SSBCI is designed to strengthen state programs that support  private financing to small businesses and small manufacturers that,  according to Treasury, are not getting the loans or investments they need  to expand and to create jobs. The act allowed Treasury to provide SSBCI funding for two state program  categories: capital access programs (CAP) and other credit support  programs (OCSP). In addition, each applicant was required to  demonstrate a “reasonable expectation” that its participating programs,  taken together, would generate an amount of private financing and  investment at least 10 times its SSBCI funding (that is, a leverage ratio of  10:1) by the program’s end in December 2016. Most States Are Participating in SSBCI and Plan to Use the Funds to Support a Variety of Programs

Nearly all of the states eligible for SSBCI funds submitted applications to  Treasury. 3). 4). Venture capital programs are to receive the largest amount of  SSBCI funds of any program type. States indicated that they expect SSBCI funds to result in a total of $18.7  billion in new private financing and investment throughout the life of the  program. Treasury’s Evolving Processes Have Created Some Delays

		Treasury Revised Its Application Guidance and Review Procedures to Clarify Requirements and Thoroughly Reviewed Selected Applications

With the enactment of the Small Business Jobs Act of 2010 on  September 27, 2010, Treasury was tasked with quickly starting up an  SSBCI program office and developing processes and guidance to  implement this new program. Some states reported that they delayed submitting their applications until  Treasury’s final application guidance was issued. According to our survey  results, 37 states did not submit their final applications for SSBCI funds  until June 2011, the month that applications were due. However, Treasury did not begin processing state requests for  their second installment of funds until November 2011. Treasury Is Implementing a Plan to Monitor Recipient Compliance with Program Requirements

Treasury is implementing a multi-step plan to monitor recipient  compliance with SSBCI program requirements. Treasury officials told us they plan to  sample states’ transaction-level data to help ensure the accuracy of state  reporting. The Treasury Inspector General recently made recommendations to  further enhance Treasury’s oversight of SSBCI recipients. Treasury Is in the Process of Developing Performance Measures for SSBCI

Treasury officials told us that they have not yet established performance  measures for the SSBCI program. Although Treasury plans to rely  primarily on the department’s overall performance measures in evaluating  the SSBCI program, officials noted they are considering several draft  performance measures to assess the efficiency of the program. The importance of performance measures for gauging the progress of  programs and projects is well recognized. Among other criteria,  we have identified nine key attributes of successful performance  measures. Given the preliminary nature of Treasury’s potential performance  measures, assessing whether the measures will reflect the attributes of  successful performance measures would be premature. Nevertheless,  considering these attributes as it works to finalize SSBCI-specific  performance measures could help Treasury to develop robust measures. Until such measures are developed and implemented, Treasury will not  be able to determine whether the program is achieving its goals. Recommendation for Executive Action

We are making one recommendation to Treasury to improve its  implementation and oversight of the SSBCI program as follows:
To help ensure that the performance measures for the SSBCI  program are as robust and meaningful as possible, we recommend  that the Secretary of the Treasury direct the SSBCI Program Manager  to consider key attributes of successful performance measures as the  program’s measures are developed and finalized. Appendix I: Objectives, Scope, and Methodology

To determine which states applied for and received State Small Business  Credit Initiative (SSBCI) funds and the planned uses of the funds, we  developed a Web-based questionnaire to collect information from the 54  states and territories that filed a Notice of Intent to Apply for SSBCI funds  with the Department of the Treasury (Treasury) by the November 26,  2010 deadline. By September  14, 2011, we had received completed questionnaires from 54 states and  territories, for a 100 percent response rate. To review Treasury’s efforts to measure whether the SSBCI program  achieves its goals of increasing small business investment and creating  jobs, we discussed with Treasury their proposed performance metrics for  the SSBCI program.
Why GAO Did This Study

Congress enacted the Small Business Jobs Act of 2010 in September 2010 in response to concerns that small businesses have been unable to access capital that would allow them to create jobs. Among other things, the act aims to stimulate job growth by establishing the $1.5 billion State Small Business Credit Initiative (SSBCI) within the Department of the Treasury (Treasury) to strengthen state and territory (state) programs that support lending to small businesses and small manufacturers. Participating states are expected to leverage the SSBCI funds to generate an amount of private financing and investment at least 10 times the amount of their SSBCI funds (that is, a leverage ratio of 10:1). The act also requires GAO to audit SSBCI annually. Accordingly, this report examines (1) which states applied for SSBCI funds and the planned uses of those funds; (2) Treasury's implementation of SSBCI; and (3) Treasury's efforts to measure whether SSBCI achieves its goals. GAO surveyed state SSBCI applicants (for a 100 percent response rate), analyzed data from Treasury case files, and interviewed officials from Treasury and eight participating states.

What GAO Found

Fifty-four of the 56 eligible states and territories submitted applications requesting a total of about $1.4 billion in SSBCI funds. According to GAO's survey of SSBCI applicants, states plan to support 153 lending programs nationwide with SSBCI funds, 69 of which are new programs being created because of the SSBCI program. These lending programs include a variety of capital access programs and other credit support programs, with venture capital programs receiving the largest amount of funds among eligible program types. SSBCI applicants anticipate that their SSBCI funds will allow them to leverage up to $18.7 billion in new private financing and investment. Some applicants, however, expressed concern that achieving a 10:1 leverage ratio of private financing and investment to program funds could ultimately prove challenging, especially for states creating new programs. Treasury's procedures for SSBCI have evolved throughout its implementation of the program. Treasury began approving applications for SSBCI funds in January 2011 in accordance with guidance it issued in December 2010. However, Treasury did not finalize its application guidance and review procedures until April and May 2011, respectively. Some states indicated they delayed submitting their applications until Treasury's guidance was finalized, with 37 states not submitting an application until June 2011--the deadline for applications. In addition, Treasury did not finalize its procedures for disbursing subsequent installments of funds to states until November 2011, citing potential different legal interpretations of the act's disbursement requirements as the cause for the delay. Treasury is implementing a plan to monitor states' compliance with program requirements, which will include sampling transaction-level data to evaluate the accuracy of the states' annual reports. The Treasury Inspector General made recommendations in August 2011 to improve the tools Treasury will use to monitor state compliance. Treasury has not yet established performance measures for the SSBCI program. Treasury officials noted they are considering several draft performance measures to assess the efficiency of the program. However, Treasury has not finalized its plans for measuring the SSBCI program's performance. GAO and others have recognized the importance of using performance measures to gauge the progress of programs. GAO has also identified key attributes of successful performance measures. Given the preliminary nature of Treasury's potential performance measures, assessing whether the measures reflect the attributes of successful performance measures is premature. Nonetheless, considering these attributes as it works to finalize the SSBCI-specific performance measures could help Treasury to develop robust measures. Until such measures are developed and implemented, Treasury will not be able to determine whether the program is achieving its goals.

What GAO Recommends

GAO recommends that Treasury direct the SSBCI Program Manager to consider key attributes of successful performance measures when developing and finalizing SSBCI-specific performance measures. Treasury concurred with the report's recommendation.