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Strategic Objective
Expand access to capital
Strategic Objective
Overview
Access to capital is critical to the long-term success of America’s small businesses. The top priority at the SBA is to get lending flowing to small businesses. As the economy continues to improve, the SBA is working to ensure that remaining gaps in the commercial markets are filled and that small businesses across the country are well positioned to take advantage of opportunities. The SBA also continues to streamline and simplify its loan programs to make its products more attractive to lenders and borrowers.
Progress Update
The SBA made substantial progress toward its Priority Goal in 2015 by adding 292 new 7(a) lenders to its network. While the SBA did not meet its FY 2015 target, the 7(a) loan program increased by 23 percent from FY 2014, leading to a record year of approvals in volume and dollars. Bank mergers have impacted the number of active lending partners providing the number of 7(a) loans. This goal continued to help expand SBA’s footprint to increase small business access to capital. In addition, significant progress continued to be made streamlining and simplifying the loan application process, decreasing processing time, and lowering costs to participants. The number of jobs supported from 7(a) loans, 504 loans, microloans, and surety bond guaranties has increased since 2010 with the FY 2015 results showing nearly 729,000 jobs supported.
Expand All
Strategic Goals
Strategic Goal:
Growing businesses and creating jobs
Statement:
Growing businesses and creating jobs
Strategic Objectives
Statement:
Expand access to capital through SBA's extensive lending network
Description:
Access to capital is critical to the long-term success of America’s small businesses. The top priority at the SBA is to get lending flowing to small businesses. As the economy continues to improve, the SBA is working to ensure that remaining gaps in the commercial markets are filled and that small businesses across the country are well positioned to take advantage of opportunities. The SBA also continues to streamline and simplify its loan programs to make its products more attractive to lenders and borrowers.
FY 16-17 Priority Goal: Strengthen and expand the network of lenders offering SBA products
Statement:
By September 30, 2017, expand access to capital for small businesses by increasing the number of lenders in SBA's 7(a) loan program from 2,244 (FY 2014) to 2,500.
Description:
Providing access to capital has been one of the SBA’s critical strategies in meeting its objective to drive business formation, job growth, and economic expansion particularly in underserved markets since the Agency’s creation in 1953. By providing loan guarantees to reduce lenders’ loss exposure, the SBA provides an important credit lifeline to small businesses, especially startup businesses and businesses owned by women, minorities, veterans and other underserved groups that often cannot easily obtain credit in the conventional market. SBA loan programs are necessary to ensure that small businesses are not only surviving but also leading the way toward US economic expansion and growth.
The 7(a) Loan program is the federal government’s primary small business loan program, assisting small businesses to obtain financing when they do not qualify for or otherwise have access to traditional credit. The SBA guarantees a portion of each loan (typically 50 to 90%) that participating lenders make by using the adjusted credit standards of the 7(a) loan program.
SBA's FY 2014-2015 Priority Goal to increase new and returning 7(a) lenders has reduced the decline from FY 2012 to FY 2014. SBA will continue to support small business access to capital by increasing the number of lenders participating in the flagship 7(a) loan program (including the Community Advantage pilot program). Lender participation is essential to growth in the quantity of loans approved and small businesses assisted. Attaining a high volume of lender participation will create a consistent pipeline of SBA loans to small businesses.
This Priority Goal directly supports SBA’s Strategic Objective 1.1 – Expand access to capital through SBA’s extensive lending network. Access to capital is critical to the long-term success of America’s small businesses. The top priority at the SBA is to get lending flowing to small businesses.
Key barriers and challenges:
- Economic Trends; micro- and macro-economic that impact whether banks want to provide SBA-backed loans such as:
- Lender may not have the technology in place to support migration to SBA systems
- Some industries may have a high default rate and a risk that would not allow a lender to underwrite a SBA backed loan
- Lender located in an area where some industries are effected by geographic factors that would make a risk (for example, Northeast Area has a big fishing industry that depends on weather, availability of product, regulations, etc.)
- Bank mergers impact the number of lending partners providing 7(a) loan
- Program awareness of SBA products and services and a shrinking workforce in field offices which provide training
FY 14-15 Priority Goal: Increase Active Lender Participation
Statement:
Expand access to capital by adding 325 new and returning lenders to SBA’s flagship 7(a) program each fiscal year in FY2014-2015.
Description:
Providing access to capital has been one of the SBA’s critical strategies in meeting its objective to drive business formation, job growth and economic expansion particularly in underserved markets since the agency was created in 1953. By providing loan guarantees to reduce lenders’ loss exposure, the SBA provides an important credit lifeline to small businesses, especially startup businesses and businesses owned by women, minorities, veterans and other underserved groups who often cannot easily obtain credit in the conventional market. In the current economic conditions, SBA loan programs become even more crucial for ensuring that small businesses are not only surviving but also leading the way toward economic recovery and growth, as they have done time-and-time again throughout U.S. history.
SBA will increase small business access to capital by increasing the number of new or returning lenders in the fiscal year for the flagship 7(a) program (including the Community Advantage pilot program). New and returning lenders are a major component of SBA’s lending portfolio and are essential to growth in the quantity of loans approved and small businesses assisted. Each new or returning lender will expand SBA’s footprint and increase small business access to capital. Attaining a high volume of new and returning lenders from one fiscal year to the next will create a consistent pipeline of SBA loans into the hands of small business.
There are barriers and challenges to the SBA in achieving its priority goals:
- Economic Trends; micro and macro
- Issues within the Finance Industry as a whole
- Shrinking workforce in field offices which provide training
- Recent cases from the OIG reviewing SBA lenders underwriting criteria have triggered a more cautious approach from some lenders with some loan guaranty types
Statement:
Ensure federal contracting goals are me and/or exceeded by collaborating across the federal government to expand opportunities for small businesses and strengthen the integrity of the federal contracting certification process and data.
Description:
Small business contracting is one of the most important federal programs to help America’s small businesses grow and create jobs. The federal government gets to work with the most innovative small businesses in America today, and small businesses get critical revenue to build and scale their operations. SBA’s goal is to make sure that all federal agencies meet or exceed their targets for federal prime contracting dollars awarded to small businesses. The SBA is improving coordination and communication across the federal government, facilitating matchmaking events, increasing online trainings and holding senior officials accountable for meeting their agencies’ small business goals. SBA continues to simplify access to federal contracting opportunities and educate small businesses on the contracting opportunities available to them. The SBA is also streamlining the certification process and data for federal contracting and continues to aggressively root out fraud, waste and abuse in small business contracting to ensure that contracting dollars go to deserving small businesses.
FY 16-17 Priority Goal: Maximize small business participation in government contracting
Statement:
Through September 30, 2017, maximize small business participation in federal prime contracting to meet the statutory goal of 23%, ensure targets for subgoals are met, and reduce participation by ineligible firms.
Description:
When a small business is awarded a government contract, the small business is often able to quickly create jobs and spur economic growth. The government agency often has a “direct line” to the CEO, helping ensure that products and services are meeting or exceeding expectations and serving America’s taxpayers. Also, underserved communities – including women, minorities, veterans and others – often have extreme difficulty in accessing federal contracting opportunities as market gaps remain. SBA’s unique contracting programs provide a path to business growth for these populations.
Congress has mandated that small businesses receive 23% of federal government prime contracting dollars, including 5% of prime and subcontracts to Small Disadvantage Businesses; 5% of prime and subcontracts to Women-Owned Small Businesses; 3% of prime and subcontracts to HUBZone Small Businesses; and 3% of prime and subcontracts to Service-Disabled Veteran-Owned Small Businesses.
Meeting and exceeding the federal government’s small business procurement goals continues to be an Administration priority. Federal contracting with small businesses is a win-win. Small businesses get the revenue they need to grow their businesses and create jobs, and the federal government gets the opportunity to work with some of America’s most innovative and nimble small businesses, often times with a direct line to the CEO.
This Priority Goal directly supports SBA’s strategic objectives:
- Strategic Objective 1.2 – Ensure federal contracting goals are met or exceeded by collaborating across the federal government to expand opportunities for small businesses and strengthen the integrity of the federal contracting certification process and data.
- Strategic Objective 2.1 – Ensure inclusive entrepreneurship by expanding access and opportunity to small businesses and entrepreneurs in communities where market gaps remain
Small businesses are agile, innovative and affordable partners for the federal government. Through small business contracting, the federal government acts as a catalyst for small business growth, innovation, and supports the national economic security of the nation. Congress designated SBA as the agency responsible for overseeing small business contracting across the federal government. The SBA takes this responsibility seriously as the strongest voice for small business across the Administration.
Key barriers and challenges:
- The unpredictable and changing budget climate is a challenge for small businesses, and SBA is working hard to create an environment where small businesses can be successful in the federal procurement marketplace.
- The instability and ambiguity caused by Continuing Resolutions make it difficult to agency acquisition staff to plan effectively for small business utilization.
- Entering the federal supply chain can often be a lengthy and arduous process for many small businesses.
- The Administration and SBA continue to increase efforts and collaboration to provide more opportunities for small businesses to compete for and win federal contracts.
- Strategic Sourcing, Bundling, and Contracting Consolidation continue to be major concerns for small business opportunity and expansion. While the government strives to balance affordability with opportunity, SBA engages with agencies to continue to promote broader competitive opportunities to ensure the health of the small business industrial base is not adversely affected due to strategic sourcing or consolidating requirements and to protect small business from contract bundling.
SBA must continue to implement effective and efficient strategies to monitor the agencies’ progress, support small businesses interested in working with the government, and improve the data quality agencies use to manage their contracting activities.
FY 16-17 Priority Goal: Grow the number of 8(a)-certified disadvantaged small businesses
Statement:
By September 30, 2017, support more disadvantaged small businesses by increasing the number of approved 8(a)-certification applications by 5% each fiscal year, FY 2016 and FY 2017.
Description:
The 8(a) Program is an essential instrument for helping socially and economically disadvantaged entrepreneurs gain access to the economic mainstream of American society. The program helps thousands of aspiring entrepreneurs to gain a foothold in government contracting.
8(a) firms are also provided with business development assistance and can participate in the Mentor Protégé Program to build their competitive and institutional know-how to participate in competitive acquisitions.
A few years ago, the 8(a) Program boasted over 9,000 certified 8(a) participants, but has declined to less than 4,700 due to the administratively burdensome application process. Though the regulatory guidance provides the SBA approximately 90 days to process a complete application, several firms have endured delays that extend anywhere from 6 months to several years. Further, the SBA rate of approval for applicants that complete the application process is exceptionally low, under 50%. While over 2,000 applicants apply each year, the SBA rejects most applications as incomplete or missing documentation. Historically, only 25% of the applicants or about 500-600 applicants per year get through the burdensome process for a final decision from the Associate Administrator of the Office of 8(a) Business Development. The SBA’s low rate of approval has led to an industry of third party firms that charge socially and economically disadvantaged applicants anywhere from $5,000 to $75,000 to prepare the application and respond to the SBA processors. Some of these firms are taking advantage of applicants; and regardless of the amount paid, there is no guarantee of approval because the SBA approval rate is consistently less than 50%.
This Priority Goal is designed to grow the 8(a) Program by improving customer service for the 8(a) applicants and reduce the unnecessary administrative burdens on applicant firms. Growth of the program will open opportunities for socially and economically disadvantaged entrepreneurs to gain a foothold in government contracting.
The mission of the Office of Business Development is to execute activities authorized under Sections 8(a) and 7(j) of the Small Business Act to provide business development assistance to firms that are owned and controlled by economically and socially disadvantaged individuals. The office fulfills its mission by certifying the eligibility of prospective 8(a) business development firm participants and managing a national program that provides marketing, managerial, technical, and procurement assistance to help eligible businesses achieve their full competitive potential. The SBA will continue to work collaboratively with community development partners, credit unions, minority associations and others to tailor programs to meet their needs and ensure that SBA’s programs remain accessible to underserved communities.
This Priority Goal directly supports SBA’s strategic objectives:
- Strategic Objective 1.2 – Ensure federal contracting goals are met or exceeded by collaborating across the federal government to expand opportunities for small businesses and strengthen the integrity of the federal contracting certification process and data.
- Strategic Objective 2.1 – Ensure inclusive entrepreneurship by expanding access and opportunity to small businesses and entrepreneurs in communities where market gaps remain
- Strategic Objective 3.3 – Mitigate risk to taxpayers and improve oversight across SBA programs
The goals address the ongoing decline in number of 8(a) small businesses. Through 8(a) sole source and competitive contracting opportunities, the federal government acts as a catalyst for small business growth, innovation, job creation, and supports the national economic security of the nation.
When a small business gets a government contract, the small business is often able to quickly create jobs and spur economic growth. The government agency often has a “direct line” to the CEO, helping ensure that products and services are meeting or exceeding expectations and serving America’s taxpayers.
Key barriers and challenges:
Many challenges exist for growing the 8(a) program and increasing the total number of application approvals for 8(a) firms. However, the SBA is committed to make smart, bold, and customer focused changes to make the 8(a) program accessible to all firms that meet the eligibility requirements of the program. Consistent measurement of progress and monitoring of implementation of new and streamlined procedures will be key to avoid reverting to historical trends of rejecting 50% of more of the completed applications. Challenges include:
- Uncertainty whether competitors will respond favorably to the necessary regulatory changes that will be posted in the Federal Register to remove longstanding but unnecessary burdens on firms. Some examples are ‘wet signatures’ and a mandatory waiting period of 12 months to reapply after being declined by the SBA regardless of the reason for the decline.
- Potential for low employee engagement or desire for the status quo within the Office of Business Development. The staff assigned to process applications work remotely from the SBA Headquarters in Washington DC and have been trained in current processes that have proven burdensome.
- Office of Field Operation’s Business Opportunity Specialists (BOS) who conduct the day-to-day marketing to 8(a) applicants and provide business development for 8(a) certified firms. The BOS are assigned other priorities leaving minimal time for 8(a) business development. The decline in access to business development creates an increase in the number of firms that are terminated each year because they do not stay connected to the SBA and do not meet program requirements for annual reviews.
The SBA programs that contribute to this Agency Priority Goal are: Size Standards, Mentor-Protégé, 8(a) Business Development, 7(j) Technical Assistance.
FY 14-15 Priority Goal: Maximize Small Business participation in government contracting
Statement:
Maximize small business participation in federal government contracting to meet the statutory goals and reduce participation by ineligible firms.
Description:
Congress has mandated that small businesses receive 23% of federal government prime contracting dollars, including 5% of prime and subcontracts to Small Disadvantage Businesses; 5% of prime and subcontracts to Women-Owned Small Businesses; 3% of prime and subcontracts to HUBZone Small Businesses; and 3% of prime and subcontracts to Service-Disabled Veteran-Owned Small Businesses
Meeting and exceeding the federal government’s small business procurement goals continues to be an Administration priority. Federal contracting with small businesses is a win-win. Small businesses get the revenue they need to grow their businesses and create jobs, and the federal government gets the opportunity to work with some of America’s most innovative and nimble small businesses, often times with a direct line to the CEO.
In FY 2012, the federal government made real progress toward the 23 percent goal, with 22.25 percent or $89.9 billion in federal contracting dollars going to small businesses compared to 21.65 percent in FY 2011, with significant impact in key areas:
- For the first time, more agencies than ever before met or surpassed all of their prime contracting goals.
- Also, for the first time, the federal government exceeded the goal for service disabled veterans.
- The federal government had the highest percentage of contracts going to Small Disadvantage Businesses to date.
As a result of a government wide focus on increasing small business contracting opportunities, during President Obama’s first term (FY2009 - FY2012) the federal government awarded $376.2 billion in federal contracting dollars to small businesses. This is a $48.1 billion increase over the four preceding years even as we have seen reduced spending overall.
Also, since President Obama took office, the SBA has supported more than $132.61 billion in Federal government contracting dollars to small disadvantaged businesses. This represents a 36.6 percent increase when compared to the prior Administration. Under the Bush Administration’s first term, $97.10 billion in federal government contracting dollars were awarded to small disadvantaged businesses.
Although we have seen marked success over the last few years, we know more must be done. Many challenges exist for small businesses seeking to enter the federal procurement marketplace.
- The unpredictable and changing budget climate is a challenge for small businesses, and SBA is working hard to create an environment where small businesses can be successful in the federal procurement marketplace.
- The instability and ambiguity caused by Continuing Resolutions make it difficult to agency acquisition staff to plan effectively for small business utilization.
- Entering the federal supply chain can often be a lengthy and arduous process for many small businesses.
SBA’s GCBD unit must implement effective and efficient strategies to monitor the agencies’ progress to goal, support small businesses interested in working with the government and encourage agencies to improve data quality when reporting their contracting activities. SBA will increase its efforts to collaborate with and hold federal agencies accountable to achieving their goals.
Statement:
Strengthen entrepreneurial ecosystems through a variety of strategic partnerships to provide tailored training, mentoring and counseling services that support entrepreneurs during every phase of their business growth
Description:
Entrepreneurs and small business owners who receive training, mentoring and/or advising services increase sales, create more jobs, and have greater economic impact on their communities. SBA’s resource partner network, including 63 SBDCs with over 900 outreach locations, over 100 WBCs, and 11,000 SCORE volunteers nationwide, along with online training, assists more than one million business owners and entrepreneurs each year. The SBA also leads and builds partnerships with other agencies and private sector partners to support robust entrepreneurial ecosystems across the country. For instance, regional innovation clusters bring together small businesses and entrepreneurs with venture capitalists, universities and regional industry leaders who can help leverage a region’s unique assets to turn entrepreneurial ideas into high-growth small businesses.
FY 14-15 Priority Goal: Expand the base of lenders for small business exporters
Statement:
Expand small business access to export financing by increasing the number of lenders providing export financing solutions from 430 to 555 and the number of small business exporters receiving financing through SBA loan programs from 1,346 to 1,480 by FY2015.
Description:
The priority goal is directly tied to the objective of both the National Export Initiative (NEI) and the Export Promotion Cabinet (EPC) to expand SME access to trade financing, which has been identified as a gap issue for smaller exporters. Increasing access to export financing, combined with trade counseling and training, will contribute to the enhanced ability of current and future U.S. small business exporters to succeed in the global marketplace and supports the cross-agency goal of doubling U.S. exports.
There are barriers and challenges to the SBA in achieving its priority goals:
- From a marketing perspective, communicating and disseminating trade financing information to lenders and small business exporters could provide challenging given current, and anticipated, budget constraints on staffing.
- Inter-agency collaboration and joint initiatives can be challenging to manage, given the differing regulations and performance metrics of individual agencies, which might reduce the commitment of other agencies to help support this priority.
- Unique, and sometimes additional, Standard Operating Procedures (SOP) requirements for core export loans vs. other 7(a) loan products can confuse lenders and may require the creation of “Lender Training Manuals,” more extensive lender training, and Office of Capital Access support in implementing needed SOP revisions.
- In terms of operations, a reduced travel budget could greatly restrict the ability of field staff to deliver the necessary training to lenders and businesses that would expand the use of SBA loan programs for exporters, given that SBA's specialized trade finance specialists cover multiple states.
- The banking sector could receive another “financial shock,” forcing it to tighten lending requirements to small businesses and/or Basel III capital requirements could limit lending capacity.*
- U.S. export growth could slow, reducing demand for trade financing, as a result of slow overseas economic growth and/or a strengthening of the U.S. dollar, making U.S. exports less competitive.
Trade financing historically has been perceived by many lenders, especially community banks, as being too complex to be incorporated into their suite of financial products. Working with other federal agencies, SBA will help reduce the complexity of USG trade financing and export marketing programs and highlight the growing importance of exports to the U.S. economy, thereby encouraging more lenders to offer comprehensive business solutions to their export customers. In addition, SBA will leverage its outreach by working with state, federal, and other resource partners in order to promote customized trade financing options to the small business exporting community.
Statement:
Enhance the ability of current and future small business exporters to succeed in global markets by expanding access to financing, counseling, training and other export tools
Description:
Export sales contribute to a strong middle class by fueling economic opportunity and jobs in communities across the United States, while the countries buying American products gain access to some of the highest-quality products and services in the world. Today, nearly 96 percent of consumers and over two-thirds of the world's purchasing power reside outside the United States. Small businesses that can tap into this global market have the potential for vast expansion and growth, with small businesses now constituting 34 percent of total export dollars and comprising approximately 97.8 percent of all exporters.
FY 14-15 Priority Goal: Expand the base of lenders for small business exporters
Statement:
Expand small business access to export financing by increasing the number of lenders providing export financing solutions from 430 to 555 and the number of small business exporters receiving financing through SBA loan programs from 1,346 to 1,480 by FY2015.
Description:
The priority goal is directly tied to the objective of both the National Export Initiative (NEI) and the Export Promotion Cabinet (EPC) to expand SME access to trade financing, which has been identified as a gap issue for smaller exporters. Increasing access to export financing, combined with trade counseling and training, will contribute to the enhanced ability of current and future U.S. small business exporters to succeed in the global marketplace and supports the cross-agency goal of doubling U.S. exports.
There are barriers and challenges to the SBA in achieving its priority goals:
- From a marketing perspective, communicating and disseminating trade financing information to lenders and small business exporters could provide challenging given current, and anticipated, budget constraints on staffing.
- Inter-agency collaboration and joint initiatives can be challenging to manage, given the differing regulations and performance metrics of individual agencies, which might reduce the commitment of other agencies to help support this priority.
- Unique, and sometimes additional, Standard Operating Procedures (SOP) requirements for core export loans vs. other 7(a) loan products can confuse lenders and may require the creation of “Lender Training Manuals,” more extensive lender training, and Office of Capital Access support in implementing needed SOP revisions.
- In terms of operations, a reduced travel budget could greatly restrict the ability of field staff to deliver the necessary training to lenders and businesses that would expand the use of SBA loan programs for exporters, given that SBA's specialized trade finance specialists cover multiple states.
- The banking sector could receive another “financial shock,” forcing it to tighten lending requirements to small businesses and/or Basel III capital requirements could limit lending capacity.*
- U.S. export growth could slow, reducing demand for trade financing, as a result of slow overseas economic growth and/or a strengthening of the U.S. dollar, making U.S. exports less competitive.
Trade financing historically has been perceived by many lenders, especially community banks, as being too complex to be incorporated into their suite of financial products. Working with other federal agencies, SBA will help reduce the complexity of USG trade financing and export marketing programs and highlight the growing importance of exports to the U.S. economy, thereby encouraging more lenders to offer comprehensive business solutions to their export customers. In addition, SBA will leverage its outreach by working with state, federal, and other resource partners in order to promote customized trade financing options to the small business exporting community.
Statement:
Fuel high-growth entrepreneurship, innovation and job creation by providing the tools small businesses need to start and grow their businesses.
Description:
High-growth businesses create almost all of the net new jobs in the economy today. Through longer-term “patient” capital, growth accelerators and regional innovation clusters, federal research and development (R&D) grants, and export assistance, the SBA plays a critical role in the ongoing success of high-growth small businesses. These high-growth investments provide opportunities for small businesses to create jobs and sustain the cycle of American entrepreneurship and innovation.
Statement:
Ensure that SBA’s disaster assistance resources for businesses, non-profit organizations, homeowners, and renters can be deployed quickly, effectively and efficiently in order to preserve jobs and help return small businesses to operation.
Description:
Returning small business operations to normal after a disaster is critical to ensuring that local economies regain traction as quickly as possible and are once again able to contribute to the economy and create jobs. The SBA, in coordination with the U.S. Federal Emergency Management Agency (FEMA), other federal agencies, the American Red Cross and array of state and local entities, helps small businesses prepare for disaster and provides timely and accessible low-cost, low-interest loans to small business owners, non-profits, homeowners, and renters who are survivors of disaster.
FY 14-15 Priority Goal: Increase the Disaster Loan Application Return Rate
Statement:
Increase the return rate for disaster survivor applications by 10 percent points from 24% to 34% return rate by September 30, 2015.
Description:
The FY13 baseline number for Disaster Loan Application Return Rate was 24%, so the goal for FY14 is to achieve 29% and 34% in FY15. Increasing the application return rate will improve the delivery of the Disaster Loan Program. The primary opportunity being addressed is that a higher application return rate should result in a greater number of disaster survivors that will apply for disaster loan assistance and receive much needed Federal disaster assistance. SBA’s plan to increase the application return rate also ensures that SBA's disaster assistance resources for businesses, non-profit organizations, homeowners, and renters can be deployed quickly, effectively and efficiently in order to preserve jobs and help return small businesses to operation.
SBA’s plan to increase the application return rate will indirectly make the Disaster Loan Program more efficient by: 1) saving costs on mailing application packets to 100% of disaster survivors referred to SBA; and 2) freeing up resources dedicated to preparing and mailing application packets that can be utilized in other critical areas of the application screening process that directly impact processing times.
Statement:
Ensure the competitiveness and innovation of American manufacturing and supply chains by building capacity and supporting integrated networks of small business suppliers that encourage insourcing and the expansion of U.S. operations
Description:
Across the country, manufacturing and production are coming back to the United States. The reality is that large manufacturers need a diverse and nimble network of small suppliers. These suppliers make large companies more efficient, more productive and more globally competitive. A strong supply chain of small businesses can be a determining factor for locating production in a particular area. To build capacity and depth in America’s small business supply chain, the SBA continues its leadership role in the American Supplier Initiative, an Administration-wide effort focused on investing in — and building capacity throughout — the nation’s small business supply chain through: increased market access for small businesses; counseling and mentoring services to assist small suppliers; ready sources of capital to support sales, and; addressing the skills gap facing many small manufacturers and suppliers.
FY 14-15 Priority Goal: Maximize Small Business participation in government contracting
Statement:
Maximize small business participation in federal government contracting to meet the statutory goals and reduce participation by ineligible firms.
Description:
Congress has mandated that small businesses receive 23% of federal government prime contracting dollars, including 5% of prime and subcontracts to Small Disadvantage Businesses; 5% of prime and subcontracts to Women-Owned Small Businesses; 3% of prime and subcontracts to HUBZone Small Businesses; and 3% of prime and subcontracts to Service-Disabled Veteran-Owned Small Businesses
Meeting and exceeding the federal government’s small business procurement goals continues to be an Administration priority. Federal contracting with small businesses is a win-win. Small businesses get the revenue they need to grow their businesses and create jobs, and the federal government gets the opportunity to work with some of America’s most innovative and nimble small businesses, often times with a direct line to the CEO.
In FY 2012, the federal government made real progress toward the 23 percent goal, with 22.25 percent or $89.9 billion in federal contracting dollars going to small businesses compared to 21.65 percent in FY 2011, with significant impact in key areas:
- For the first time, more agencies than ever before met or surpassed all of their prime contracting goals.
- Also, for the first time, the federal government exceeded the goal for service disabled veterans.
- The federal government had the highest percentage of contracts going to Small Disadvantage Businesses to date.
As a result of a government wide focus on increasing small business contracting opportunities, during President Obama’s first term (FY2009 - FY2012) the federal government awarded $376.2 billion in federal contracting dollars to small businesses. This is a $48.1 billion increase over the four preceding years even as we have seen reduced spending overall.
Also, since President Obama took office, the SBA has supported more than $132.61 billion in Federal government contracting dollars to small disadvantaged businesses. This represents a 36.6 percent increase when compared to the prior Administration. Under the Bush Administration’s first term, $97.10 billion in federal government contracting dollars were awarded to small disadvantaged businesses.
Although we have seen marked success over the last few years, we know more must be done. Many challenges exist for small businesses seeking to enter the federal procurement marketplace.
- The unpredictable and changing budget climate is a challenge for small businesses, and SBA is working hard to create an environment where small businesses can be successful in the federal procurement marketplace.
- The instability and ambiguity caused by Continuing Resolutions make it difficult to agency acquisition staff to plan effectively for small business utilization.
- Entering the federal supply chain can often be a lengthy and arduous process for many small businesses.
SBA’s GCBD unit must implement effective and efficient strategies to monitor the agencies’ progress to goal, support small businesses interested in working with the government and encourage agencies to improve data quality when reporting their contracting activities. SBA will increase its efforts to collaborate with and hold federal agencies accountable to achieving their goals.
FY 14-15 Priority Goal: Expand the base of lenders for small business exporters
Statement:
Expand small business access to export financing by increasing the number of lenders providing export financing solutions from 430 to 555 and the number of small business exporters receiving financing through SBA loan programs from 1,346 to 1,480 by FY2015.
Description:
The priority goal is directly tied to the objective of both the National Export Initiative (NEI) and the Export Promotion Cabinet (EPC) to expand SME access to trade financing, which has been identified as a gap issue for smaller exporters. Increasing access to export financing, combined with trade counseling and training, will contribute to the enhanced ability of current and future U.S. small business exporters to succeed in the global marketplace and supports the cross-agency goal of doubling U.S. exports.
There are barriers and challenges to the SBA in achieving its priority goals:
- From a marketing perspective, communicating and disseminating trade financing information to lenders and small business exporters could provide challenging given current, and anticipated, budget constraints on staffing.
- Inter-agency collaboration and joint initiatives can be challenging to manage, given the differing regulations and performance metrics of individual agencies, which might reduce the commitment of other agencies to help support this priority.
- Unique, and sometimes additional, Standard Operating Procedures (SOP) requirements for core export loans vs. other 7(a) loan products can confuse lenders and may require the creation of “Lender Training Manuals,” more extensive lender training, and Office of Capital Access support in implementing needed SOP revisions.
- In terms of operations, a reduced travel budget could greatly restrict the ability of field staff to deliver the necessary training to lenders and businesses that would expand the use of SBA loan programs for exporters, given that SBA's specialized trade finance specialists cover multiple states.
- The banking sector could receive another “financial shock,” forcing it to tighten lending requirements to small businesses and/or Basel III capital requirements could limit lending capacity.*
- U.S. export growth could slow, reducing demand for trade financing, as a result of slow overseas economic growth and/or a strengthening of the U.S. dollar, making U.S. exports less competitive.
Trade financing historically has been perceived by many lenders, especially community banks, as being too complex to be incorporated into their suite of financial products. Working with other federal agencies, SBA will help reduce the complexity of USG trade financing and export marketing programs and highlight the growing importance of exports to the U.S. economy, thereby encouraging more lenders to offer comprehensive business solutions to their export customers. In addition, SBA will leverage its outreach by working with state, federal, and other resource partners in order to promote customized trade financing options to the small business exporting community.
Agency Priority Goals
Statement:
Expand access to capital by adding 325 new and returning lenders to SBA’s flagship 7(a) program each fiscal year in FY2014-2015.
Description:
Providing access to capital has been one of the SBA’s critical strategies in meeting its objective to drive business formation, job growth and economic expansion particularly in underserved markets since the agency was created in 1953. By providing loan guarantees to reduce lenders’ loss exposure, the SBA provides an important credit lifeline to small businesses, especially startup businesses and businesses owned by women, minorities, veterans and other underserved groups who often cannot easily obtain credit in the conventional market. In the current economic conditions, SBA loan programs become even more crucial for ensuring that small businesses are not only surviving but also leading the way toward economic recovery and growth, as they have done time-and-time again throughout U.S. history.
SBA will increase small business access to capital by increasing the number of new or returning lenders in the fiscal year for the flagship 7(a) program (including the Community Advantage pilot program). New and returning lenders are a major component of SBA’s lending portfolio and are essential to growth in the quantity of loans approved and small businesses assisted. Each new or returning lender will expand SBA’s footprint and increase small business access to capital. Attaining a high volume of new and returning lenders from one fiscal year to the next will create a consistent pipeline of SBA loans into the hands of small business.
There are barriers and challenges to the SBA in achieving its priority goals:
- Economic Trends; micro and macro
- Issues within the Finance Industry as a whole
- Shrinking workforce in field offices which provide training
- Recent cases from the OIG reviewing SBA lenders underwriting criteria have triggered a more cautious approach from some lenders with some loan guaranty types
Statement:
Maximize small business participation in federal government contracting to meet the statutory goals and reduce participation by ineligible firms.
Description:
Congress has mandated that small businesses receive 23% of federal government prime contracting dollars, including 5% of prime and subcontracts to Small Disadvantage Businesses; 5% of prime and subcontracts to Women-Owned Small Businesses; 3% of prime and subcontracts to HUBZone Small Businesses; and 3% of prime and subcontracts to Service-Disabled Veteran-Owned Small Businesses
Meeting and exceeding the federal government’s small business procurement goals continues to be an Administration priority. Federal contracting with small businesses is a win-win. Small businesses get the revenue they need to grow their businesses and create jobs, and the federal government gets the opportunity to work with some of America’s most innovative and nimble small businesses, often times with a direct line to the CEO.
In FY 2012, the federal government made real progress toward the 23 percent goal, with 22.25 percent or $89.9 billion in federal contracting dollars going to small businesses compared to 21.65 percent in FY 2011, with significant impact in key areas:
- For the first time, more agencies than ever before met or surpassed all of their prime contracting goals.
- Also, for the first time, the federal government exceeded the goal for service disabled veterans.
- The federal government had the highest percentage of contracts going to Small Disadvantage Businesses to date.
As a result of a government wide focus on increasing small business contracting opportunities, during President Obama’s first term (FY2009 - FY2012) the federal government awarded $376.2 billion in federal contracting dollars to small businesses. This is a $48.1 billion increase over the four preceding years even as we have seen reduced spending overall.
Also, since President Obama took office, the SBA has supported more than $132.61 billion in Federal government contracting dollars to small disadvantaged businesses. This represents a 36.6 percent increase when compared to the prior Administration. Under the Bush Administration’s first term, $97.10 billion in federal government contracting dollars were awarded to small disadvantaged businesses.
Although we have seen marked success over the last few years, we know more must be done. Many challenges exist for small businesses seeking to enter the federal procurement marketplace.
- The unpredictable and changing budget climate is a challenge for small businesses, and SBA is working hard to create an environment where small businesses can be successful in the federal procurement marketplace.
- The instability and ambiguity caused by Continuing Resolutions make it difficult to agency acquisition staff to plan effectively for small business utilization.
- Entering the federal supply chain can often be a lengthy and arduous process for many small businesses.
SBA’s GCBD unit must implement effective and efficient strategies to monitor the agencies’ progress to goal, support small businesses interested in working with the government and encourage agencies to improve data quality when reporting their contracting activities. SBA will increase its efforts to collaborate with and hold federal agencies accountable to achieving their goals.
Statement:
Increase the return rate for disaster survivor applications by 10 percent points from 24% to 34% return rate by September 30, 2015.
Description:
The FY13 baseline number for Disaster Loan Application Return Rate was 24%, so the goal for FY14 is to achieve 29% and 34% in FY15. Increasing the application return rate will improve the delivery of the Disaster Loan Program. The primary opportunity being addressed is that a higher application return rate should result in a greater number of disaster survivors that will apply for disaster loan assistance and receive much needed Federal disaster assistance. SBA’s plan to increase the application return rate also ensures that SBA's disaster assistance resources for businesses, non-profit organizations, homeowners, and renters can be deployed quickly, effectively and efficiently in order to preserve jobs and help return small businesses to operation.
SBA’s plan to increase the application return rate will indirectly make the Disaster Loan Program more efficient by: 1) saving costs on mailing application packets to 100% of disaster survivors referred to SBA; and 2) freeing up resources dedicated to preparing and mailing application packets that can be utilized in other critical areas of the application screening process that directly impact processing times.
Statement:
Expand small business access to export financing by increasing the number of lenders providing export financing solutions from 430 to 555 and the number of small business exporters receiving financing through SBA loan programs from 1,346 to 1,480 by FY2015.
Description:
The priority goal is directly tied to the objective of both the National Export Initiative (NEI) and the Export Promotion Cabinet (EPC) to expand SME access to trade financing, which has been identified as a gap issue for smaller exporters. Increasing access to export financing, combined with trade counseling and training, will contribute to the enhanced ability of current and future U.S. small business exporters to succeed in the global marketplace and supports the cross-agency goal of doubling U.S. exports.
There are barriers and challenges to the SBA in achieving its priority goals:
- From a marketing perspective, communicating and disseminating trade financing information to lenders and small business exporters could provide challenging given current, and anticipated, budget constraints on staffing.
- Inter-agency collaboration and joint initiatives can be challenging to manage, given the differing regulations and performance metrics of individual agencies, which might reduce the commitment of other agencies to help support this priority.
- Unique, and sometimes additional, Standard Operating Procedures (SOP) requirements for core export loans vs. other 7(a) loan products can confuse lenders and may require the creation of “Lender Training Manuals,” more extensive lender training, and Office of Capital Access support in implementing needed SOP revisions.
- In terms of operations, a reduced travel budget could greatly restrict the ability of field staff to deliver the necessary training to lenders and businesses that would expand the use of SBA loan programs for exporters, given that SBA's specialized trade finance specialists cover multiple states.
- The banking sector could receive another “financial shock,” forcing it to tighten lending requirements to small businesses and/or Basel III capital requirements could limit lending capacity.*
- U.S. export growth could slow, reducing demand for trade financing, as a result of slow overseas economic growth and/or a strengthening of the U.S. dollar, making U.S. exports less competitive.
Trade financing historically has been perceived by many lenders, especially community banks, as being too complex to be incorporated into their suite of financial products. Working with other federal agencies, SBA will help reduce the complexity of USG trade financing and export marketing programs and highlight the growing importance of exports to the U.S. economy, thereby encouraging more lenders to offer comprehensive business solutions to their export customers. In addition, SBA will leverage its outreach by working with state, federal, and other resource partners in order to promote customized trade financing options to the small business exporting community.
Agency Priority Goals
FY 16-17 Agency Priority Goal:
Strengthen and expand the network of lenders offering SBA products
Statement:
By September 30, 2017, expand access to capital for small businesses by increasing the number of lenders in SBA's 7(a) loan program from 2,244 (FY 2014) to 2,500.
Description:
Providing access to capital has been one of the SBA’s critical strategies in meeting its objective to drive business formation, job growth, and economic expansion particularly in underserved markets since the Agency’s creation in 1953. By providing loan guarantees to reduce lenders’ loss exposure, the SBA provides an important credit lifeline to small businesses, especially startup businesses and businesses owned by women, minorities, veterans and other underserved groups that often cannot easily obtain credit in the conventional market. SBA loan programs are necessary to ensure that small businesses are not only surviving but also leading the way toward US economic expansion and growth.
The 7(a) Loan program is the federal government’s primary small business loan program, assisting small businesses to obtain financing when they do not qualify for or otherwise have access to traditional credit. The SBA guarantees a portion of each loan (typically 50 to 90%) that participating lenders make by using the adjusted credit standards of the 7(a) loan program.
SBA's FY 2014-2015 Priority Goal to increase new and returning 7(a) lenders has reduced the decline from FY 2012 to FY 2014. SBA will continue to support small business access to capital by increasing the number of lenders participating in the flagship 7(a) loan program (including the Community Advantage pilot program). Lender participation is essential to growth in the quantity of loans approved and small businesses assisted. Attaining a high volume of lender participation will create a consistent pipeline of SBA loans to small businesses.
This Priority Goal directly supports SBA’s Strategic Objective 1.1 – Expand access to capital through SBA’s extensive lending network. Access to capital is critical to the long-term success of America’s small businesses. The top priority at the SBA is to get lending flowing to small businesses.
Key barriers and challenges:
- Economic Trends; micro- and macro-economic that impact whether banks want to provide SBA-backed loans such as:
- Lender may not have the technology in place to support migration to SBA systems
- Some industries may have a high default rate and a risk that would not allow a lender to underwrite a SBA backed loan
- Lender located in an area where some industries are effected by geographic factors that would make a risk (for example, Northeast Area has a big fishing industry that depends on weather, availability of product, regulations, etc.)
- Bank mergers impact the number of lending partners providing 7(a) loan
- Program awareness of SBA products and services and a shrinking workforce in field offices which provide training
FY 14-15 Agency Priority Goal:
Statement:
Expand access to capital by adding 325 new and returning lenders to SBA’s flagship 7(a) program each fiscal year in FY2014-2015.
Description:
Providing access to capital has been one of the SBA’s critical strategies in meeting its objective to drive business formation, job growth and economic expansion particularly in underserved markets since the agency was created in 1953. By providing loan guarantees to reduce lenders’ loss exposure, the SBA provides an important credit lifeline to small businesses, especially startup businesses and businesses owned by women, minorities, veterans and other underserved groups who often cannot easily obtain credit in the conventional market. In the current economic conditions, SBA loan programs become even more crucial for ensuring that small businesses are not only surviving but also leading the way toward economic recovery and growth, as they have done time-and-time again throughout U.S. history.
SBA will increase small business access to capital by increasing the number of new or returning lenders in the fiscal year for the flagship 7(a) program (including the Community Advantage pilot program). New and returning lenders are a major component of SBA’s lending portfolio and are essential to growth in the quantity of loans approved and small businesses assisted. Each new or returning lender will expand SBA’s footprint and increase small business access to capital. Attaining a high volume of new and returning lenders from one fiscal year to the next will create a consistent pipeline of SBA loans into the hands of small business.
There are barriers and challenges to the SBA in achieving its priority goals:
- Economic Trends; micro and macro
- Issues within the Finance Industry as a whole
- Shrinking workforce in field offices which provide training
- Recent cases from the OIG reviewing SBA lenders underwriting criteria have triggered a more cautious approach from some lenders with some loan guaranty types
