Congressional interest in the SBA's access to capital programs has increased in recent years, primarily because assisting small business in accessing capital is viewed as a means to enhance job creation and economic growth. Some have argued that the SBA should be provided additional resources to assist small businesses in acquiring capital necessary to start, continue, or expand operations and create jobs. They advocate business tax reduction, reform of financial credit market regulation, and federal fiscal restraint as the best means to assist small business economic growth and job creation. 111-5 , the American Recovery and Reinvestment Act of 2009 (ARRA), created or retained 785,955 jobs. During the 111 th Congress, several laws were enacted to enhance small business access to capital. 111-5 , provided the SBA an additional $730 million, including $375 million to temporarily subsidize SBA fees and increase the 7(a) loan guaranty program's maximum loan guaranty percentage from 85% on loans of $150,000 or less and 75% on loans exceeding $150,000 to 90% for all regular 7(a) loans. 111-240 , the Small Business Jobs Act of 2010, authorized the Secretary of the Treasury to establish a $30 billion Small Business Lending Fund (SBLF) ($4.0 billion was issued) to encourage community banks with less than $10 billion in assets to increase their lending to small businesses; $1.5 billion State Small Business Credit Initiative to provide funding to participating states with small business capital access programs; numerous changes to the SBA's loan guaranty and contracting programs; funding to continue the fee subsidies and the 7(a) program's 90% maximum loan guaranty percentage through December 31, 2010; and about $12 billion in tax relief for small businesses (see Table A-1 in the Appendix for a list of its key provisions). P.L. 111-322 , the Continuing Appropriations and Surface Transportation Extensions Act, 2011, authorized the SBA to continue its fee subsidies and the 7(a) program's 90% maximum loan guaranty percentage through March 4, 2011, or until available funding was exhausted, which occurred on January 3, 2011. 113-76 , the Consolidated Appropriations Act, 2014, increased the SBA's Small Business Investment Company (SBIC) venture capital program's authorization amount to $4 billion from $3 billion as a means to provide small businesses additional access to venture capital. The act also increased the 7(a) loan program's FY2015 authorization limit from $18.75 billion to $23.5 billion; and P.L. This report addresses a core issue facing the 116 th Congress: What, if any, additional action should the federal government take to enhance small business access to capital? It discusses the role of small business in job creation and retention, provides an assessment of the supply and demand for small business loans, and discusses recently enacted laws designed to enhance small business access to capital by increasing the supply of small business loans, the demand for small business loans, or both. It also examines recent actions concerning the SBA's budget and concludes with a brief overview of three legislative options available to address small business access to capital issues during the 116 th Congress: wait-and-see, enact additional programs, or reduce and consolidate existing programs. P.L. P.L. 112-106 , the Jumpstart Our Business Startups Act (JOBS Act), established "a regulatory structure for startups and small businesses to raise capital through securities offerings using the Internet through crowdfunding." The act also increased the supply of 504/CDC loans by expanding the projects eligible for refinancing under the program in any fiscal year in which the refinancing program and the 504/CDC program as a whole do not have credit subsidy costs. 115-31 , the Consolidated Appropriations Act, 2017, increased the 7(a) program's authorization limit to $27.5 billion for FY2017 from $26.5 billion in FY2016 and P.L. 115-141 , the Consolidated Appropriations Act, 2018, increased the 7(a) program's authorization limit to $29.0 billion for FY2018. P.L. P.L. P.L. P.L. Others worry about the long-term adverse economic effects of spending programs that increase the federal deficit. During the 113 th and 114 th Congresses, Congress approved legislation that increased the annual authorization amount for the SBA's SBIC program to $4 billion from $3 billion, authorized and made permanent the Obama Administration's waiver of the up-front, one-time loan guaranty fee for veteran loans under the SBAExpress loan guaranty program, expanded the projects eligible for refinancing under the 504/CDC loan guarantee program, and increased the SBIC program's family of funds limit (the amount of outstanding leverage allowed for two or more SBIC licenses under common control) to $350 million from $225 million.
The U.S. Small Business Administration (SBA) administers several programs to support small businesses, including loan guaranty and venture capital programs to enhance small business access to capital; contracting programs to increase small business opportunities in federal contracting; direct loan programs for businesses, homeowners, and renters to assist their recovery from natural disasters; and small business management and technical assistance training programs to assist business formation and expansion. Congressional interest in these programs has increased in recent years, primarily because assisting small business is viewed as a means to enhance economic growth.
Some have argued that the SBA should be provided additional resources to assist small businesses in acquiring capital necessary to start, continue, or expand operations and create jobs. Others worry about the long-term adverse economic effects of spending programs that increase the federal deficit. They advocate business tax reduction, reform of financial credit market regulation, and federal fiscal restraint as the best means to assist small business economic growth and job creation.
Over the past several Congresses, several laws were enacted to assist small businesses, including
P.L. 111-5, the American Recovery and Reinvestment Act of 2009 (ARRA), provided the SBA an additional $730 million, including $375 million to temporarily subsidize SBA fees and increase the 7(a) loan guaranty program's maximum loan guaranty percentage to 90%. P.L. 111-240, the Small Business Jobs Act of 2010, authorized numerous changes to the SBA's loan guaranty and contracting programs; provided $510 million to continue the SBA's fee subsidies and 90% maximum loan guaranty percentage through December 31, 2010; and provided about $12 billion in tax relief for small businesses. P.L. 111-322, the Continuing Appropriations and Surface Transportation Extensions Act, 2011, continued the SBA's fee subsidies and the 7(a) program's 90% maximum loan guaranty percentage through March 4, 2011, or until available funding was exhausted, which occurred on January 3, 2011. P.L. 112-106, the Jumpstart Our Business Startups Act, established a regulatory structure for startups and small businesses to raise capital through securities offerings using the Internet through crowdfunding. P.L. 113-76, the Consolidated Appropriations Act, 2014, increased the annual authorization amount for the SBA's Small Business Investment Company (SBIC) venture capital program to $4 billion from $3 billion. P.L. 114-38, the Veterans Entrepreneurship Act of 2015, authorized and made permanent the SBA's practice of waiving the SBAExpress loan program's one-time, up-front loan guaranty fee for veterans and increased the 7(a) loan program's FY2015 authorization limit from $18.75 billion to $23.5 billion. P.L. 114-113, the Consolidated Appropriations Act, 2016, expanded the projects eligible for refinancing under the 504/CDC loan guaranty program in any fiscal year in which the refinancing program and the 504/CDC program as a whole do not have credit subsidy costs, increased the SBIC program's family of funds limit (the amount of outstanding leverage allowed for two or more SBIC licenses under common control) to $350 million from $225 million, and increased the 7(a) loan program's authorization limit to $26.5 billion for FY2016. P.L. 115-31, the Consolidated Appropriations Act, 2017, increased the 7(a) program's authorization limit to $27.5 billion for FY2017. P.L. 115-141, the Consolidated Appropriations Act, 2018, increased the 7(a) program's authorization limit to $29.0 billion for FY2018.
This report addresses a core issue facing the 116th Congress: What, if any, additional action should the federal government take to enhance small business access to capital? It discusses the role of small business in job creation and retention, then provides an assessment of the supply and demand for small business loans and recently enacted laws designed to enhance small business access to capital by increasing either the supply of small business loans or the demand for small business loans, or both. It also examines recent actions concerning the SBA's budget and concludes with a brief overview of three legislative options available to address small business access to capital issues during the 116th Congress: wait-and-see, enact additional programs, or reduce and consolidate existing programs.