Small Business Committee Needles SBA on Sequester

Agencies affected by the sequestration budget cuts have had some say as to where the cuts are made. Though no one believes it was the nation's only or best option, this level of flexibility in the sequester's application could help mitigate its effects in certain sectors of the federal government, such as in the Small Business Administration (SBA).

To ensure that the cuts are applied in the most effective way, the House Small Business Committee, chaired by Sam Graves (R-MO), sent a letter this week demanding that the SBA provide more details about how the agency plans "to conduct its core functions in a time of limited budgetary resources."

Graves stressed that the sequester's cuts be directed at programs that are wasteful, rather than at the SBA's core functions of counseling, increasing access to capital and contracting. Specifically, the letter sent from the committee to SBA Chairman Karen Mills requested details on contingency plans that the SBA would implement in the instance that demand for guaranteed loans exceed the funds available in the agency's business loan account. Essentially, Graves wants to make sure that the sequester affects lending less than it affects how the SBA's programs are administered.

In an oversight hearing held earlier in March, Graves' committee cited a Government Accountability Office (GAO) report that identified room for improvement across 52 of the SBA's entrepreneurial assistance programs, most of them geared toward unnecessary or inefficient filing and paperwork requirements. "The ways that these programs are administered could lead to inefficient delivery of services, such as requiring entrepreneurs to fill out applications to multiple agencies with varying program requirements," said William Shear, director of financial markets and community investments at the GAO. "These inefficiencies could compromise the government’s ability to effectively provide the needed services and meet the shared goals of the programs."

Ideally, the sequester cuts do more to clear out the waste in the SBA, rather than make it a less effective source of financing. "As our debt continues to pile up, an important way for us to rein in federal spending is to find ways to get rid of duplication and overlap in federal programs where taxpayer dollars are being wasted or used inefficiently," said Graves. "Rooting out duplication, inefficiency and waste in SBA programs to ensure small businesses are being best served is a goal of this Committee."

The SBA must respond to the committee's requests for contingency plans by April 15.

- Jacob Barron, CICP, NACM staff writer

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