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Proposed SBA Budget Focus of Hearing

Mark Marich

PDE staff were on hand yesterday to cover the fairly routine Senate Small Business & Entrepreneurship Committee hearing on the proposed budget for fiscal year 2010 for the Small Business Administration. Our report follows:

Over the last eight years the agency has seen a 28 percent deduction. The proposed budget seeks to reverse this. Over $700 million in discretionary budget has been allocated—compared to $674 million last year.

More specifically, the President's Fiscal Year 2010 budget provides $28 billion in loan guarantees to expand credit availability for small businesses: $17.5 billion in guaranteed debentures in the Section 504 Guaranteed Loan program, providing Certified Development Companies financing to support commercial real estate development, $3 billion in authority for the Small Business Investment Company debenture program, $25 million in Microloan volume, and for the first time loans will be available for technical assistance.

The FY 2010 budget also continues to support non-credit assistance programs, like Small Business Development Centers, Women’s Business Centers, SCORE and microloan technical assistance. These programs are designed to provide entrepreneurs access to counseling and business development expertise.

While committee members were happy to see the increase in funding, they expressed concern that the money be used efficiently.

“Overall, lending by SBA has dropped from $20 billion to $10 billion because of the economy,” aid Sen. Olympia Snowe, (R-ME), committee ranking member. “We want to do everything we can to bolster that. We want to ease the credit market to get credit flowing again.”

Specifically, Snowe mentioned the Microloan program that created or retained over 7,000 jobs last year, many of which were start-ups. She also stressed the importance of SBA advocating for small businesses when federal contracts are being doled out, particularly HUBZones, which were implemented to give entrepreneurs in low-income communities access to the federal marketplace.

“The agency has not done enough to utilize (such) existing programs that could buttress small businesses,” Snowe said. “(Doing so would target) the heart of the areas that are suffering unemployment.”

To ensure efficiency, Landrieu asked Hairston to provide the committee with details of how these suggestions will be implemented in the budget. Hairston said this request was already in the works, but would not be available until early April.

Sen. Ben Cardin (D-MD) also encouraged more oversight on the part of SBA, to ensure proper implementation of newly-funded programs, specifically surety bonds. Cardin said these bonds should have a significant positive impact on small businesses, which is a priority goal within the current economy.

“We’ve got to make sure these laws are being complied with,” Cardin said. “The President and Congress have come up with some new ideas, but will it translate into loans being made for small businesses? That’s where we need you (Hairston)—to tell us if that law is being implemented or not.”

Landrieu echoed these sentiments, emphasizing that SBA should be aggressive in its requests from Congress.

“This is a very critical time in this country for small businesses,” she said. “This agency can have a very positive impact.”

[Reported by Paige Ingram]

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