Rural Economic Development:

Collaboration between SBA and USDA Could Be Improved

GAO-08-1123: Published: Sep 18, 2008. Publicly Released: Sep 18, 2008.

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The Small Business Administration (SBA) and the Rural Development offices of the U.S. Department of Agriculture both work in rural areas to foster economic development by promoting entrepreneurship and community development. This report discusses (1) the complementary nature of some SBA and Rural Development programs and the extent to which it provides a rationale for the agencies to collaborate, (2) past and current efforts by SBA and Rural Development to work together and with other agencies, and (3) opportunities for the agencies to improve their collaborative efforts. In completing its work, GAO analyzed agency documentation and prior reports on collaboration, conducted site visits at locations where SBA and Rural Development were working together, and interviewed agency and selected economic development officials.

The complementary nature of some SBA loan programs and Rural Development business programs provides a rationale for the agencies to collaborate. SBA and Rural Development have similar economic development missions, and their programs provide financing for similar purposes, including start-up and expansion projects, equipment purchases, and working capital for small businesses. According to SBA and Rural Development officials currently involved in collaborative working relationships, working together allows the agencies to leverage the unique strengths of each other's programs, increase the number of financing options available to borrowers in rural areas, and ultimately better promote economic development in these areas. However, collaboration between SBA and Rural Development to date has been sporadic and mostly self-initiated by officials in field offices. GAO found that the extent of the collaborative efforts and use of formal agreements such as memorandums of understanding (MOU) varied across locations. The two agencies worked together frequently in a few locations, infrequently in others, and not at all in many locations. The SBA and Rural Development offices in North Dakota that GAO visited collaborated frequently and had formal agreements in place. Officials there established an MOU with other community development organizations to provide "one-stop" shopping assistance to borrowers at a single location. The SBA and Rural Development offices in Nebraska and New Mexico that GAO visited worked with each other less frequently and more informally, conducting community outreach sessions and holding periodic meetings and joint training sessions. But many other locations--about half of SBA and Rural Development's field offices--did not appear to be collaborating at all or to have an established framework to facilitate collaboration. Opportunities exist for SBA and Rural Development to improve their collaborative efforts. In an October 2005 report, GAO identified key practices that could help federal agencies enhance and sustain their collaborative efforts. In comparing SBA and Rural Development's efforts with these criteria, GAO found that the agencies could take steps to improve their efforts by implementing a more formal approach to encourage collaboration. This approach would provide the agencies with a mechanism that reflected several of GAO's key practices--to define and articulate a common outcome, agree on roles and responsibilities, monitor key progress and results, and reinforce accountability for collaborative efforts. With such an approach, SBA and Rural Development could more effectively leverage each other's unique strengths and help to improve small business opportunities in rural communities.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In response to our recommendation to the Administrator of SBA to take steps to adopt a formal approach to encourage further collaboration, in FY 2012 SBA expanded the April 2011 USDA-SBA MOU to all SBA district offices with a USDA presence in their territory. District offices have reported collaborating with their USDA counterparts including, cross-training, referring USDA customers to SBA resource partners for counseling and technical assistance, collaborating on outreach activities, and jointly marketing each others loan programs. The activities were also included as part of their FY 2012 strategic plans. As a result, this recommendation is closed as implemented.

    Recommendation: To improve SBA and Rural Development's collaborative efforts, the Administrator of SBA and the Secretary of Agriculture should take steps to adopt a formal approach to encourage further collaboration in support of common economic development goals in rural areas. Such steps could include establishing and implementing a written agreement; defining and articulating a common outcome for rural economic development; specifying roles and responsibilities to ensure proper coordination; establishing mechanisms to monitor, evaluate, and report on results; and reinforcing accountability for collaborative efforts.

    Agency Affected: Small Business Administration

  2. Status: Closed - Implemented

    Comments: In response to our recommendation to the Secretary of Agriculture to take steps to adopt a formal approach to encourage further collaboration, in April 2011 the RBS Administrator notified State Directors and State Business Programs Directors of the USDA-SBA MOU and emphasized the need for all offices to implement the collaborative activities identified in the MOU. The State Business Programs Offices were later surveyed to help gauge the level of collaboration between RBS and SBA as well as identify additional opportunities to enhance collaboration. Survey results demonstrated that areas of strong collaboration include referrals, outreach, and interagency communication. As a result, this recommendation is closed as implemented.

    Recommendation: To improve SBA and Rural Development's collaborative efforts, the Administrator of SBA and the Secretary of Agriculture should take steps to adopt a formal approach to encourage further collaboration in support of common economic development goals in rural areas. Such steps could include establishing and implementing a written agreement; defining and articulating a common outcome for rural economic development; specifying roles and responsibilities to ensure proper coordination; establishing mechanisms to monitor, evaluate, and report on results; and reinforcing accountability for collaborative efforts.

    Agency Affected: Department of Agriculture

 

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