	Background

SSBCI provides direct support to participants for use in programs  designed to increase access to credit for small businesses. Treasury  has procedures for participants to apply for modifications and for its  processing of modification approval requests. SSBCI Participants Have Used Funds at Varying Rates and a Number of Challenges Have Been Addressed

Between June 30, 2012, and June 30, 2013, SSBCI participants nearly  quadrupled their overall use of SSBCI funds, but individual participants  continue to use their funds at varying rates and for different types of  programs. While initial challenges have mostly  been addressed, participants continue to face ongoing challenges with  using SSBCI funds, including reluctance from large banks to participate in  the program. Variation among SSBCI participants’ programs. Treasury Uses Performance Measures to Manage SSBCI but Has Not Set Targets for All Measures

In 2012 we reported that Treasury had established performance  measures for both the timeliness of program administration and the  monitoring of program performance, which are listed in table 1. First, Treasury officials  stated that they use the measure on the amount of SSBCI funds  participants have used to adjust staff allocations, which has helped them  to improve efficiency in program operations. To address these issues,  Treasury has started to determine how it will evaluate the performance of  SSBCI at the end of the program in 2017. In addition, because the SSBCI program is included as one of  the programs that will help to meet a Cross-Agency Priority goal,  obtaining input from the agencies involved in the working group on  increasing access to capital for entrepreneurs and small businesses (Ex- Im, SBA, and USDA) could help to ensure that the evaluation is useful in  measuring progress toward that goal. Further, our guidance on designing  program evaluations encourages agencies to obtain input from external  stakeholders, such as Congress, that are expected to be interested in the  evaluation results. By seeking input from Congress on the types of  information in which it is interested, Treasury can help ensure that it  designs an evaluation that is useful for decision makers. Treasury officials stated that it did not develop  these targets because, among other things, factors outside of the  program’s control can have a significant impact on SSBCI’s outcomes. Targets for selected performance measures could help  Treasury better manage SSBCI by identifying performance gaps and  highlighting program areas that may need additional attention. In its  written comments, Treasury agreed with our recommendations and stated  that it has begun to take steps to implement both of them. Appendix I: Objectives, Scope, and Methodology

Our objectives were to examine the extent to which (1) State Small  Business Credit Initiative (SSBCI) participants have used their SSBCI  allocations and faced challenges in using the funds, (2) the Department of  the Treasury (Treasury) and program stakeholders have used outreach  activities to promote use of the program and assessed the success of  these efforts, and (3) Treasury has used performance measures and  program evaluation to manage SSBCI. To examine the extent to which SSBCI participants faced challenges in  using SSBCI funds, we reviewed reports from Treasury’s Office of the  Inspector General (OIG) on participants’ usage of SSBCI funds; our 2011  and 2012 reports on SSBCI; and Treasury’s policies and procedures,  including its policies on disbursing subsequent tranches of SSBCI funds  and terminating the availability of participants’ SSBCI allocations.addition, we interviewed officials from Treasury and nine SSBCI   In  participants: Arizona; Iowa; Maryland; Missouri; Montana; New York; City  of Carrington, North Dakota; Vermont; and Virginia. We identified relevant criteria  on setting targets for performance measures in the federal internal control  standards and leading practices for federal agencies’ performance  management. Finally, we reviewed the Small Business Jobs Act of  2010 to identify requirements for Treasury to evaluate SSBCI.
Why GAO Did This Study

The Small Business Jobs Act of 2010 created SSBCI within Treasury. The program provides direct funding to participants for programs that expand access to capital for small businesses. The act mandates that GAO conduct an annual audit of the program. GAO's first two reports examined Treasury's implementation of SSBCI and its processes for monitoring compliance and procedures for evaluating and communicating program outcomes. This third report examines, among other things, the extent to which (1) participants have used their SSBCI allocations and faced challenges in using the funds, and (2) Treasury has used performance measures and program evaluation to manage SSBCI. GAO reviewed Treasury's SSBCI policies and procedures and participants' data on fund usage and interviewed officials from Treasury, eight states, and one municipality. GAO selected the states and municipality based on usage of SSBCI funds, the number of programs they implemented, and geographic dispersion, among other things.

What GAO Found

As of June 30, 2013, State Small Business Credit Initiative (SSBCI) participants--states, territories, and municipalities--had used $549 million of the $1.5 billion the Department of the Treasury (Treasury) allocated to them, nearly four times the amount used as of June 30, 2012. However, the rates at which participants have used funds continue to vary, as shown below. While initial challenges generally have been addressed, others remain. Participants' challenges with using funds at the start of the program resulted from some program policies not being finalized and low demand for some program types, among other things. Treasury and participants have since addressed many of these issues, but according to agency officials and others, participants will likely continue to face some challenges in using SSBCI funds. For example, some large lenders have been reluctant to partner with SSBCI participants because the variation in participants' programs makes it difficult for lenders to implement the program on a national basis, which has limited the program's reach into the small business lending market.
Treasury uses performance measures to manage SSBCI. For example, Treasury uses performance measures to adjust staff allocations and to identify participants that may need additional assistance. Although Treasury has set targets for program administration measures (for example, how long it takes the agency to approve participants' requests to modify their programs), it has not set targets for performance (for example, the amount of funds used over time). Federal internal control standards and performance management leading practices encourage agencies to set targets, where appropriate. Targets could help Treasury identify program areas needing improvement. Treasury has also recently started to determine how it will evaluate SSBCI's effectiveness and plans to form a working group of participants to help design the format of the evaluation. GAO guidance on designing evaluations encourages agencies to obtain input from external stakeholders, including Congress, that are expected to be interested in the results. By seeking input from external stakeholders early in the design phase, Treasury can help ensure that it designs an evaluation that is useful for decision makers and other agencies working to promote small business credit access.

What GAO Recommends

GAO recommends that Treasury set targets for selected measures to track SSBCI's performance and seek input from Congress and other federal agencies on what information will be useful in assessing SSBCI's effectiveness as Treasury designs its program evaluation. Treasury agreed with both of these recommendations.