WASHINGTON, DC— Senate Small Business and Entrepreneurship Committee Ranking Member Jim Risch (R-ID) and House Small Business Committee Chairman Sam Graves (R-MO) today released the following statements in response to the Administration’s comments about the impact of the sequester on small business:

“I am troubled the President has chosen to use scare tactics to incite small business owners into a fury rather than provide real leadership on the sequester,” said Senator Risch. “Excluding funding for the disaster program, the SBA’s budget has increased 45 percent since President Obama took office.  I am confident Administrator Mills and her team have been planning for the possibility of the sequester for some time and can continue to deliver the core, congressionally authorized programs to small businesses without the alarming program disruptions touted by the Administration.”  

“The President continues to create fear in the small business community by politicizing the effects of the sequester,” said Congressman Graves. “While government aid to small businesses may face cuts resulting from the sequester, the President, and the SBA, have a certain level of discretion on how those cuts are applied. The President should show some leadership and work with Congress to make smart, targeted cuts – such as eliminating duplicative and wasteful programs like those identified by the Government Accountability Office, and refocus the SBA’s mission on its core functions of counseling, capital, and contracting, rather than on unauthorized experiments.”  

In a February 8, 2013 release, the White House claimed that “Small Business Administration (SBA) loan guarantees would be cut by up to $902 million, constraining financing needed by small businesses to maintain and expand their operations and create jobs.”

In reality, the SBA has yet to reach its spending cap in the 7(a) and 504 loan programs for FY13. Therefore, reduced SBA lending due to sequestration is not a given. Whether the SBA hits the reduced cap after sequestration depends on loan volume. SBA also has options when it comes to managing its lending programs, by providing backing for more businesses through smaller loans. 

SBA Administrator Karen Mills says that the SBA has been preparing for sequestration since last summer, acknowledging that they won’t have to furlough workers. If the SBA has prepared to avoid furloughing workers, hopefully they are considering all their options to mitigate the programmatic cuts in a more constructive manner than the President suggests.