Rosa DeLauro, “Explanatory Statement Submitted by Mrs.
DeLauro, Chairwoman of the House Committee on Appropriations Regarding H.R. 2471, Consolidated Appropriations
Act, 2022 (Division E – Financial Services and General Government Appropriations Act, 2022),” 117th Cong., 2nd
sess., March 9, 2022, p. 53, at http://docs.house.gov/billsthisweek/20220307/BILLS-117RCP35-JES-DIVISION-E.pdf.
68 Rep. Harold Rogers, “Explanatory Statement Submitted by Mr. Rogers of Kentucky, Chairman of the House
Committee on Appropriations Regarding the House Amendment to the Senate Amendment on H.R. 83,” Congressional
Record
, vol. 160, part 151 (December 11, 2014), p. H9741; and Rep. Harold Rogers, “Explanatory Statement
Submitted By Mr. Rogers of Kentucky, Chairman of the House Committee on Appropriations Regarding House
Amendment No. 1 to the Senate Amendment on H.R. 2029 Consolidated Appropriations Act,” Congressional Record,
vol. 161, no. 184-Book II (December 17, 2015), p. H10140.
69 SBA, “SBA Boosts Economic Impact of Accelerators with $4.4 Million in Prizes,” August 4, 2015, at
https://www.sba.gov/content/sba-boosts-economic-impact-accelerators-44-million-prizes-0; SBA, “SBA Announces
$3.4 Million for Small Business Startups,” August 31, 2016, at https://www.sba.gov/content/sba-announces-34-million-
small-business-startups; SBA, “SBA Announces 20 Growth Accelerator Fund Competition Recipients,” October 30,
2017, at https://www.sba.gov/node/1594788; SBA, “SBA Announces $3 Million for 60 Growth Accelerator Fund
Competition Recipients Supporting Startups and STEM Focused Entrepreneurs,” September 26, 2019, at
https://www.sba.gov/about-sba/sba-newsroom/press-releases-media-advisories/sba-announces-3-million-60-growth-
accelerator-fund-competition-recipients-supporting-startups-and; SBA, “SBA Announces $3 Million for 60 Growth
Accelerator Fund Competition Recipients Supporting Startups and STEM Focused Entrepreneurs,” February 6, 2020, at
https://www.sba.gov/article/2020/feb/06/sba-announces-3-million-60-growth-accelerator-fund-competition-recipients-
supporting-startups-stem; SBA, Office of Congressional and Legislative Affairs, “correspondence with the author,”
June 25, 2021; and SBA, SBIR•STIR America’s Seed Fund, “Accelerators,” at https://www.sbir.gov/accelerators.
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businesses per year. Award recipients also reported supporting the creation or retention of nearly
4,800 jobs.70
During the 117th Congress, H.R. 4945 (To amend the Small Business Act to establish a growth
accelerator fund competition, and for other purposes) would provide the growth accelerators
initiative statutory authorization. Similar legislation was introduced during the 116th (H.R. 4387)
and 115th Congresses (H.R. 2686).
Concluding Observations
The SBA has indicated, from the very start of the agency, that assisting small businesses to create
and retain jobs is part of its mission. However, the SBA also has a long-established tradition of
providing assistance to all qualifying small businesses. With some exceptions, the SBA has
generally not taken actions or requested authorization to focus its assistance solely onto those
businesses, such as startups, that are judged to be the ones most likely to contribute to job growth
or wealth creation. The tradition of providing SBA assistance to all qualified small businesses
without regard to their potential for job growth or wealth creation is perhaps understandable given
that the tradition aligns with one of the SBA’s primary missions, which is to promote free
markets—by limiting monopoly and oligarchy formation within all industries. In addition, the
tradition of providing assistance to all qualified small businesses has, for the most part, never
been challenged by Congress or interested small business organizations.
The SBA’s recent initiatives to focus increased attention to assisting startups (e.g., the Growth
Accelerators initiative and the recently sunset early stage debenture SBIC initiative) are less of a
challenge to the SBA’s tradition of assisting all qualified small businesses than a recognition of
the potential role of startups in job creation and concerns about the pace of job growth during the
current economic recovery.71 For example, the SBA has offered the initiatives as supplements to,
rather than replacements of, existing programs.
As mentioned, the relatively “high risk-high reward” of targeting SBA assistance to startups
makes it tempting for some and controversial for others. Most who have participated in these
programs report in surveys sponsored by the SBA that the programs were useful. However,
determining if the risk of financial losses associated with targeting SBA assistance to startups
outweighs the startups’ potential for job growth is difficult because the data collected by the SBA
concerning these programs’ impact on economic activity and job creation are somewhat limited
and subject to methodological challenges concerning their validity as reliable performance
measures.

70 SBA, FY2017 Congressional Budget Justification and FY2015 Annual Performance Report, p. 85, at
https://www.sba.gov/sites/default/files/FY17-CBJ_FY15-APR.pdf.
71 For additional information concerning the early stage debenture SBIC initiative, see SBA, “Small Business
Investment Companies - Early Stage SBICs,” 76 Federal Register 76907-76917, December 9, 2011; SBA, “Small
Business Investment Companies - Early Stage SBICs,” 77 Federal Register 25042-25055, April 27, 2012; and CRS
Report R41456, SBA Small Business Investment Company Program, by Robert Jay Dilger and Anthony A. Cilluffo.
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Author Information

Robert Jay Dilger
Anthony A. Cilluffo
Senior Specialist in American National Government Analyst in Public Finance




Disclaimer
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Congressional Research Service
R43083 · VERSION 33 · UPDATED
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