SBA requests 2007 budget

The requested budget calls for $624 million, which would enable the agency to provide a record $28 billion in loan and venture capital authority for SBA's flagship small-business financing programs.

SBA Administrator Hector V. Barreto said in a news release that the budget request is “fiscally responsible” and will provide the resources SBA makes available to small businesses.

“From a lending perspective, this builds on our successes over the last four years, when we reached more small businesses, including more women and minority entrepreneurs,” Barreto said. “As we have in the past, we also continue to strive to be efficient and innovative in our use of technology as we deliver financing, technical assistance, education and counseling, and contracting programs to millions of small-business owners.”

For technical assistance, SBA's budget requests about $87 million for Small Business Development Centers, $12 million for Women's Business Centers and $5 million for the SCORE counseling program.

As was the case in fiscal years 2005 and 2006, SBA's 7(a) loan guarantee program will be sustained by modest fees paid by lenders and borrowers and will not be subsidized by an appropriation, resulting in about $100 million in annual taxpayer savings.

Loan fees

The budget also suggests a fee on loans for more than $1 million to small businesses to offset lending administrative costs, but that fee would not have any effect on the majority of borrowers.

The budget request also proposes continued preferential loan terms to victims of disaster. But in order to contain the escalating program costs, the budget recommends keeping the current deeply subsidized rates for the first five years after the loan origination, during the critical rebuilding phase for those businesses. After five years, the rates would graduate to the rates on Treasury instruments of similar maturity. This proposal is expected to save $41 million in fiscal year-2007.

“These changes are necessary fiscal restraints that strike a balance between the needs of the SBA's customers and clients (and) the needs of all American taxpayers,” Barreto said.

“They will allow us to continue to operate more efficiently and effectively to meet the record demands of small businesses for financing, and of disaster victims for federal help over the long term.”

Other highlights of SBA's proposed budget for FY 2007:

o A record $17.5 billion in lending authority for the 7(a) loan guarantee program; and

o A record $7.5 billion in lending authority for the 504 certified development company program with a zero subsidy.