State Small Business Credit Initiative: Improved Planning Could Help Treasury Limit Additional Delays

GAO-23-105293 Published: Feb 02, 2023. Publicly Released: Feb 02, 2023.
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Fast Facts

Treasury's State Small Business Credit Initiative is authorized to provide $10 billion to states, territories, and tribal governments to support small business lending and investment programs.

All 50 states, five territories, the District of Columbia, and 283 tribal governments have applied for these funds.

However, Treasury is taking longer than expected to review applications and disburse funds. We found that it could improve how it plans these and other program activities—such as identifying interim steps and staff responsible for each activity.

We recommended doing so, which could help Treasury ensure timely disbursement of these funds.

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What GAO Found

The State Small Business Credit Initiative (SSBCI) provides funds to eligible jurisdictions—states, territories, the District of Columbia, and tribal governments—to support small business lending and investment programs through its capital program. Eligible jurisdictions also can apply for technical assistance funding (such as for legal, accounting, and financial advisory services) to support certain businesses that apply to an SSBCI program or another government small business program.

The Department of the Treasury, which administers SSBCI, extended application deadlines for the capital and technical assistance programs multiple times (see figure). All 50 states, five territories, and the District of Columbia submitted applications for capital program funds, and as of September 30, 2022, Treasury had approved 31 applications and disbursed $1.3 billion.

Application Deadline Extensions for State Small Business Credit Initiative, March 2021–March 2023


Partly because of these deadline extensions and the time needed to review and approve numerous applications, Treasury has taken longer than expected to disburse SSBCI funds. Significant SSBCI implementation steps remain, such as reviewing remaining applications and implementing compliance monitoring and performance measurement plans. However, Treasury's planning efforts have not fully incorporated certain best practices GAO previously developed for reliable project scheduling. For example, Treasury's work plan has not identified which staff or contractors would be responsible for each activity. Fully incorporating these best practices could help limit the potential for delays and help ensure timely disbursement and oversight of program funds.

Treasury has been developing a framework to support and monitor jurisdictions' compliance with SSBCI guidelines. In November 2022, Treasury published compliance and oversight standards for jurisdictions to use for their programs. Officials said they have been building on procedures used for the original SSBCI and planned to develop compliance monitoring procedures (for Treasury to use) by December 31, 2022. Treasury also has published data collection and reporting requirements for SSBCI and has been developing key indicators to measure program performance.

Why GAO Did This Study

SSBCI was reauthorized by the American Rescue Plan Act of 2021 (ARPA) to support small businesses recovering from the economic effects of the COVID-19 pandemic. Congress appropriated $10 billion for the program.

The CARES Act and ARPA include provisions for GAO to monitor the federal government's efforts to respond to COVID-19. Among its objectives, this report examines Treasury's efforts to complete key implementation steps for SSBCI and manage program risks and measure program performance.

GAO reviewed relevant legislation and SSBCI documentation and analyzed Treasury data on allocated and disbursed funds. GAO also interviewed Treasury officials, representatives of four territories, and representatives of nongeneralizable samples of 12 states and three tribal governments—selected to represent a range of geographic regions and other characteristics.

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GAO recommends that Treasury fully incorporate certain best practices for project scheduling in its planning efforts for SSBCI. Treasury agreed to review options for incorporating such practices in line with GAO's recommendation.

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of the Treasury Treasury's Chief Recovery Officer should fully incorporate best practices for project scheduling related to sequencing and establishing the duration of activities, assigning resources to activities, and updating the schedule using actual progress into its planning processes for the SSBCI program. (Recommendation 1)
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

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