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Clarification of GAO Decision on Leveraging Block Grant Funds by SBA

B-197439 Jan 30, 1981
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Highlights

The rejection by the Small Business Administration (SBA) of an application for leveraging funds resulted in the need for GAO to clarify a previous decision. SBA had interpreted that decision as prohibiting it from leveraging Federal funds invested in minority enterprise small business investment companies (MESBIC's). Since the application was based on Federal Block Grant funds under the Housing and Community Development Act, SBA explained that it had no alternative but to turn it down. The prior decision held that SBA did not have the authority to leverage Federal funds invested in MESBIC's, since by statute SBA is authorized to leverage only private money. The decision stated, however, that where a specific statute authorizes it, Federal money may be leveraged. The legislative history of the Act showed that legislators had leveraging in mind when they enacted it. Therefore, GAO concluded that the Act authorized SBA to leverage Block Grant funds invested in MESBIC's.

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