FY 2009 Summary of Performance and Financial Information

Message from the Administrator about the document:

I am pleased to present the U.S. Small Business Administration’s (SBA) FY 2009 Summary of Performance and Financial Information report. This report summarizes the Agency’s efforts to help Americans grow businesses and create jobs by providing resources and tools, including: access to capital; opportunities in federal contracting; access to entrepreneurial education; and disaster assistance for businesses, homeowners, and renters.

Never before have SBA’s activities been more important. A deep recession combined with the financial meltdown of October 2008 led to an extremely difficult environment for entrepreneurs to succeed and for small businesses to survive and grow.

For this reason, Congress and the President included $730 million for the SBA in the American Reinvestment and Recovery Act (Recovery Act) which passed in February 2009. This substantial investment provided opportunities for this relatively small federal agency to help unfreeze the credit lines in the small business lending market. The Recovery Act enhancements to SBA programs supported billions of dollars in lending for tens of thousands of small businesses throughout the country. Also, Recovery Act federal contracting dollars began to flow to the small business community towards the latter half of the fiscal year.

Key SBA accomplishments in FY 2009 include:

Turnaround in SBA lending — The SBA ended the year strongly, with September 2009 having the highest monthly SBA lending volume in two years through the Agency’s top two loan programs, 7(a) and 504. Average weekly SBA loan volume increased by 60 percent compared to the weeks before the Recovery Act. Even in a difficult economic time, the SBA was able to provide more than 50,000 loans to small businesses this fiscal year.

Increase in access to capital — Since the passage of the Recovery Act, more than 1,200 lenders who had not made loans since October 2008 returned to SBA lending. In fact, of those lenders more than half had not made SBA loans since 2007.

Increase in small business contracting with federal agencies — Through stronger efforts to coordinate and reach out to other federal agencies, the SBA helped more than 25 percent of federal agency Recovery Act contracting dollars awarded by federal agencies go to small businesses in FY 2009. This amounted to a total of over $4 billion. This contrasts with 21.5 percent in small business contracting for FY 2008 for all contracting opportunities.

Continued elimination of waste, fraud and abuse — Under the Recovery Act, the SBA strengthened its commitment to mitigating risk while eliminating waste, fraud and abuse. The Agency formed senior level teams which systematically identified and reduced risks related to the implementation of Recovery Act initiatives. In addition, the SBA continues to re-engineer the HUBZone contracting program to both improve efficiency and prevent fraud. In FY 2009, the Agency conducted nearly 900 site visits to ensure that participants in that program werelegitimate small businesses. Going forward, the SBA will be implementing stronger eligibility verification processes as well as enhancing the ability to pursue and prosecute fraud.

Increase in entrepreneurial education resources — SBA’s grant-funded resource partners, about 900 Small Business Development Centers (SBDC), more than 100 Women’s Business Centers, and more than 350 chapters of an executive mentoring program called SCORE, continued to experience high demand for their free and/or low cost services from entrepreneurs and small business owners. For example, the SBDCs have seen an increase of five percent, compared to last fiscal year, in the number of “extended engagement” clients who need more than three hours of counseling. The SBA also continued to reach out directly to small business owners through its network of 68 offices nationwide and by developing new tools such as a popular online training module to introduce small business owners to federal contracting.

Continued optimization of disaster assistance resources — The SBA has hired more full time and on-call employees while acquiring critical surge space to prepare for a major catastrophe. Also, the Agency has shortened disaster loan processing times, improved information technology capacity, and strengthened its marketing and outreach efforts.

There continue to be many ways in which the Agency can improve its efforts to achieve operational excellence while increasing accountability and transparency. For example, the SBA continues to identify, support and develop new and revised regulations and policies that will ensure that only small businesses are benefiting from SBA contracting programs. The Agency will establish a more streamlined license renewal process for Small Business Investment Companies that continue to support high-growth, high-impact
small businesses. The SBA will also continue to steward taxpayer dollars to strengthen areas such as lender oversight, small business exporting, and outreach to underserved populations.

I am pleased to provide an assurance that SBA’s financial and performance data in this report are reliable and complete. SBA’s auditor issued an unqualified opinion on our FY 2009 financial statements. The auditor did note a material weakness in development and review of the alignment entry which adjusts the net receivables for defaulted loan guaranties and liability for loan guaranties to their net present value. This error was immediately corrected and the SBA is instituting a process to ensure that this does not recur.

Overall, the Agency is renewing its commitment in FY 2010 to promote the growth, innovation and global competitiveness of the U.S. small business community as it leads the country out of recession and into recovery and prosperity in the 21st century.


Karen G. Mills

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