SMALL BUSINESS ADMINISTRATION

Federal Funds

For necessary expenses, not otherwise provided for, of the Small Business Administration as authorized by Public Law 108–447, including hire of passenger motor vehicles as authorized by 31 U.S.C. 1343 and 1344, and not to exceed $3,500 for official reception and representation expenses, [$444,269,000]$427,296,000: Provided, That the Administrator is authorized to charge fees to cover the cost of publications developed by the Small Business Administration, and certain loan program activities, including fees authorized by section 5(b) of the Small Business Act: Provided further, That, notwithstanding 31 U.S.C. 3302, revenues received from all such activities shall be credited to this account, to remain available until expended, for carrying out these purposes without further appropriations: Provided further, That [$113,000,000]$103,000,000 shall be available to fund grants for performance in fiscal year [2011]2012 or fiscal year [2012]2013 as authorized by section 21 of the Small Business Act[, of which $1,000,000 shall be for the Veterans Assistance and Services Program authorized by section 21(n) of the Small Business Act, and of which $1,000,000 shall be for the Small Business Energy Efficiency Program authorized by section 1203(c) of Public Law 110–140]: Provided further, That $10,000,000 shall remain available until September 30, [2012]2013 for marketing, management, and technical assistance under section 7(m) of the Small Business Act (15 U.S.C. 636(m)(4)) by intermediaries that make microloans under the microloan program: Provided further, That [$18,347,700]$7,100,000 shall be available for the Loan Modernization and Accounting System, to be available until September 30, [2012]2013: Provided further, That notwithstanding the provisions of section 7(e) of the Small Business Act, the Administration may provide financial assistance in the form of grants or cooperative agreements to educational institutions, nonprofit organizations, Federal, State, and local departments and agencies (including Small Business Development Centers operating pursuant to section 21 of the Small Business Act, Women's Business Centers operating pursuant to section 29 of the Small Business Act, and SCORE chapters operating pursuant to section 8(b)(1)(B) of the Small Business Act) for the purpose of providing management or technical assistance and other services to small businesses: Provided further, That of the funds made available under this heading, $1,767,090 is for strengthening the agency's acquisition workforce capacity and capabilities: Provided further, That with respect to the previous proviso, such funds shall be available for training, recruitment, retention, and hiring members of the acquisition workforce as defined by the Office of Federal Procurement Policy Act, as amended (41 U.S.C. 401 et seq.): Provided further, That with respect to the seventh proviso, such funds shall be available for information technology in support of acquisition workforce effectiveness or for management solutions to improve acquisition management. Note.—A full-year 2011 appropriation for this account was not enacted at the time the budget was prepared; therefore, this account is operating under a continuing resolution (P.L. 111–242, as amended). The amounts included for 2011 reflect the annualized level provided by the continuing resolution.

Program and Financing (in millions of dollars)

This account funds the administrative expenses of SBA headquarters and field office operations. Appropriations for the administration of the disaster and business loan programs are merged with this account. The 2012 Budget provides funding for the continued development of a revised loan management accounting system, which will improve oversight of SBA's more than $93 billion portfolio of loans and loan guarantees. Funding is also requested for core agency activities, including information technology investments and human capital development. In addition, this account funds non-credit business assistance grant programs. The 2012 Budget includes funds for SBA's regional clusters initiative and expands the Emerging Leaders program (formerly known as E200).

On September 27, 2010, the Small Business Jobs Act of 2010 (Jobs Act) (P.L. 111–240) was enacted. The Jobs Act, among other things: (1) provided funding for additional grants to Small Business Development Centers (SBDCs) for technical assistance and counseling services to small businesses; (2) provided administrative funds for staff and resources for developing, implementing and maintaining the SBDC Grant Program; and (3) established an export promotion pilot program through which SBA will make competitive grants to States in order to carry out export programs that assist small businesses to begin or expand exporting.

Object Classification (in millions of dollars)

Employment Summary

For necessary expenses of the Office of Inspector General in carrying out the provisions of the Inspector General Act of 1978, [$18,000,000]$18,400,000. Note.—A full-year 2011 appropriation for this account was not enacted at the time the budget was prepared; therefore, this account is operating under a continuing resolution (P.L. 111–242, as amended). The amounts included for 2011 reflect the annualized level provided by the continuing resolution.

Program and Financing (in millions of dollars)

The 2012 Budget proposes $18.4 million in new budget authority and $1.0 million transferred from the Disaster Loans Program account for a total of $19.4 million for the Office of Inspector General (OIG). This appropriation provides funds for agency-wide audit, investigative, and related functions to promote economy and efficiency in SBA operations and to prevent and detect waste, fraud, and abuse. In addition, the passage of the American Recovery and Reinvestment Act of 2009 provided an additional $10 million, available from 2009 through 2013, for oversight and audit of SBA Recovery Act programs, grants, and projects.

Object Classification (in millions of dollars)

Employment Summary

For necessary expenses of the Office of Advocacy in carrying out the provisions of Title II of Public Law 94–305, as amended, (15 U.S.C. 634a et seq.) and the Regulatory Flexibility Act of 1980, as amended, (5 U.S.C. 601 et seq.), $9,120,000, to remain available until expended. Note.—A full-year 2011 appropriation for this account was not enacted at the time the budget was prepared; therefore, this account is operating under a continuing resolution (P.L. 111–242, as amended). The amounts included for 2011 reflect the annualized level provided by the continuing resolution.

Program and Financing (in millions of dollars)

The 2012 Budget proposes $9,120,000 in new budget authority. This appropriation provides funds for operations of the Office of Advocacy, in accordance with the Small Business Jobs Act of 2010 (P.L. 111–240). Pursuant to Section 1602 of the Jobs Act, SBA is requesting that the funds remain available, without fiscal year limitation, until expended.

The Office of Advocacy's advice and small business research helps the Federal Government take into account the concerns of small businesses when it develops policies and regulations. The Office's regional advocates support regulatory flexibility at the State level, work with the regional Regulatory Fairness Boards established by the Small Business Regulatory Enforcement Fairness Act, and promote the use of Advocacy research and data products in the curricula of universities and other schools in their respective regions.

Object Classification (in millions of dollars)

Employment Summary

[For additional capital for the Surety Bond Guarantees Revolving Fund, authorized by the Small Business Investment Act of 1958, as amended, $1,000,000, to remain available until expended.]

Program and Financing (in millions of dollars)

SBA is authorized to issue bond guarantees to surety companies for construction, service, and supply contracts or work orders, and to reimburse these sureties up to 90 percent of the losses sustained if the contractor defaults. SBA's guarantees provide an incentive for sureties to issue bonds to small contractors who could not otherwise secure them and compete in the contracting industry. For 2012, it is estimated that there are sufficient funds in reserve to cover the cost of claim defaults. Therefore, no new appropriated funds are requested.

Balance Sheet (in millions of dollars)

For the cost of direct loans, $3,765,000, to remain available until expended, and for the cost of guaranteed loans as authorized by section 7(a) of the Small Business Act (Public Law 85–536, as amended) and section 503 of the Small Business Investment Act of 1958 (Public Law 85–699, as amended), [$165,386,000]$211,600,000, to remain available until expended: Provided, That such costs, including the cost of modifying such loans, shall be as defined in section 502 of the Congressional Budget Act of 1974: Provided further, That subject to section 502 of the Congressional Budget Act of 1974, during fiscal year [2011]2012 commitments to guarantee loans under section 503 of the Small Business Investment Act of 1958 shall not exceed $7,500,000,000: Provided further, That during fiscal year [2010]2012 commitments for general business loans authorized under section 7(a) of the Small Business Act shall not exceed [$17,500,000,000]$16,500,000,000 for a combination of amortizing term loans and the aggregated maximum line of credit provided by revolving loans: Provided further, That during fiscal year [2011]2012 commitments to guarantee loans for debentures under section 303(b) of the Small Business Investment Act of 1958, shall not exceed $3,000,000,000: Provided further, That during fiscal year [2011]2012, guarantees of trust certificates authorized by section 5(g) of the Small Business Act shall not exceed a principal amount of $12,000,000,000. In addition, for administrative expenses to carry out the direct and guaranteed loan programs, [$157,000,000]$147,958,000, which may be paid to the appropriations for Salaries and Expenses.

Note.—A full-year 2011 appropriation for this account was not enacted at the time the budget was prepared; therefore, this account is operating under a continuing resolution (P.L. 111–242, as amended). The amounts included for 2011 reflect the annualized level provided by the continuing resolution.

Program and Financing (in millions of dollars)

Summary of Loan Levels, Subsidy Budget Authority and Outlays by Program (in millions of dollars)

As required by the Federal Credit Reform Act of 1990, as amended, this account records the subsidy costs associated with the direct loans obligated and loan guarantees committed in 1992 and beyond (including modifications of direct loans or loan guarantees that resulted from obligations or commitments in any year), as well as administrative expenses of the business loan program. The subsidy amounts are estimated on a present value basis; the administrative expenses are estimated on a cash basis.

For 2012, the Budget proposes $363 million in new budget authority for the Business Loans Program account. This includes $148 million in administrative expenses funding, $212 million in credit subsidy for the Sections 7(a) and 504 guaranteed loan programs, and $3.8 million in credit subsidy for the direct Microloan Program.

The Section 7(a) Program provides general business credit assistance. The 2012 Budget includes a new accounting treatment for 7(a) revolving lines of credit that is being implemented in 2011. Previously, SBA's modeling and budget presentations treated all 7(a) loans as term loans, when in fact a significant portion of approvals (roughly $1–2 billion) consisted of revolving lines of credit, under which a borrower was able to draw and repay multiple times during the loan term. In order to be consistent with Federal Credit Reform requirements and better reflect the total economic activity supported by the guarantee, the total 7(a) program levels are to reflect the full revolving lines of credit disbursement and repayment activity. Therefore, the Budget supports $14.5 billion in 7(a) term loans and $2 billion for 7(a) revolving lines of credit, which are estimated to support $48 billion in total economic activity through draws and repayments over the life of the guarantee. Based on the maximum draw activity at any one time, the base approval amounts are consistent with the authorized program level of $16.5 billion. For budget execution purposes, the 7(a) program will have separate risk categories and subsidy rates for term and revolving loans. In addition, as part of the Secondary Market Guarantee (SMG) Program, SBA's fiscal agent pools the guaranteed portion of 7(a) loans and sells the securities to investors. This mechanism provides liquidity to lenders participating in the 7(a) loan program. For 2012, the Budget proposes a program level of $12 billion in such securities.

The Section 504 Certified Development Company program is for long-term, fixed-rate financing, and the requested guaranteed loan program level is $7.5 billion in 2012. The Small Business Investment Company (SBIC) program provides credit to support venture capital investments. The Budget proposes a program level of $3 billion for SBIC Debentures and a $25 million program level for direct Microloans.

A number of legislative proposals (Section 522 through 524 of the SBA Administrative Provisions) to improve small business access to credit were proposed in the 2011 Budget. As most of these provisions were enacted with the passage of the Small Business Act of 2010 (Jobs Bill), P.L. 111–240, SBA has deleted these provisions from the 2012 request. The subsidy rates presented in the Budget and Federal Credit Supplement for the 7(a), 504, and Microloan programs are based on enactment of these provisions.

Due to the economic crisis and significantly higher default claims, SBA recorded a $3.7 billion upward reestimate in its loan guarantee programs, the highest in the Agency's history since the implementation of credit reform in 1992. This additional subsidy cost is covered by appropriations and increases the Federal Budget deficit in 2011. Further, projected economic conditions and higher than anticipated defaults have doubled the estimated cost of new 7(a) loan guarantees for 2012 compared to 2010. Therefore, the Administration will submit a legislative package to provide SBA the flexibility to adjust fees in the 7(a) program to enable it to be self-sustaining over time. These changes in the program's fee structure would become effective for loans originated after 2012.

In addition to increasing the maximum loan size for standard 7(a) loans as discussed above, the Jobs Act: (1) established an Intermediary Lending Pilot Program and subsidy for this program was appropriated over two years with $8 million authorized for use in each of 2011 and 2012; (2) provided staff and resources for implementing and overseeing the Intermediary Lending Pilot Program; (3) provided subsidy funding for the cost of modifying the 7(a) loan program; and (4) extended Recovery Act fee reductions and increased guarantees through December 31, 2010, and appropriated funding of $505 million to pay for the subsidy amount necessary for fee reductions and increased guarantees.

Object Classification (in millions of dollars)

Program and Financing (in millions of dollars)

Status of Direct Loans (in millions of dollars)

As required by the Federal Credit Reform Act of 1990, as amended, this non-budgetary account records all cash flows to and from the Government resulting from direct loans obligated in 1992 and beyond (including modifications of direct loans that resulted from obligations in any year). The amounts in this account are a means of financing and are not included in the budget totals.

Balance Sheet (in millions of dollars)

Program and Financing (in millions of dollars)

Status of Guaranteed Loans (in millions of dollars)

As required by the Federal Credit Reform Act of 1990, as amended, this non-budgetary account records all cash flows to and from the Government resulting from loan guarantees committed in 1992 and beyond (including modifications of loan guarantees that resulted from commitments in any year). The amounts in this account are a means of financing and are not included in the Budget totals.

Balance Sheet (in millions of dollars)

Program and Financing (in millions of dollars)

Status of Direct Loans (in millions of dollars)

Status of Guaranteed Loans (in millions of dollars)

As required by the Federal Credit Reform Act of 1990, as amended, this account records all cash flows to and from the Government resulting from SBA direct loans obligated and loan guarantees committed prior to 1992. This account is shown on a cash basis. All new activity in this program in 1992 and beyond (including modifications of direct loans or loan guarantees made in any year) is recorded in corresponding program and financing accounts.

Balance Sheet (in millions of dollars)

Object Classification (in millions of dollars)

For administrative expenses to carry out the direct loan program authorized by section 7(b) of the Small Business Act, [$203,000,000]$167,300,000, to be available until expended, of which $1,000,000 is for the Office of Inspector General of the Small Business Administration for audits and reviews of disaster loans and the disaster loan programs and shall be paid to the appropriations for the Office of Inspector General; of which [$193,000,000]$157,300,000 is for direct administrative expenses of loan making and servicing to carry out the direct loan program, which may be paid to the appropriations for Salaries and Expenses; and of which $9,000,000 is for indirect administrative expenses for the direct loan program, which may be paid to the appropriations for Salaries and Expenses. Note.—A full-year 2011 appropriation for this account was not enacted at the time the budget was prepared; therefore, this account is operating under a continuing resolution (P.L. 111–242, as amended). The amounts included for 2011 reflect the annualized level provided by the continuing resolution.

Program and Financing (in millions of dollars)

Summary of Loan Levels, Subsidy Budget Authority and Outlays by Program (in millions of dollars)

As required by the Federal Credit Reform Act of 1990, as amended, this account records, for loans made pursuant to Section 7(b) of the Small Business Act, as amended, the subsidy costs associated with the direct loans obligated in 1992 and beyond (including modifications of direct loans or loan guarantees that resulted from obligations or commitments in any year), as well as administrative expenses of this program. The subsidy amounts are estimated on a present value basis; the administrative expenses are estimated on a cash basis.

Disaster loans made pursuant to Section 7(b) of the Small Business Act provide Federal assistance for non-farm, private sector disaster losses. Through the disaster assistance program, SBA helps homeowners, renters, businesses of all sizes, and non-profit organizations pay for the cost of replacing, rebuilding or repairing property damaged by disasters. The program is the only form of SBA financial assistance not limited to small businesses. The program provides subsidized loans of up to 30 years to borrowers who have incurred uninsured physical losses or economic injury as the result of a disaster.

In 2012, the Budget supports $1.1 billion in loans, the ten-year average for such loans, excluding outlying events. The Budget includes a legislative proposal (Section 521 of the SBA Administrative Provisions) to increase the maximum term for Business Credit Elsewhere loans from three to seven years. With this policy proposal, the subsidy rate is 10.93 percent. The Budget does not request new credit subsidy budget authority (BA), as SBA has sufficient unobligated balances to support estimated 2012 loan approvals. However, the Budget does request $167 million in new BA for administrative expenses.

Object Classification (in millions of dollars)

Program and Financing (in millions of dollars)

Status of Direct Loans (in millions of dollars)

As required by the Federal Credit Reform Act of 1990, as amended, this non-budgetary account records all cash flows to and from the Government resulting from disaster direct loans obligated in 1992 and beyond (including modifications of direct loans that resulted from obligations in any year). The amounts in this account are a means of financing and are not included in the Budget totals.

Balance Sheet (in millions of dollars)

Program and Financing (in millions of dollars)

Status of Guaranteed Loans (in millions of dollars)

As required by the Federal Credit Reform Act of 1990, as amended, this non-budgetary account records all cash flows to and from the Government resulting from loan guarantees committed in 1992 and beyond (including modifications of loan guarantees that resulted from commitments in any year). The amounts in this account are a means of financing and are not included in the Budget totals.

Program and Financing (in millions of dollars)

Status of Direct Loans (in millions of dollars)

As required by the Federal Credit Reform Act of 1990, as amended, this account records all cash flows to and from the Government resulting from SBA disaster direct loans obligated prior to 1992. This account is shown on a cash basis. All new activity in this program in 1992 and beyond (including modifications of direct loans or loan guarantees made in any year) is recorded in corresponding program and financing accounts.

Balance Sheet (in millions of dollars)

Object Classification (in millions of dollars)

Program and Financing (in millions of dollars)

Status of Guaranteed Loans (in millions of dollars)

Public Law 94–305 established this fund to alleviate the adverse impact of pollution regulations on small businesses. As a result of the elimination of tax-exempt financing associated with the Pollution Control Guaranteed loan program, no new activity is anticipated for this program.

Balance Sheet (in millions of dollars)

(in millions of dollars)

(including transfer of funds)

[(a) in paragraph (1)(B)(iii), by striking "$35,000" and inserting in lieu thereof "$50,000";]

[(b) in paragraph (3)(C), by striking "$750,000" and inserting in lieu thereof "$1,000,000" and by striking "$3,500,000" and inserting in lieu thereof "$5,000,000";]

[(c) in paragraph (3)(E), by striking "$35,000" each place that term appears and inserting in lieu thereof "$50,000"; and]

[(d) in paragraph (11)(B), by striking "$35,000" and inserting in lieu thereof "$50,000".]

(a) in clause (ii) by striking "$2,000,000" and inserting in lieu thereof "$5,000,000";

(b) in clause (iii) by striking "$4,000,000" and inserting in lieu thereof "$5,500,000".]