Small Business Administration. FY2013 Budget

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1 Small Business Administration FY2013 Budget

2 FY2013 Overview ($ in Thousands) In FY2013, President Obama continues his investment in small businesses by providing more tools to help them grow and create jobs, while also increasing SBA s efficiency and effectiveness. New tools: SBA will roll out new initiatives for veterans and transitioning workers; launch BusinessUSA.gov; boost efficiencies with electronic loan application submissions and modernized data infrastructure; and guarantee up to $26 billion in loans to small businesses (7a, 504, & SBIC). Drivers of budget growth: (1) Subsidy costs have increased for SBA loan programs because of risks inherent in an environment of sustained unemployment and depressed real estate market as well as low performing loans made in mid 2000s that continue to influence our credit profile. (2) Disaster funding is increasing based on the $167 million for Disaster Administration Expenses being provided under the disaster cap adjustment for Presidentially Declared Disasters. Tough choices: SBA has made tough budget choices in order to be fiscally responsible, but we will continue to ensure our resource partners have the tools they need to support small business owners and the next generation of entrepreneurs. 2

3 Priority Goals Maximizing SBA s Effectiveness For FY2013, SBA has four priority goals that help promote the agency s efficiency and effectiveness: 1. Process business loans efficiently. By September 30, 2013, increase the use of paperless processing in the 7(a) program from 72 percent to 90 percent and in the 504 program from 55 percent to 75 percent to improve the efficiency, effectiveness, and level of service in its business loan programs. 2. Increase small business participation in government contracting. By September 30, 2013, SBA will increase small business participation in federal government contracting to meet the government wide goal that 23 percent of all prime contracting dollars go to small businesses, and continue to ensure that the benefits of SBA s small business programs flow to the intended recipients. 3. Process disaster assistance applications efficiently. By September 30, 2013, increase the use of the Disaster Assistance electronic loan application (ELA) by 50 percent. 4. Expand access to long term capital. From FY 2012 through September 30, 2013, commit at least $4.3 billion of capital via the Small Business Investment Company program in order to facilitate access to capital for high growth companies and enhance job creation and retention by these companies. 3

4 New Initiatives More Tools to Help Small Businesses Grow and Create Jobs In FY2013, SBA will launch several new initiatives across our network of resource partners to serve the next generation of entrepreneurs: Lead national, gov t wide Veterans Entrepreneurship Training Initiative ($7M) Lead efforts to develop BusinessUSA.gov ($6M) Complete data center consolidation effort ($5M) Boost Office of Investment & Innovation capabilities to help get more long term capital to innovative, high growth small businesses and spur job creation ($3M) Roll out Skills Training Initiative to train next generation of workers and experienced workers transitioning to new positions ($1.7M) 4

5 Access to Capital 7(a) $16 billion 504 $6 billion SBA lending is back to pre recession levels and small businesses continue to have more points of access to capital. But, loans initiated in the mid 2000s continue to alter our credit profile. SBA proposes to increase the loan subsidy and decrease the authority to remain fiscally responsible, while still meeting the capital needs of small businesses. Since SBA s fees are statutorily capped, SBA proposes to increase the loan subsidy to $351M and set the program cap at the historical average to still meet the needs of the small business community: 7(a) from $17.5B to $16B 504 from $7.5B to $6B Recovery Act and Small Business Jobs Act provisions included higher guarantees to entice lenders to provide access to capital during tough economic times. As the guarantees and markets return to historical levels, SBA s lending program levels will return to historical averages. * SBA s credit profile is altered by a more risky lending environment inherent in a time of high unemployment as well as a depressed real estate market have led to higher loan subsidies. 5

6 Making SBA More Efficient Smartly Trimming Overhead SBA continues to streamline operations to maximize the effect of taxpayers dollars. For FY2013, SBA identified inefficient practices to reduce or eliminate in accordance with several Presidential initiatives for sustainability: Reducing printing costs by pivoting from print to the Internet for marketing Using technology to reduce conference costs Modernizing data infrastructure and consolidating data centers to decrease maintenance needs Saving taxpayer dollars by reducing SBA s service contracts Streamlining administrative services 6

7 Tough Choices To Maintain Fiscal Responsibility, SBA Must Do More with Less While the SBA has made tough budget choices, we will continue to ensure our resource partners have the tools they need to support small business owners and the next generation of entrepreneurs. Working with our resource partners, SBA will roll out targeted entrepreneurial training for returning veterans, skills training for new and mid career workers, and support for regional hubs of innovators. NON CREDIT PROGRAMS FY2011 ($000) FY2012 ($000) FY2013 ($000) 7(j) Technical Assistance Program $ 6,354 $ 3,100 $ 2,790 Drug Free Workplace HUBZone Program 2,194 2,500 1,976 Microloan Technical Assistance 24,603 20,000 19,760 National Women's Business Council Native American Outreach 1,132 1, PRIME Technical Assistance 7,983 3,500 0 SBDC Grants* 120, , ,093 SCORE* 6,986 7,000 6,300 Veterans Business Development 2,495 2,500 2,496 Women's Business Centers Grants* 13,866 14,000 12,600 Entrepreneurial Development Initiatives (Clusters) 6,581 5,000 3,350 National Veterans Entrepreneurial Training (VET) Program 0 0 7,000 TOTAL $ 195,061 $ 172,348 $ 159,113 * Indicates that in FY2013 resource partner budgets were cut proportionally to ensure fairness. 7

8 Accomplishments in FY2011 8