1). 2). The Complementary Nature of Some SBA and Rural Development Programs Provides a Rationale for Collaboration

Some SBA loan programs and Rural Development business programs are  complementary, providing a rationale for the agencies to collaborate. Both  types of programs can fund start-up and expansion projects, equipment  purchases, and working capital to rural borrowers and, in some cases, the  eligibility requirements for the programs are comparable. Collaboration Allows SBA and Rural Development to Leverage Each Agency’s Strengths and Increase Financing Options in Rural Areas

According to SBA and Rural Development officials who are engaged in  collaborative relationships, collaboration allows the agencies to leverage  the unique strengths of each agency’s programs and increase the number  of financing options to better promote economic development. In other states we visited, such as Nebraska and New Mexico,  SBA and Rural Development worked with each other less frequently and  on a more informal basis. A Few SBA and Rural Development Field Offices Have Established Formal Collaborative Efforts

Our site visits and the results of the query of field offices identified a few  SBA and Rural Development offices, such as those in North Dakota, Ohio,  and Washington state that appeared to be collaborating frequently. In New Mexico, SBA  and Rural Development officials reported conducting joint monthly  meetings and community outreach sessions, or “Access to Capital” forums. SBA and Rural Development have Collaborated with Each Other and Other Agencies in the Past

SBA and Rural Development have collaborated in the past with each other  and with other agencies. As discussed previously, based on the results of each agency’s query, we  found a few locations where SBA and Rural Development are involved in  frequent and formal collaborative efforts, some locations where the  agencies are involved in informal efforts, and many locations where the  agencies appear not to be working together at all. However, SBA and Rural Development’s  collaborative efforts to date have been sporadic and mostly self-initiated  by specific officials in each agency’s field offices. Officials of each agency  worked together frequently in some locations and infrequently in others. However, when comparing these past efforts with our  criteria for effective interagency collaboration, we found that the agencies  could take further steps to facilitate collaboration by establishing and  implementing a formal approach. Our previous work in this area shows that adopting  key practices—such as defining and articulating a common outcome;  specifying roles and responsibilities; establishing a mechanism to monitor,  evaluate, and report on results; and reinforcing agency accountability for  collaborative efforts—can help federal agencies enhance and sustain their  collaborative efforts. Such an approach can help SBA and Rural  Development to effectively leverage each other’s unique strengths to help  improve small business opportunities and promote economic development  in rural communities. Recommendations for Executive Action

To improve SBA and Rural Development’s collaborative efforts, we  recommend that the Administrator of SBA and Secretary of Agriculture:  take steps to adopt a formal approach to encourage further collaboration  in support of common economic development goals in rural areas. To determine the extent to which SBA and Rural Development’s primary  loan and business programs are complementary and to identify the  rationale for SBA and Rural Development to collaborate, we reviewed the  mission and structure of SBA and Rural Development offices.
Why GAO Did This Study

The Small Business Administration (SBA) and the Rural Development offices of the U.S. Department of Agriculture both work in rural areas to foster economic development by promoting entrepreneurship and community development. This report discusses (1) the complementary nature of some SBA and Rural Development programs and the extent to which it provides a rationale for the agencies to collaborate, (2) past and current efforts by SBA and Rural Development to work together and with other agencies, and (3) opportunities for the agencies to improve their collaborative efforts. In completing its work, GAO analyzed agency documentation and prior reports on collaboration, conducted site visits at locations where SBA and Rural Development were working together, and interviewed agency and selected economic development officials.

What GAO Found

The complementary nature of some SBA loan programs and Rural Development business programs provides a rationale for the agencies to collaborate. SBA and Rural Development have similar economic development missions, and their programs provide financing for similar purposes, including start-up and expansion projects, equipment purchases, and working capital for small businesses. According to SBA and Rural Development officials currently involved in collaborative working relationships, working together allows the agencies to leverage the unique strengths of each other's programs, increase the number of financing options available to borrowers in rural areas, and ultimately better promote economic development in these areas. However, collaboration between SBA and Rural Development to date has been sporadic and mostly self-initiated by officials in field offices. GAO found that the extent of the collaborative efforts and use of formal agreements such as memorandums of understanding (MOU) varied across locations. The two agencies worked together frequently in a few locations, infrequently in others, and not at all in many locations. The SBA and Rural Development offices in North Dakota that GAO visited collaborated frequently and had formal agreements in place. Officials there established an MOU with other community development organizations to provide "one-stop" shopping assistance to borrowers at a single location. The SBA and Rural Development offices in Nebraska and New Mexico that GAO visited worked with each other less frequently and more informally, conducting community outreach sessions and holding periodic meetings and joint training sessions. But many other locations--about half of SBA and Rural Development's field offices--did not appear to be collaborating at all or to have an established framework to facilitate collaboration. Opportunities exist for SBA and Rural Development to improve their collaborative efforts. In an October 2005 report, GAO identified key practices that could help federal agencies enhance and sustain their collaborative efforts. In comparing SBA and Rural Development's efforts with these criteria, GAO found that the agencies could take steps to improve their efforts by implementing a more formal approach to encourage collaboration. This approach would provide the agencies with a mechanism that reflected several of GAO's key practices--to define and articulate a common outcome, agree on roles and responsibilities, monitor key progress and results, and reinforce accountability for collaborative efforts. With such an approach, SBA and Rural Development could more effectively leverage each other's unique strengths and help to improve small business opportunities in rural communities.