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, [$433,438,000] $444,269,000: 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] $113,000,000 shall be available to fund grants for performance in fiscal year [2010] 2011 or fiscal year [2011] 2012 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, [as added by section 107 of Public Law 110-186,] 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 [$22,000,000] $10,000,000 shall remain available until September 30, [2011] 2012 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 during fiscal year 2010, the applicable percentage under section 7(m)(4)(A) of the Small Business Act shall be 50 percent:] Provided further, That [$11,690,500] $18,347,700 shall be available for the Loan Modernization and Accounting System, to be available until September 30, [2011: Provided further, That $2,000,000 shall be for the Federal and State Technology Partnership Program under section 34 of the Small Business Act (15 U.S.C. 657d)] 2012: 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. (Financial Services and General Government Appropriations Act, 2010.)

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 2011 Budget provides increased funding for the continued development of a new loan management accounting system, which will improve oversight of SBA's more than $90 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 2011 Budget includes additional funds for a regional clusters initiative and to expand the Emerging Leaders program (formerly known as E200).

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, [$16,300,000] $18,000,000. (Financial Services and General Government Appropriations Act, 2010.)

Program and Financing (in millions of dollars)

The 2011 Budget proposes $18.0 million in new budget authority and $1.0 million transferred from the Disaster Loans Program account for a total of $19.0 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 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. (Financial Services and General Government Appropriations Act, 2010.)

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. In 2011, the Budget proposes $1 million to cover potential losses ; the American Recovery and Reinvestment Act of 2009 (ARRA) also provided an additional $15 million in funding for this program.

Balance Sheet (in millions of dollars)

For the cost of direct loans, [$3,000,000] $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, [$80,000,000] $165,386,000, 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 [2010] 2011 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 commitments for general business loans authorized under section 7(a) of the Small Business Act shall not exceed $17,500,000,000 for a combination of amortizing term loans and the aggregated maximum line of credit provided by revolving loans: Provided further, That during fiscal year [2010] 2011 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 [2010] 2011, 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, [$153,000,000] $157,000,000, which may be [transferred to and merged with] paid to the appropriations for Salaries and Expenses. (Financial Services and General Government Appropriations Act, 2010.)

[Sec. 1006. (a) There is hereby appropriated $125,000,000, for an additional amount for "Small Business Administration—Business Loans Program Account'' for fee reductions and eliminations under section 501 of division A of the American Recovery and Reinvestment Act of 2009 (Public Law 111-5) and for the cost of guaranteed loans under section 502 of such division: Provided, That such cost shall be as defined in section 502 of the Congressional Budget Act of 1974.] (Department of Defense Appropriations Act, 2010.)

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 2011, the Budget proposes $326 million in new budget authority for the Business Loans Program account. This includes $157 million in administrative expenses funding, $165 million in credit subsidy for the Section 7(a) guaranteed loan program, and $3.8 million in credit subsidy for the direct Microloan program.

The Section 7(a) program provides general business credit assistance. The 2011 Budget implements a new accounting treatment for 7(a) revolving lines of credit. In previous fiscal years, 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 level will now reflect the full revolving lines of credit disbursement and repayment activity. Therefore, the Budget supports $16 billion in 7(a) term loans and $39 billion in 7(a) revolving lines of credit. Excluding the anticipated draw and repayment activity, the base approval amounts are consistent with the historically authorized program level of $17.5 billion. For budget execution purposes, the 7(a) program will have separate risk categories and subsidy rates for term and revolving loans.

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 2011. 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. Finally, the Budget proposes a $25 million program level for direct Microloans. 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 2011, the Budget proposes a program level of $12 billion in such securities.

The 2011 Budget includes a number of legislative proposals (Section 522 through 524 of the SBA Administrative Provisions) to improve small business access to credit. These provisions would increase the maximum loan size for standard 7(a) loans from $2 million to $5 million; increase the maximum loan size for the 504 program from $2 million to $5 million for regular projects and from $4 million to $5.5 million for manufacturing projects; and increase maximum loan size for microloans to small business concerns from $35,000 to $50,000. The proposal also increases the maximum loan limits for lenders in their first year of participation in the Microloan Program, from $750,000 to $1 million, and from $3.5 million to $5 million in the subsequent years. The subsidy rates presented in the Budget and Federal Credit Supplement for the 7(a), 504, and Microloan programs assume enactment of these proposals.

Due to the economic crisis and significantly higher default claims, SBA recorded a $4.5 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 mandatory appropriations and increases the Federal budget deficit in 2010. Further, projected economic conditions and higher anticipated defaults have doubled the estimated cost of new 7(a) loan guarantees for 2011 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 in 2012.

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 the cost of guaranteed loans, including the cost of modifying such loans as defined in section 502 of the Congressional Budget Act of 1974, $1,690,000, to remain available until expended, of which $352,357 is for loan guarantees as authorized by section 42 of the Small Business Act, and $1,337,643 is for loan guarantees as authorized by section 12085 of Public Law 110-246.]

[In addition, for] For administrative expenses to carry out the direct loan program authorized by section 7(b) of the Small Business Act, [and the guaranteed loan programs authorized by section 42 of the Small Business Act and section 12085 of Public Law 110-246, $76,588,200] $203,000,000, 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 [transferred to and merged with] paid to the appropriations for the Office of Inspector General; of which [$65,278,200] $193,000,000 is for direct administrative expenses of loan making and servicing to carry out the direct loan program, which may be [transferred to and merged with] 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 [transferred to and merged with] paid to the appropriations for Salaries and Expenses[, and of which $1,310,000 is for administrative expenses to carry out the guaranteed loan programs, which may be transferred to and merged with the appropriations for Salaries and Expenses]. (Financial Services and General Government Appropriations Act, 2010.)

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 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 2011, 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 13.22 percent. The Budget does not request new credit subsidy Budget Authority (BA), as SBA has sufficient unobligated balances to support estimated 2011 loan approvals. However, the Budget does request $203 million in new BA for administrative expenses, an increase of $126 million from the 2010 enacted level, as SBA will no longer have unobligated balances to rely upon.

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".