WASHINGTON – Today Sen. John Kerry (D-Mass.) said the President's proposed budget for the Small Business Administration (SBA) is insufficient for meeting the needs of small businesses and falls short of repairing the deep cuts to the agency over the last seven years. The proposed Fiscal Year 2008 budget represents a 45 percent cut since the Bush Administration took over in 2001 and a 32 percent decrease when not counting disaster loan funding. The President's request of $464 million for the SBA is only .02 percent of the entire $2.9 trillion budget.

"This is triage when the SBA budget needs major overhaul. The cuts have been so deep for so long that many small businesses are falling through the cracks," said Kerry, Chairman of the Committee on Small Business and Entrepreneurship. "Yet again, the President has sent us a budget that gives with one hand and takes away with another. He reduces fees on some of SBA's primary loans, but he didn't provide any funding for them. The budget still lacks the transparency and sufficient levels to really leverage the resources this agency has to grow our economy, grow the middle class, and help minorities build wealth."

Kerry noted the lack of funding for the Microloan Program and the lack of new funding for the Disaster Loan Program as two areas of concern in the proposed budget.

"The Administration's proposal to keep the Microloan Program for the first time in four years is disingenuous," said Kerry. "With no funding, the program will die. Microloans should be fully funded, especially given that the Administration is talking about providing microloans in Iraq and spent over $200 million on Microloan Programs in other countries in 2005."

This budget proposal also cuts key business counseling and outreach programs like Small Business Development Centers, Women's Business Centers, Program for Investment in Microentrepreneurs, and technical assistance programs.

Specifically, the proposed 2008 budget:
  • Lacks funding for loans and venture capital programs. While the proposal reduces fees on 7(a) and 504 loans and SBIC deals, which will be helpful to small firms, the President's budget still provides no funding for these programs.

  • Eliminates all funding for the Microloan Program and Microloan Technical Assistance. For the first time in four years the President has proposed keeping microloans, but he caps the program's capacity at $25 million, eliminates all funding, and increases the interest rate. This shifts the cost of the loans – which proportionately help more women and minorities than other programs – to non-profits. The proposal also eliminates the counseling assistance program, Microloan Technical Assistance, which is essential for microentrepreneurs to succeed and repay the loans. Last year, 2,500 small businesses received $32.4 million in microloans nationwide.

  • Increases Procurement Center Representatives. The proposed budget would increase PCR staff by nine. Currently there are about 50 PCRs -- although only around 30 have full-time PCR duties -- to monitor contract bundling and break out contracts for small firms. This is a step in the right direction, but it falls short of the 100 PCRs Congress has been calling for to oversee nearly $400 billion in federal contracts.

  • Cuts funding for key counseling programs. The President's budget proposal cuts grants for Small Business Development Centers and Women's Business Centers. For the seventh year in a row, the President has proposed flat-funding for SBDCs and WBCs which equals real cuts for these centers due to their funding level not keeping up with inflation. In addition, with the elimination of the Microloan Technical Assistance program, the President proposes SBDCs and WBCs would pick up the slack without additional funding. The Program for Investment in Micro-entrepreneurs which provides counseling to low-income entrepreneurs has also been eliminated. Last year, SBDCs assisted 667,660 businesses and WBCs assisted 197,373 businesses.

  • Provides no new funding for the Disaster Loan Program. This same approach was taken in FY 2006, when the President rescinded his request for Disaster Loan Program funding. As a result of the damage caused by the Gulf Coast Hurricanes, emergency funding was needed on four different occasions to prevent the disaster assistance program from shutting down. The SBA's disaster assistance program needs consistent, on-budget funding to ensure that money is available when a disaster strikes.

  • Eliminates low-income capital program. The President requested no new funding for the New Markets Venture Capital Program even though the proposal highlights targeting underserved markets as a "new vision" for the SBA. The proposed budget also eliminates the companion new markets program for business to business matchmaking called BusinessLINC which provides entrepreneurial expertise and equity capital to small businesses in low-income regions.

  • Cuts funding for critical assistance programs and eliminates line-item transparency. The President continues to propose cuts to funding for the 7(j), HUBZone and Native American Outreach programs as well as roll the funding into the overall budget of the Government Contracting and Business Development office. This reduces transparency and creates uncertainty as to how much funding the programs will receive.