SSBCI provides direct support to  participants for use in programs designed to increase access to credit for  small businesses. As of  June 30, 2014, total qualified small business lending for SBLF  participants increased by $13.5 billion over an aggregate baseline of $33  billion. Three participants had used 1 percent or less of  their allocations. Treasury Has Enhanced Performance Measures and Evaluation but Has Not Effectively Communicated or Updated Its SBLF Evaluation

Treasury has taken steps to enhance performance measures and  evaluation, consistent with our prior recommendations. This  rigorous approach estimated the impact of the program and is a  significant improvement over its previous comparison assessments of the  SBLF program which did not attempt to isolate impact. In addition, Treasury has not updated the  results of its impact evaluation. For SSBCI, Treasury developed some  new performance measures and also developed targets for some of its  measures. In addition, officials stated they reached out to and received  input from internal agency subject-matter experts and experts from OMB  on the design of the planned SSBCI evaluation and have reached out to  congressional staff for feedback on its proposed design. In other words, when controlling for observable variables, the  evaluation estimates that 23 percentage points of the increase in small  business lending among SBLF banks is attributable to the program. Previous assessments,  however, did not adequately address observable differences between  SBLF and non-SBLF banks and did not attempt to isolate the impact of  the program. In its earliest approach to assess SBLF, Treasury has  compared lending among SBLF banks to small and medium-sized banks,  which suggested that SBLF banks increased business lending by 45  percentage points more than non-SBLF banks as of September 30, 2013  (see fig. Consistent with our  previous recommendation that Treasury set targets for selected  performance measures related to monitoring program performance,  Treasury established a target for its performance measure related to the  amount of private-sector leverage. Officials explained that  they used the stated program objectives in the Small Business Jobs Act  of 2010 to establish the additional measures and select the measures for  which they established targets. In  response to our prior recommendations, Treasury conducted a rigorous  impact evaluation, which is a distinct improvement over other analyses  using comparisons because it uses statistical methods to compare SBLF  banks to a carefully selected control group of banks that did not  participate in the program but are as similar as possible to the  participating SBLF banks along a broad set of characteristics. However, because Treasury presents its impact  evaluation in appendixes in its Lending Growth Reports rather than in the  body, users of Treasury’s lending reports may rely on less rigorous  analyses to inform their conclusions. Recommendations for Executive Action

To help ensure that Congress and stakeholders can easily access the  best information available to inform their conclusions about the  effectiveness of SBLF as a capital investment tool, we recommend that  the Secretary of the Treasury take the following two actions: (1) make the  results of its SBLF impact evaluation more prominent, such as by  discussing the results in the executive summary and body of future  Lending Growth Reports, and (2) update the results of its impact  evaluation in future reports, taking into consideration the costs and  benefits of doing so to determine the appropriate frequency of the  updates. Treasury provided written comments, which are reprinted in  appendix III. SSBCI Program Status

To examine the status of SSBCI, we analyzed Treasury program data on  participants’ allocation amounts and program types, and whether  participants developed new programs to participate in SSBCI or  expanded existing programs with SSBCI funds. We selected  participants based on the following criteria: (1) the percentage of SSBCI  funds participants had used as of March 31, 2014; (2) the percentage of  SSBCI funds transferred to participants; (3) the percent of SSBCI funds  recycled by participants; (4) the number of programs participants  implemented and whether the programs were new or existing; (5) the  number of program modifications; and (6) geographic dispersion. Treasury’s Efforts to Enhance Performance Measures and Evaluations

To assess the extent to which Treasury’s efforts enhance performance  measures and evaluations for SBLF and SSBCI, we interviewed agency  officials on the activities they conducted to implement recommendations  from our 2012 and 2013 reports and collected information related to these  activities. Appendix II: Summary of Treasury’s Efforts to Measure and Evaluate the Performance of the Small Business Lending Fund (SBLF) and State Small Business Credit Initiative (SSBCI)

Appendix II: Summary of Treasury’s Efforts to  Measure and Evaluate the Performance of the  Small Business Lending Fund (SBLF) and  State Small Business Credit Initiative (SSBCI)
Treasury has undertaken several efforts to measure and evaluate the  performance of SBLF and SSBCI, as shown in table 2.
Why GAO Did This Study

The Small Business Jobs Act of 2010 established the SBLF and SSBCI programs within Treasury to enhance credit opportunities for small businesses. SBLF aims to stimulate job growth by encouraging community banks and community development loan funds with assets of $10 billion or less to increase their small business lending. SSBCI provides direct funding to participants for programs that expand access to capital to small businesses.
The act mandates that GAO conduct an audit of both programs annually. GAO's prior audits examined program implementation, monitoring of performance and compliance, and usage of program funds. This fourth report examines (1) the status of SBLF and SSBCI and (2) the extent to which Treasury has enhanced efforts to measure and evaluate program performance. GAO analyzed the most recently available financial and performance information and interviewed officials from Treasury, nine states, one municipality, and trade associations. GAO selected the states and municipality based on usage of SSBCI funds, unique program characteristics, number of programs, and geographic dispersion, among other things.

What GAO Found

The Small Business Lending Fund (SBLF) and State Small Business Credit Initiative (SSBCI) have continued to support small business lending. According to the Department of the Treasury (Treasury), as of June 30, 2014, SBLF participants had increased their qualified small business lending by $13.5 billion over their aggregate 2010 baseline, and SSBCI participants had used 60 percent of the $1.5 billion in allocated funds.
In response to prior GAO recommendations, Treasury has taken steps to enhance performance measurement and program evaluation for SBLF and SSBCI but has not effectively communicated or updated its SBLF evaluation.
SBLF. Treasury conducted an impact evaluation, using statistical methods to compare lending among SBLF banks to a control group of non-SBLF banks that are as similar as possible to participating SBLF banks. This rigorous approach is a significant improvement over Treasury's previous analyses because it is designed to isolate the impact of the program and provides greater confidence that any differences observed between SBLF and non-SBLF banks are attributable to the program rather than to other factors. Treasury's impact evaluation estimated that 23 percentage points of the increase in small business lending among SBLF banks is attributable to the program. Although Treasury's previous, less rigorous analyses suggested that SBLF banks increased lending by as much as 45 percentage points more than non-SBLF banks, these analyses did not attempt to isolate the impact of SBLF from other factors. Treasury published its impact evaluation in appendixes in its three most recent Lending Growth Reports . However, it did not discuss the results of the evaluation in the summary or body of the reports and has not utilized the control group to update the results. Relevant resources on program evaluations indicate that the most rigorous evidence should be presented most prominently. Because Treasury has not effectively presented or updated its impact evaluation results, stakeholders may not benefit from the most rigorous and recent information on the effect of SBLF.
SSBCI. Treasury established targets for selected measures to monitor program performance and has taken steps to enhance the design of its planned program evaluation. Treasury established a target for one of its existing performance measures and also developed new performance measures and targets. For example, Treasury established a target for its existing performance measure on the amount of private-sector funds leveraged using SSBCI funds and created a new performance measure and target related to the amount of funds disbursed to states. To select and establish the new performance measures and targets, agency officials stated that they used the program objectives stated in the Small Business Jobs Act of 2010 and information from participants' annual 2013 reports. Treasury officials stated they have obtained input from experts on the design of their SSBCI program evaluation and have begun to reach out to congressional staff for feedback on the proposed design.

What GAO Recommends

Treasury should make the results of its SBLF impact evaluation more prominent and update its estimate of the impact of SBLF in future reports. In its written comments, Treasury agreed to implement both recommendations.