Introduction

Other than laws which temporarily extended the agency's authorizations under existing terms, Congress has not passed legislation to reauthorize the Small Business Administration (SBA) since 2004.¹ Unlike certain other federal agencies or programs, whose authorizations have sunset dates that require periodic reauthorization, Congress has permanently authorized SBA and the vast majority of its programs. While this means SBA and most of its programs do not require reauthorization to continue operating, taking up reauthorization legislation affords Congress the opportunity to consider certain policy issues related to SBA and small businesses, alter aspects of SBA program operations, and update authorizations of appropriations, many of which are expired for various SBA programs.²

Calls for Congress to pass a comprehensive reauthorization of SBA have increased in frequency with some organizations and interest groups over the past few years.³ Some Members of Congress have also expressed interest in reauthorizing the agency.⁴ Members of the 117^th Congress introduced the Small Business Administration Reauthorization and Modernization Act of 2022 (S. 5220), which would have modified and reauthorized various SBA programs. In a statement, the bill's sponsor, then-Chair of the Senate Committee on Small Business and Entrepreneurship, Senator Benjamin Cardin, said, "The SBA is long due for a reauthorization."⁵

This report summarizes the authorization status of SBA and its programs and examines selected policy issues Congress may want to explore. Appendix A provides a brief overview of the SBA and its main areas of activity.

Authorization Status of SBA and SBA Programs

By authorizing an agency or program, Congress provides the legal authority for such agency to operate or administer a program or engage in a certain activity. Authorization—a term applied in congressional procedure to a statutory provision—establishes, continues, or modifies a federal agency or program. Authorization may establish policies and restrictions as well as address organizational or administrative matters. Authorizations do not have to be limited to a specific timeframe; they may be either permanent or include "sunset" provisions requiring periodic review and reauthorization. An authorization would be considered permanent if it does not include a specific expiration date.⁶

The Small Business Act (P.L. 83-163, as amended; 15 U.S.C. §§631 et seq.) established SBA. Both the Small Business Act and the Small Business Investment Act of 1958 (Small Business Investment Act; P.L. 85-699, as amended; 15 U.S.C. §§661 et seq.) contain language authorizing most SBA programs.

Nearly all SBA programs have permanent authorization. Congress, however, may still choose to pursue a reauthorization either of an entire law (such as the Small Business Act), an agency (such as SBA), or individual program or programs. Such a reauthorization—while not necessary to keep a program or agency running—gives Congress the opportunity to change aspects of how a program or agency operates.

Authorizing legislation sometimes includes language explicitly authorizing appropriations for one or more activities or programs for one or more fiscal years. Such language can be said to have expired after the last fiscal year that an authorization of appropriations appears in statute. Congress may also use reauthorization to extend a program or agency's authorization of appropriations even if the underlying authorization for an agency or program is permanent. Authorizations of appropriations do not provide funding for a program or agency, but instead provide a recommended level for appropriations to be enacted in subsequent annual appropriations bills, which is generally the approach Congress has taken to fund SBA. An authorization of appropriations establishes a procedural upper limit for appropriations, but does not require that appropriations be made. Additionally, Congress regularly appropriates money to programs without a corresponding authorization of appropriations.

Congress can and has reauthorized or amended programs that have been permanently authorized in standalone legislation, as opposed to providing a reauthorization for a host of programs in one bill, or has reauthorized an entire agency. For example, in the 117^th Congress, the House passed the STEP Improvement Act of 2022 (H.R. 8844). The bill dealt with SBA's State Trade Expansion Program (STEP), which Congress permanently authorized in the Trade Facilitation and Trade Enforcement Act of 2015 (P.L. 115-125). However, STEP's authorization of appropriations ended in FY2020. Therefore, while Congress authorized STEP to operate on a permanent basis, H.R. 8844 would have extended STEP's authorization of appropriations (through FY2026) while also mandating additional data collection and other programmatic changes.

SBA Programs Lacking Permanent Authorization

Congress has provided permanent statutory authority for most but not all SBA programs. The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs—in addition to six associated pilot programs and the affiliated Federal and State Technology (FAST) program—are the only SBA non-pilot programs with authorizations that sunset.⁷

Congress may still provide appropriations for programs whose authorizations have expired. For example, Congress has routinely done so with the FAST program, whose program authorization expired at the end of FY2005.⁸ Table 1 presents SBA programs with expired program authorizations.

Recent Reauthorization Attempts

Members of both the 116^th and 117^th Congresses introduced legislative proposals for comprehensive SBA reauthorization. Neither attempt resulted in an enacted bill.

116^th Congress

In the 116^th Congress, the Senate Committee on Small Business and Entrepreneurship (Senate Committee) conducted a significant amount of activity on reauthorizing SBA. The Senate Committee held eight hearings, organized by SBA's areas of major responsibilities, between April and June 2019.

Then-Senate Committee Chair Senator Marco Rubio released a Chairman's Mark (a draft legislative proposal) titled the SBA Reauthorization and Improvement Act of 2019, on July 18, 2019.⁹ The Chairman's Mark would have changed several SBA programs and extended the authorizations of appropriations for those programs, including

• the Small Business Investment Company (SBIC) program;
• the 504 loan guaranty program;
• the State Trade Expansion Program (STEP);
• the 7(a) loan guaranty program;
• the Microloan program;
• the Small Business Development Centers (SBDC) program; and
• the Women's Business Centers (WBC) program.

In addition, the Chairman's Mark also would have made various changes to SBA's small business contracting preference programs, including increasing the maximum dollar amount of a federal contract for which manufacturing contracts may be awarded without competition (as a sole-source award);¹⁰ requiring SBA to commission an independent study to determine which industries are underrepresented by women;¹¹ and expanding the definition of Historically Underutilized Business Zones (HUBZones) to include federal Opportunity Zones.¹² The Chairman's Mark also would have given the SBIR/STTR programs and the Community Advantage Pilot Program permanent statutory authorization.

The Senate Committee scheduled a business meeting to mark up the Chairman's Mark for July 24, 2019. Disagreements regarding the content of the bill led to the markup being postponed on the day of the hearing. According to press statements released by Chair Rubio and then-Ranking Member Senator Ben Cardin, the disagreements related to regulatory reform and the role of SBA's Office of Advocacy.¹³ No markup ultimately took place.

117^th Congress

Near the end of the 117^th Congress, then-Senate Committee Chair Cardin introduced the Small Business Administration Reauthorization and Modernization Act of 2022 (S. 5220). The bill rolled up 11 other bills introduced in the 117^th Congress into one SBA reauthorization bill.

S. 5220 would have changed how several SBA programs operated and extended the authorizations of appropriations for those programs, including

• STEP;
• the SBDC program; and
• the WBC program.

In addition, S. 5220 would have made various changes to SBA's small business contracting programs, including increasing the maximum dollar amount of various types of federal contracts for which a contract may be awarded without competition; increasing the amount of time a small business may stay in the 7(j) technical assistance program; and requiring that small businesses certified under the 8(a) contracting program submit to SBA a number of business-related documents.

S. 5220 also would have given the Community Advantage Pilot Program permanent statutory authorization and authorized a number of new programs, including a pilot program to award grants to organizations to create or support existing entrepreneurial development programs for formerly incarcerated individuals.

S. 5220 was referred to the Senate Committee but did not advance.

Selected Reauthorization Issues

This section discusses selected issues that may be addressed by reauthorization, either because they have previously drawn interest from Congress or other interest groups. Those issues are

• administration and oversight of SBA's COVID-19 pandemic relief programs;
• effectiveness of SBA's technical assistance programs;
• data and reporting on federal contracts with small businesses;
• responsibilities of SBA's Office of Advocacy;
• SBA's assistance to disadvantaged entrepreneurs; and
• status of the Community Advantage Pilot Program.

Administration and Oversight of SBA's COVID-19 Pandemic Relief Programs

SBA's pandemic relief programs resulted in a significant increase in the agency's appropriations and responsibilities. Congress appropriated over $1 trillion in FY2020 and FY2021 for SBA to implement its pandemic relief programs. SBA's appropriation in FY2019 was $715 million; in FY2020, SBA's appropriation was $762 billion. In one day—April 10, 2020—SBA received over 4.5 million applications for its COVID Economic Injury Disaster Loan (EIDL) program. Before the pandemic, SBA received an average of 65,000 disaster loan applications (which included SBA's non-COVID EIDL program as well as a few other types of disaster loans) each year.¹⁴

Oversight and administration of SBA's pandemic relief programs remain an issue of congressional interest. In its report on SBA's largest management challenges for FY2023, SBA's Office of Inspector General (OIG) wrote: "managing COVID-19 stimulus lending is the greatest overall challenge facing SBA, and it may likely continue to be for many years."¹⁵ Over just a few months in 2020, SBA received approximately twice as many COVID EIDL applications as it had made approvals for all disaster loans (including non-COVID EIDLs and a few other types of disaster loans) over the previous seven decades.¹⁶ SBA has serviced or will service almost 3.6 million COVID EIDLs in FY2023 and FY2024.¹⁷ As of May 2022, SBA was servicing approximately four million pandemic relief loans (from the Paycheck Protection Program (PPP) and COVID EIDLs) worth approximately $390 billion—more than 43 times SBA's pre-pandemic loan portfolio. Despite the increased workload, SBA OIG has warned that SBA does not have "the staff or infrastructure" to adequately manage the volume of loans.¹⁸

Policies and Processes to Address Fraud and Fraud Prevention Concerns

Congress may choose to exercise its oversight function specifically with regard to SBA's pandemic relief programs to ensure that SBA itself provides sufficient investigation and oversight during the remaining period of the programs' administration. SBA's two largest pandemic relief programs, PPP and COVID EIDL, were both targeted by individuals and organizations attempting to defraud the programs. Although exact numbers vary, many fraudulent actors were successful. A June 2023 SBA OIG report found that SBA disbursed over $200 billion in potentially fraudulent COVID EIDLs, Targeted and Supplemental Targeted EIDL Advances (payments to COVID EIDL applicants that did not need to be repaid), and PPP loans.¹⁹ A separate report from SBA, issued the same day as the SBA OIG report, estimated the agency issued $36 billion of fraudulent pandemic relief loans and grants.²⁰ In the 117^th Congress, a number of bills addressing fraud in SBA's pandemic relief programs became law. For example, the COVID-19 EIDL Fraud Statute of Limitations Act of 2022 (P.L. 117-165) and the PPP and Bank Fraud Enforcement Harmonization Act of 2022 (P.L. 117-166) increased to 10 years the statute of limitations for criminal charges and civil enforcement of fraud related to COVID EIDL and PPP, respectively.

In considering SBA reauthorization, Congress may consider additional measures such as assessing SBA OIG's role in the oversight and investigations related to the pandemic relief programs and related funding questions. In addition, the Biden Administration's FY2024 budget request proposed a base appropriation of $47.7 million for the SBA OIG and an additional $1.6 million transfer from SBA's Disaster Loans Program account; in FY2023, SBA OIG's base appropriation was $32.0 million (with a further $1.6 million in transfers).²¹ SBA OIG's budget request for FY2024 was $63.3 million, which the office argued was necessary to oversee SBA's expanded loan portfolio and manage the extended statutes of limitation for PPP and COVID EIDL fraud.²² The Biden Administration's March 2023 anti-fraud proposal also recommended at least $100 million in supplemental funding for SBA OIG "for the express purpose of long-term hiring of investigators to pursue special cases of organized pandemic fraud."²³ Congress could also consider whether additional costs related to additional investigation and oversight may outweigh the benefits of recouping funds from fraudulent actors.

Congress may also consider whether to create a statutory framework for fraud prevention within SBA. A May 2023 Government Accountability Office (GAO) report found that, for all its pandemic relief programs, SBA did not adequately use available information to help prevent fraud. For example, SBA did not cross-check PPP and COVID EIDL applicants' information to determine if a potentially fraudulent applicant for one program was also applying for the other program. GAO found that this partially resulted from SBA lacking a centralized, designated entity to design and oversee fraud prevention.²⁴ SBA OIG has issued similar findings, for example noting that "the need to establish and utilize effective fraud, eligibility, and compliance controls while reviewing for loan eligibility, forgiveness, and guaranty purchase remains an ongoing challenge."²⁵

In April 2022, SBA announced the creation of a Fraud Risk Management Board (FRMB). According to SBA, the FRMB "was established to serve as the designated anti-fraud entity responsible for oversight and coordination of SBA's fraud risk prevention, detection, and response activities."²⁶ In an SBA authorization, Congress may choose to codify the FRMB, thus making the office permanent. By codifying the FRMB, Congress can spell out the FRMB's responsibilities and, therefore, provide standards for use to assess its effectiveness.²⁷ Additionally, the FRMB appears to be outside the SBA OIG. Among SBA OIG's responsibilities is "detecting and deterring fraud."²⁸ Congress may be interested in whether and how the FRMB aligns or overlaps with SBA OIG's mission, and whether codifying the FRMB could address these questions.

Effectiveness of Technical Assistance Programs

Congress has expressed interest in the potential duplication among SBA's various technical assistance programs and services. In addition to funding a network of nearly 1,000 Small Business Development Centers (SBDCs), SBA provides financial support to more than 140 Women's Business Centers (WBCs), 22 Veteran Business Outreach Centers (VBOCs), and more than 250 chapters of the mentoring program SCORE, which also provide technical assistance services to small business owners. In 2021, SBA's Community Navigator Pilot Program funded 51 grantees, which work with 450 organizations providing outreach and technical assistance to underserved small business owners. Technical assistance is also associated with other SBA initiatives, such as the Program for Investment in Microentrepreneurs (PRIME) and 7(j) Management and Technical Assistance.

SBA typically tracks client outreach and levels of service, such as numbers of clients served and training events held, as well as the number of new businesses started and jobs supported as a result of SBDC activities.²⁹ SBA has recently also begun to track the satisfaction of SBDC clients served. The "Average Satisfaction Rate of Entrepreneurs Assisted by SBDCs" was 93% in FY2022.³⁰ SBA has also incorporated participant surveys into its THRIVE Emerging Leaders Reimagined Program. Nearly 93% recommend the program to other business owners in FY2022, and previous years' surveys found rates in the 94-95% range.³¹

By contrast, SBA historically provides fewer outcome-based metrics than participation- or activity-based metrics for its technical assistance programs. In 2019, an SBA OIG report "found that [the SCORE] program officials had established limited outcome-based performance measures to assess whether the SCORE program has its intended effect."³² Recent VBOC and Native American outreach program performance reports do not include indications of customer experience or customer business outcomes.³³ SBA, however, is beginning to develop and monitor outcome-based program performance measures for certain technical assistance programs. These programs include the SBDC, WBC, SCORE, and THRIVE Emerging Leaders programs, whose most recent program performance reports provide one or more outcome-based metrics related to "business starts," "capital infusion," "revenue growth," and business owners "creating or retaining jobs."³⁴ In the 118^th Congress, proposed legislation from both chambers include provisions related to technical assistance data collection and reporting.³⁵

Some stakeholders have argued that merging SBA's technical assistance programs could improve the efficiency of services; others have expressed preference for tailored programs.³⁶ Some advocates favor improved coordination among funding recipients and suggest greater program oversight.³⁷ Furthermore, pandemic-era legislation for small business economic relief raised concerns that additional technical assistance funding for that period may have led to duplicative services. A House report accompanying the American Rescue Plan Act explicitly expressed "concerns with the duplication" of SBA technical assistance that might be created by new funding for SBA partner organizations.³⁸

Congressional interest also exists for increasing resources for organizations that partner with SBA to provide technical assistance to firms. For example, S. 2185 in the 118^th Congress would authorize $175 million for SBDC grants for each fiscal year from FY2024 through FY2027 (the Consolidated Appropriations Act of 2023, P.L. 117-328, appropriated $140 million for grants for the SBDC program). Also in the 118^th Congress, S. 2184 would raise the maximum grant award amount for each WBC from $150,000 to $300,000 annually. In the 117^th Congress, both bills were also included in the Small Business Administration Reauthorization and Modernization Act of 2022 (S. 5220).

Data and Reporting on Federal Contracts with Small Businesses

Limited data analysis functions may hinder understanding of contractor compliance and accountability issues, as well as the effectiveness of SBA's contracting programs. Although the Federal Procurement Data System of contract awards provides tools to extract dynamic data on contractors and contract awards, use of these tools requires extensive knowledge of the data and its structure and they are not tailored for analysis of small business contract awards.

SBA, the SAM.gov data bank, and the General Services Administration (GSA) each issue annual reports related to federal government small business contracting with data inconsistencies. SBA issues a procurement scorecard for the 24 CFO Act agencies every fiscal year, which provides data on the percentage of contract dollars and subcontract dollars awarded to small businesses.³⁹ SAM.gov's Small Business Goaling Reports provide data on contracting goal achievement by agency and by contracting program (such as 8(a), HUBZone, etc.).⁴⁰ GSA issues another annual report on all prime contract procurements made each fiscal year, using a slightly different measurement approach; additionally, GSA provides a subcontracting report by industry.⁴¹

These reports, however, provide "static" data, released for individual fiscal years, and are primarily organized according to socioeconomic small business goal category (i.e., small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business (WOSB)). SBA's procurement scorecards and SAM.gov small business goaling reports exclude some contracts, leading the data to differ from that provided by the GSA annual reports.⁴² In general, the currently available data cannot be disaggregated and analyzed by such variables as location of performance, contract type, or contract preference such as a small business set-aside. Dynamic data at various levels of detail may be extracted from SAM.gov but that requires deep knowledge of the underlying data, its format, and the SAM.gov interface and data extraction tools.

Recent legislative proposals have included new small business contract award data reporting requirements. In the 118^th Congress, the Small Business Contracting Transparency Act of 2023 (H.R. 4670) passed the House and would require annual reports with additional WOSB, HUBZone and Service-Disabled Veteran-Owned Small Business contract award data. In the 117^th Congress, Section 412 of the Small Business Administration Reauthorization and Modernization Act of 2022 (S. 5220) would have required annual reports with "disaggregated data on the size and number of contracts in total by the federal government and by each federal agency to small business concerns by demographics, including, at a minimum, the gender, race, and ethnicity categories published by the Administration" for FY2020, FY2021, and FY2022.⁴³ Also in the 117^th Congress, the WOSB Program Transparency Act (H.R. 7670) passed the House and would have required an annual report with additional WOSB contract award data.

Responsibilities of the Office of Advocacy

The Office of Advocacy (Advocacy) is an independent entity within SBA. Advocacy's role is to be an "independent voice for small business within the federal government," and the office "advances the views and concerns of small businesses before Congress, the White House, federal agencies, federal courts, and state policymakers."⁴⁴

Advocacy's responsibilities have increased since it was established in 1976 in P.L. 94-305. Those responsibilities include representing the interests of small business in the regulatory process, producing and promoting small business economic research, facilitating small business outreach within the federal government, and providing compliance training to federal regulatory officials as required under the Regulatory Flexibility Act (RFA, P.L. 96-354, as amended, 5 U.S.C. §§601-612). Specifically, the RFA requires federal agencies to analyze the potential effects of their regulatory actions on small entities, which include small nonprofits, small governments, and small businesses. The RFA also requires federal agencies to consider other options that would effectively implement their regulatory goals without unduly burdening small entities. Advocacy is responsible for overseeing and facilitating compliance with the RFA.

Congress has considered the roles and responsibilities of Advocacy in recent years. Members have introduced several pieces of legislation related to Advocacy:

• In the 118^th Congress, the Small Business Advocacy Improvements Act of 2023 (H.R. 399) would expand Advocacy's duties to include examining the role of small businesses in the international economy and representing small businesses before foreign governments and international entities to contribute to regulatory and trade initiatives affecting small businesses. The bill passed the House. Similar legislation was introduced in the 117^th Congress (H.R. 6454), the 116^th Congress (H.R. 128), and the 115^th Congress (H.R. 6316). Each of those bills also passed the House.
• In the 118^th Congress, the Small Business Regulatory Flexibility Improvements Act (H.R. 358) would expand Advocacy's responsibilities by, among other things, expanding the use of small business advocacy review panels; enhancing requirements for federal agency notification of the Chief Counsel for Advocacy (Chief Counsel) prior to the publication of any proposed rule; and authorizing the Chief Counsel to file comments on any notice of proposed rulemaking, not just when the RFA is concerned. Similar provisions were included in the Regulatory Accountability Act of 2017 in the 115^th Congress (H.R. 5), which passed the House.
• In the 117^th Congress, the Advocacy Empowerment Act of 2022 (S. 3729) would have authorized the Chief Counsel to issue rules governing federal agency compliance with the RFA. Similar legislation was introduced in the 116^th Congress (S. 83).

Congress may wish to consider the scope of Advocacy's role in any potential SBA reauthorization, including whether to make changes to the RFA. The 2019 Chairman's Mark (a draft legislative proposal) released by then-Senate Committee on Small Business and Entrepreneurship Chair Senator Marco Rubio included provisions that would have amended the RFA and, therefore, Advocacy's responsibilities. For example, the Chairman's Mark would have allowed the Chief Counsel to send a letter questioning an agency's certification that a proposed rule would not have a significant impact on a substantial number of small entities and asking the agency to reconsider the rule.⁴⁵ According to statements from the Senate Committee on Small Business and Entrepreneurship's then-Chair Marco Rubio and then-Ranking Member Benjamin Cardin, disagreement about changes to the RFA and Advocacy's responsibilities caused the markup of the Chairman's Mark to be indefinitely postponed.⁴⁶ Thus, Congress could decide whether to make any changes to the RFA and Advocacy's responsibilities in an SBA reauthorization or whether to separate any such discussions from debate on reauthorization.

SBA Assistance to Disadvantaged Entrepreneurs and Underserved Markets

SBA has a long history of considering the impact of its programs to disadvantaged entrepreneurs and underserved markets.⁴⁷ During its first decade of existence, SBA did not systematically collect race and ethnicity data from borrowers. Estimates by researchers suggested that few SBA loans were made to minority entrepreneurs.⁴⁸ To remedy this funding gap, SBA created the 6 x 6 pilot program in January 1964.⁴⁹ During the first year of that program, SBA approved 794 loans, with approximately half (393 or 49%) going to minority businesses in five cities.⁵⁰

Congress and SBA can provide incentives to increase access to loan and equity business finance for disadvantaged entrepreneurs and underserved markets. For example, the 7(a) and 504 programs have used fee waivers—thereby lowering the lender's cost of making those loans relative to other loans—for certain disadvantaged entrepreneurs. Statutory authorization for a fee waiver exists in the 7(a) program for certain loans to veterans.⁵¹ During SBA's annual fee-setting process, it also has the authority to provide lower or no fees for certain loans. For example, in FY2019, SBA waived the annual service fee and set a lower upfront fee for loans of $150,000 or less made to a business in a rural area or HUBZone.⁵²

More recently, SBA has operated several programs intended to increase access to capital for disadvantaged entrepreneurs and underserved markets. SBA does this through specialized programs and through modifications to existing programs. Two existing specialized programs are the Community Advantage Pilot Program (CA, previously a pilot program within 7(a)) and the Microloan program. One of CA's goals is to "increase access to capital for small businesses located in underserved markets."⁵³ The Microloan program is statutorily intended to "assist women, low-income, veteran … and minority entrepreneurs and business owners" access capital.⁵⁴

Since 1988, the federal government has maintained annual goals for small and small "disadvantaged" business participation in federal contracting. At that time, Congress required that small disadvantaged businesses receive "not less than 5 percent of the total value of all prime contract and subcontract awards for each fiscal year."⁵⁵ Today, statute maintains an annual Small Disadvantaged Business (SDB) contracting goal of 5% of prime and subcontract award dollars. Executive action under the Biden Administration, however, increased the statutory SDB goal, seeking to increase this share of award dollars to 15% by 2025. In FY2022, agencies were required to collectively award at least 11% of contract spending to SDBs, per Office of Management and Budget Memorandum (OMB) M-22-03.⁵⁶ In FY2023, agencies were required to collectively award at least 12% to SDBs, per OMB Memorandum M-23-01.⁵⁷ In FY2024, agencies must collectively award at least 13% to SDBs, per OMB Memorandum M-24-01.⁵⁸ Procurement Scorecards show that SDBs have received in the range of 10-11% of small business-eligible prime contract awards from FY2018-FY2022.⁵⁹ Apart from the increase of the Service-Disabled Veteran-Owned Small Business goal from 3% to 5% by the National Defense Authorization Act for Fiscal Year 2024 (P.L. 118-31), legislation has not altered the contracting goals in statute for certain other types of disadvantaged small businesses since passage of the Small Business Reauthorization Act of 1997.⁶⁰

Status of the Community Advantage Pilot Program

The Community Advantage Pilot Program (CA pilot), a subprogram within the 7(a) loan guarantee program, was intended "to meet the credit, management, and technical assistance needs of small businesses in underserved markets."⁶¹ The CA pilot's goals were to

• increase access to credit for small businesses located in underserved markets;
• expand points of access to the SBA 7(a) loan program by allowing nontraditional, mission-oriented lenders to participate;
• provide management and technical assistance to small businesses as needed; and
• manage portfolio risk.⁶²

SBA created the CA pilot in 2011 using its authority to create temporary pilot programs.⁶³ The CA pilot was originally set to expire on March 15, 2014, but the agency subsequently extended and modified the program. The CA pilot was last extended through September 30, 2024,⁶⁴ but SBA decided to sunset the program on October 31, 2023.⁶⁵ To date, Congress has not provided permanent statutory authorization for the CA pilot.

Following the sunset of the CA pilot, SBA transitioned active CA pilot lenders to be Community Advantage Small Business Lending Companies (CA SBLCs).⁶⁶ The SBA stated its intention to make a version of the CA pilot permanent, thus providing greater stability and predictability for CA lenders.⁶⁷ SBA regulations require that CA SBLCs are subject to similar SBA oversight requirements as other SBLCs.⁶⁸ Compared with previous CA pilot program guidance, the regulations contain few provisions specific to CA SBLCs. However, SBA stated that CA SBLCs will still be subject to the administrative requirements⁶⁹ that were in effect during the CA pilot, including the $350,000 loan maximum.⁷⁰

Congress has shown interest in the CA pilot program since its inception. More recently, SBA reauthorization attempts from the 116^th and 117^th Congresses (see "Recent Reauthorization Attempts") included provisions to make a version of the CA pilot permanent. Senate legislation in the 118^th Congress, the Community Advantage Loan Program Act of 2023 (S. 2482), partially in reaction to SBA's business loan program rule changes, would also make a version of the CA pilot permanent. Congress, therefore, may choose to consider the status of the Community Advantage program during a new reauthorization attempt.

Concluding Observations

Members of Congress and outside interest groups have both expressed interest in reauthorizing SBA. While SBA as a whole and the majority of the agency's programs are permanently authorized, a comprehensive SBA reauthorization could give Congress the opportunity to consider various aspects of SBA's operations. Given Congress's longstanding engagement with small business policy and SBA's expanded responsibilities over recent years, the topic of SBA reauthorization may be an area of congressional interest for the foreseeable future.

Appendix A. SBA Major Areas of Activity

SBA administers a range of programs for different types of small businesses and involving several types of activities. SBA's activities focus on access to capital, entrepreneurial development and technical assistance, federal contracting assistance, and disaster relief and assistance. This appendix briefly summarizes SBA's main areas of activity and provides links for further details. For a more comprehensive examination of SBA's programs and activities, see CRS Report RL33243, Small Business Administration: A Primer on Programs and Funding.

Access to Capital

Small businesses often require funds (in the form of loans or equity) to start, operate, and expand. SBA operates several programs to assist small businesses access funds: the 7(a) and 504 loan guarantee programs, the Microloan program, and the Small Business Investment Company (SBIC) venture capital program. These programs require that businesses meet SBA's industry-based or alternative size standards. The programs are structured as market-type transactions that require repayment or business equity (meaning they are not grants), and all are implemented by private program partners. Additionally, the programs are limited to small businesses who cannot access credit on reasonable terms on the private market.

Current major SBA access to capital programs include

• SBA's 7(a) loan guarantee program, which is SBA's largest access to capital program by both dollar amount and number of small businesses assisted. Through the 7(a) program, SBA guaranteed 57,362 loans for a total of $27.5 billion in FY2023.⁷¹ A 7(a) loan often starts with an entrepreneur visiting a local 7(a) lender (often a local bank or credit union) and applying for a loan. If the lender believes the business's project is promising but the application is too risky for the lender's underwriting (for example, the owner does not have enough collateral or management experience), then the lender can apply for the SBA to guarantee a portion of the loan principal. SBA will guarantee between 50%-90% of the principal, but typically guarantees 75%-85%. SBA 7(a) loans are available up to a maximum of $5 million, generally for up to 10 years. The borrower must repay a 7(a) loan in full (with interest).⁷²
• SBA's 504 loan guarantee program, which offers larger loans for longer durations than 7(a) for specialized projects. In FY2023, SBA guaranteed 5,924 loans for $6.4 billion in the 504 program.⁷³ A 504 project requires three funding sources: (1) up to 40% of project cost from a loan from an SBA-certified Certified Development Company (CDC), the principal of which is 100% SBA guaranteed; (2) at least 50% from a private lender, with no SBA guarantee; and (3) at least 10% from the borrower's own funds. Loans in the 504 program are often for specialized investments in land, building a structure, or specialized machinery. The maximum amount of a 504 loan is either $5 million or $5.5 million (depending on the project type), with a maturity up to 30 years. The borrower must repay the CDC and private lender loans in full (with interest).⁷⁴
• The Microloan program, which offers smaller loans of up to $50,000 for up to 10 years. In FY2023, Microloan Intermediaries made 5,590 Microloans for a total of $87.5 million.⁷⁵ Microloan is statutorily intended to "assist women, low-income, veteran … and minority entrepreneurs and business owners" access capital.⁷⁶ Microloan operates as a two-step program. SBA provides low-interest rate direct loans and grants for management training to SBA-certified Microloan Intermediaries (often locally focused community development nonprofit organizations), who also must secure outside matching funds (generally at least 15% of the amount request from SBA). Microloan Intermediaries then use SBA and outside funds to make Microloans and provide management training to small businesses. Microloans can be used for many purposes, such as purchasing supplies or equipment, except for use to purchase real estate. Borrowers must repay Microloans in full (with interest).⁷⁷
• The Small Business Investment Company (SBIC) program, which provides SBA-supported venture capital financing to small businesses. In FY2023, SBICs invested a total of $8.1 billion in 1,208 small businesses.⁷⁸ SBA guarantees the principal and interest on debentures issued by SBICs, thereby allowing SBICs to borrow from private investors at more favorable terms than they otherwise would be able to. SBICs are private venture capital funds set up to invest in small businesses and participate in the program. SBICs can subsequently make debt, equity, or mixed investments in small businesses. For debt investments, the borrower must repay the SBIC on the agreed terms. For equity investments, the borrower sells a portion of their business to the SBIC.⁷⁹

Technical Assistance

SBA has provided for management and technical assistance to small businesses since it began operating in 1953, initially providing this directly to small business owners.⁸⁰ SBA has since increasingly relied on third parties, known as resource partners, to work with business owners. These resource partners are typically organizations that receive renewable grants from SBA to help them operate and provide SBA-sanctioned counseling and training. At the same time, SBA continues to provide some direct services to small business owners, such as through SBA District Offices that are dispersed around the country. SBA services help counsel and train nearly 1 million small business owners and entrepreneurs each year.⁸¹

SBA currently supports technical assistance through the following programs and initiatives:

• Small Business Development Centers (SBDCs) receive formula-based grants to provide free counseling, training, and resources to small business owners and entrepreneurs. SBDCs operate in partnership with state governments and higher education institutions. Lead SBDCs are tasked with establishing "a network of partner service centers to cover its service area." There are 62 lead SBDCs that receive grant funds from SBA, and at least one lead center in each state, the District of Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands. Lead SBDCs are tasked with establishing "a network of partner service centers to cover its service area." There are currently more than 900 service centers.⁸²
• Women's Business Centers (WBCs) receive renewable multi-year grants to provide free and low-cost counseling and training to women business owners, as well as facilitate their access to credit and capital. There are 146 WBCs located throughout the United States and its territories.⁸³
• Veterans Business Outreach Centers (VBOCs) receive grants to perform outreach to veteran-owned small businesses and provide programming such as the Boots to Business and Boots to Business Reboot programs for veterans interested in entrepreneurship. SBA supports 28 grant-funded VBOCs as well as other partners such as the Veteran Institute for Procurement. SBA's Office of Veterans Business Development administers these activities.⁸⁴
• SBA's Office of Native American Affairs (ONAA) oversees assistance for Native American-owned small businesses, engages in tribal consultations, and produces promotional materials. Organizations that receive SBA support and serve Native American-owned small businesses include the following SBA partners: National Center for American Indian Enterprise Development, Our Native American Business Network (ONABEN), Rural Enterprises of Oklahoma, Inc., Two Rivers Community Development Corporation, and the Council on Native Hawaiian Advancement. SBA has also contracted with RedWind and Sister Sky, Inc., to offer entrepreneurial development workshops in Native American communities.
• SCORE (an association formerly known as the Service Corps of Retired Executives) is a network of a volunteer small business management mentors that receives grant funding from SBA. SBA has a cooperative agreement with SCORE, a nonprofit organization, and provides renewable grants to SCORE chapter organizations located throughout the country. In addition to small business mentoring, SCORE services include training, workshops, and online resources. There are more than 250 SCORE chapters, which provided mentorship to over 300,000 small business owners in FY2022.⁸⁵
• The THRIVE Emerging Leaders Reimagined Program is an "executive-level" training program that includes an in-person course, professional coaching, and online learning. It is available in 68 U.S. cities.⁸⁶
• The Community Navigators Pilot Program administers grants to resource partners that offer management and technical assistance to underserved businesses, such as minority-, women-, and veteran-owned businesses.⁸⁷ The program directs grants to organizations with "established roots in underserved communities," which counseled over 16,000 clients in FY2022.⁸⁸

Contracting Assistance

Section 15(g)(2) of the Small Business Act established the government-wide goals for federal contracting with small businesses. One of SBA's roles is to consult with federal agencies to establish annual goals for small business participation in contracting. Collectively, the federal agencies' contributions add up to the statutory, government-wide goal.⁸⁹ The contracting goal is aspirational; there are no punitive consequences for agencies that fail to meet these goals. However, SBA creates annual Small Business Procurement Scorecards and GSA produces annual reports, which may attract scrutiny of contracting practices. In order to facilitate agency contracting with small businesses, small disadvantaged businesses, HUBZone businesses, women-owned small businesses, and service-disabled veteran-owned small businesses, SBA oversees contracting preference programs that offer these businesses set-asides (contracts made with limited competition) and sole-source contract awards (contracts made without competition).⁹⁰ In addition, SBA and other agencies provide assistance to small business contractors. For example, the APEX Accelerator program provides training and technical assistance to help small businesses identify and prepare for federal contracts.⁹¹

Small business eligibility for federal contracting preferences is determined by various criteria and certification requirements, related to a business owner's socio-economic characteristics or a business's location (in the case of the HUBZone program).⁹² SBA is "integrating SBA certification programs like 8(a) Business Development, HUBZone, Women-Owned Small Business, and Veteran-Owned Small Business Certifications into the single structure," so that "small businesses will have one point of entry to apply for certifications and access their information."⁹³

Disaster Assistance

SBA's Disaster Loan Program provides low-interest direct loans to help businesses, nonprofit organizations, homeowners, and renters repair or replace property damaged or destroyed in a federally declared disaster. The program is also designed to help small agricultural cooperatives recover from economic injury resulting from a disaster. Approximately 80% of SBA's direct disaster loans are made to individuals and households rather than to small businesses.

SBA offers two categories of disaster loans: (1) home physical and personal property disaster loans and (2) business disaster loans. There are two types of loans within each category.

Home physical and personal property disaster loans are either

• Personal Property Loans, which provide a creditworthy homeowner or renter located in a declared disaster area with up to $40,000 to repair or replace personal property owned by the survivor; or
• Real Property Loans, which provide creditworthy homeowners located in a declared disaster area with up to $200,000 to repair or restore the homeowner's primary residence to its pre-disaster condition.⁹⁴

Business disaster loans are either

• Business Physical Disaster Loans, which provide up to $2 million to repair or replace damaged physical property including machinery, equipment, fixtures, inventory, and leasehold improvements that are not covered by insurance;⁹⁵ or
• Economic Injury Disaster Loans (EIDLs), which provide up to $2 million to help meet financial obligations and operating expenses that could have been met had the disaster not occurred.

For more information on SBA's Disaster Loan Program, see CRS Report R44412, SBA Disaster Loan Program: Frequently Asked Questions.

COVID-19 Pandemic Financial Relief

Congress authorized new financial relief programs to help small businesses recover from the financial damage many experienced as a result of the COVID-19 pandemic.⁹⁶ SBA administered these programs, which made guaranteed loans and grants directly to small businesses. SBA's pandemic relief programs included

• the Paycheck Protection Program (PPP), which offered forgivable loans (fully guaranteed by SBA) up to $10 million for small businesses and nonprofits to continue paying their employees;
• COVID Economic Injury Disaster Loans (EIDLs), which offered an expanded version of one of SBA's existing disaster loan programs;
• Emergency EIDL Advances, which offered COVID EIDL applicants $1,000 per employee, up to $10,000, for use while SBA processed EIDL applications, and which did not require repayment;
• Targeted EIDL Advances and Supplemental Targeted EIDL Advance, which offered $10,000 and $5,000 payments, respectively, to COVID EIDL applicants in low-income areas, and which did not require repayment;
• Section 1112 payments, which offered debt relief to small businesses that held pre-pandemic SBA loans;
• the Shuttered Venue Operators Grant (SVOG) program, which offered up to $10 million for operators of live performance venues affected by the pandemic; and
• the Restaurant Revitalization Fund (RRF), which offered restaurant and bar owners up to $5 million per permanent physical location to address the pandemic's impacts.

Congress appropriated over $1 trillion in FY2020 and FY2021 for SBA to implement its pandemic relief programs. As noted previously, SBA's FY2019 appropriation was $715 million; SBA's FY2020 appropriation was $762 billion, an over one-thousand-fold increase. SBA's pandemic relief programs are closed to new applications. However, the agency continues to service a large number of loans made during the pandemic and investigate instances of waste, fraud, and abuse in the programs, and Congress continues to have an oversight interest in the programs.

For more information on SBA's pandemic relief programs, see CRS Report R47694, SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic, coordinated by Adam G. Levin.

Appendix B. Key CRS Products and Resources

This appendix provides additional CRS resources and products, organized by issue area.

Access to Capital

• CRS Report R41146, Small Business Administration 7(a) Loan Guaranty Program.
• CRS Report R41184, Small Business Administration 504/CDC Loan Guaranty Program.
• CRS Report R41057, Small Business Administration Microloan Program.
• CRS Report R41456, SBA Small Business Investment Company Program.

Technical Assistance

• CRS Report R41352, Small Business Management and Technical Assistance Training Programs.
• CRS In Focus IF12402, The SBA's Small Business Development Centers Program.

Contracting Assistance

• CRS In Focus IF12458, The SBA's 8(a) Business Development Program.
• CRS Insight IN12018, Federal Small Business Contracting Goals.

Disaster Assistance

• CRS Report R44412, SBA Disaster Loan Program: Frequently Asked Questions.

SBA Pandemic Relief Programs

• CRS Report R47694, SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic.

CRS Report R47509, SBA COVID-19 EIDL Financial Relief: Policy Options and Considerations.