Briefing on SBA FY2012 Proposed Budget

Speech Date: 
Monday, February 14, 2011
Speech Location: 
As Prepared For: 
Karen G Mills, SBA Administrator

It’s critical that we continue to support small businesses as they find ways to grow, innovate and create jobs as we come out of recession. That said, even agencies like SBA that provide them with access to capital, contracts and counseling are being asked to tighten our belt and make tough choices.

The Small Business Administration’s Fiscal Year 2012 Budget request is $985 million, a 45 percent decrease from 2010 enacted funding, which included $962 million in supplemental appropriations. Excluding supplemental funding, the 2012 request is $161 million higher primarily due to increased estimated subsidy costs. Our FY12 request for administrative costs drops $19 million compared to FY11.

Already, we’ve shown that with a relatively small budget and a full-time staff of just 2,200, we can deliver a big bang for the taxpayer buck. For example, under the Recovery Act and the Small Business Jobs Act, we delivered more than $42 billion in lending support at a cost of just $1.2 billion in subsidy at a time when traditional credit was frozen and cut. We’ve also helped the Administration deliver nearly one-third of Recovery Act contracts to small business, well above the annual goal of 23%. And we continue to make small investments that create big returns in areas like counseling where we serve over a million clients a year. For example, for $7 million in FY 2010 for SCORE, we supported a nationwide volunteer network of 12,000 mentors.

And we’ve taken even more steps over the past two years to be good stewards of taxpayer dollars. For example, we streamlined our loan application process for low-dollar loans. We reduced certification turnaround times in federal contracting programs. And we strengthened our SBIC investment program that gets capital to innovative, high growth firms at no cost to taxpayers. At the same time, we stepped up our oversight in areas like government contracting to better ensure that these programs are benefitting only eligible businesses.

As you’ve probably heard from the White House, there is an overall focus in this budget on not making reckless and indiscriminate cuts that could hurt our biggest job generators – small businesses.

That said, the SBA, like all agencies, is finding a way to tighten our belts to make some reductions in SBA budget request from FY2011 to FY2012.

  • For example, we want to make sure that our technical assistance programs for small businesses are efficient and effective. For Fiscal Year 2012 we are proposing eliminating the $8 million PRIME technical assistance program because we believe in a time when we are tightening our belts, we can better leverage additional technical assistance through our micro-lending partners and our new Community Advantage loan program.

  • This budget will reduce the amount requested for Small Business Development Centers by $10 million, while continuing to leverage this critical program to more efficiently provide effective entrepreneurial education.

  • We also propose eliminating the Drug-Free Workplace program, which replicates efforts of other agencies and private-sector organizations. This step will save $1 million.

  • We’re also saving $20 million by significantly reworking our loan management and accounting systems to gain important improvements but at less cost to taxpayers.

  • Finally, we are proposing taking our core Disaster Assistance staff level to 850, down from 1,000, which will save the agency $8 million. This reduction would not include the agency’s more than 2,000 on-call disaster reservists.

In the budget request, you will see two key increases focused on mission-critical activities.

First, we are requesting an increase in the subsidy for our guaranteed loan programs because historical defaults have pushed up the estimated subsidy costs for new loans. Like all financial institutions, SBA has seen the impact of the recession on our portfolio and defaults have risen, in part, due to the fact that commercial property values, which small businesses often use as collateral, were inflated during the real estate bubble of the pre-recession years.

Second, we are requesting additional support for our disaster loan program due to the fact that funds from previous years’ supplemental appropriations has dropped dramatically.

Other, smaller funding requests include efforts to increase government contracting opportunities – including implementing the women’s contracting rule – and to continue removing waste, fraud, and abuse in contracting programs.

We’re a small agency with a big mission. My commitment is that we will continually review SBA programs and responsibly make cuts to ensure that American taxpayers are getting the best bang for their buck. And we’ll also continue to do everything we responsibly can to meet our mission of helping small businesses do what they do best: grow and create jobs.