Small businesses are an important driver of the nation’s economic growth. The Small Business Administration (SBA) oversees programs that provide small businesses and entrepreneurs with counseling and training, access to capital and federal contracts, and disaster assistance. In addition, SBA provided more than $1 trillion in relief funds to assist small business affected by COVID-19.
However, there are a number of additional opportunities (as well as priority recommendations) to improve how SBA and other federal agencies implement and oversee programs to assist small businesses.
- As of July 2021, SBA had provided 3.8 million Economic Injury Disaster Loans, totaling $214.4 billion. For eligible applicants to this program, SBA also provided millions of grants totaling about $22.9 billion. However, SBA has not communicated important information about this program, such as expected processing times, to potential and actual program participants in an effective or timely manner.
Approval Rate for Economic Injury Disaster Loans by County, March 2020-Feburary 2021
- SBA administered two other programs to support businesses affected by COVID-19—the Shuttered Venue Operators Grant program, which was intended to help businesses in the arts and entertainment industries, and the Restaurant Revitalization Fund, which was intended to help businesses in the food service industry. SBA could improve its oversight of both these programs, including by managing potential fraud risks.
- Some of SBA’s COVID funds went to fraudsters—the Department of Justice charged hundreds of individuals and is investigating many more. SBA hasn't had timely access to some external data sources—such as tax data—that could help prevent fraud.
- SBA’s Disaster Loan Program helps small businesses, homeowners, and renters rebuild or replace damaged property or continue business operations during disasters. For example, after Hurricanes Harvey, Irma, and Maria in 2017, SBA accepted 340,000 disaster loan applications and approved 141,000—making over $7 billion in such loans. Loan processing averaged 18 days or less. However, SBA’s disaster plans lack an in-depth discussion of how to deal with risks (such as extended power outages) that could affect its ability to respond in a timely manner during disasters. Also, some communities may face barriers in accessing the recovery assistance that SBA and other federal agencies provide. SBA should coordinate with other agencies to design and establish processes across recovery programs that address access barriers and disparate outcomes.
- SBA’s State Trade Expansion Program seeks to help small businesses export their products to other countries. The program requires states to provide matching funds. However, SBA needs to develop a process to ensure that states are complying with this requirement. It also needs to evaluate the challenges some states face in using all their grant funds.
- Annual reporting by agencies on federal programs can help agencies meet their statutory responsibilities and inform congressional decision-making and oversight. As such, SBA should take steps to improve the timeliness of its annual reports to Congress for the Small Business Innovation Research and Small Business Technology Transfer programs—which aim to help small businesses bring new technologies to market—as well as the 8(a) Business Development Program, which is intended to help socially and economically disadvantaged small businesses.
- SBA is one of many federal agencies that provide assistance to tribal entities for economic development. SBA, in coordination with tribes, should establish a plan for periodically analyzing and publicly reporting the amount of economic development assistance provided by SBA to tribal entities. It should also use this analysis to identify opportunities to improve assistance to tribal entities.
- SBA's Microloan Program provides small businesses—including those owned by women, low-income, veteran, and minority entrepreneurs—with loans of up to $50,000 and technical assistance. However, SBA does not clearly define what qualifies an entrepreneur as low-income. As a result, SBA may not be able to determine whether this program really helps low-income borrowers.
- SBA works with Historically Black Colleges and Universities to provide entrepreneurial training and counseling for students and adjacent communities. However, SBA should collect additional information to measure the effectiveness of these efforts.
- The Small Business Act seeks to improve small businesses’ access to federal procurement contracts. The act provides for small-business set-asides (including for businesses owned by service-disabled veterans or women). Businesses have two options to certify their eligibility for the women-owned small business program: self-certifying at no cost or using the fee-based services of an approved third-party certifier. However, SBA performs minimal oversight of third-party certifiers and has yet to develop procedures that provide reasonable assurance that only eligible businesses obtain these set-asides.
- Certain federal contracts that go to large businesses must have small business subcontracting plans. Under these plans, contractors have to make a good-faith effort to offer subcontracting opportunities to small businesses. Agencies are supposed to notify SBA representatives about proposed contracts with these plans for possible review. However, agencies can’t always show whether that happened. Agencies also didn’t ensure that contractors submitted subcontracting reports, or that the reports were accurate.
- Federal agencies with procurement powers are required to establish an Office of Small and Disadvantaged Business Utilization to advocate for small businesses and fulfill a number of related requirements. However, agencies varied in how they complied with these requirements.