WASHINGTON, D.C. – U.S. Senate Committee on Small Business and Entrepreneurship Ranking Member Olympia J. Snowe (R-Maine) today questioned Small Business Administrator Karen Mills about her agency’s proposed spending plan for Fiscal Year 2013, and how it could most effectively assist small businesses. Specifically, at a Committee hearing on the agency’s Fiscal Year 2013 budget request, Senator Snowe challenged the Small Business Administration (SBA) to improve its performance regarding the rising cost of loan subsidies. From 2005 to 2009, the agency’s flagship 7(a) and 504 loan programs operated at zero subsidy, meaning the programs paid for themselves though fees, with no requirement for taxpayer support. In each of FY 2010 and FY 2011, however, the SBA required $80 million to subsidize these programs due to increased defaults, with subsidies growing to $350 million this year.

“With our country’s economic recovery from the recent recession still lackluster at best, we must ensure that the SBA can be the catalyst small businesses require to get Americans back to work,” said Senator Snowe. “That’s why it is critical the SBA establish a clear plan to reduce the subsidy costs in future years. Looking at historical data, subsidies compared to the overall SBA budget continue to get higher every year, accounting for 12 percent of the total SBA budget in FY 2011; 26 percent in FY 2012; finally reaching an alarming 37 percent in FY 2013. This is the paramount issue in the Agency’s FY 2013 budget, and I urge the SBA to take these concerns seriously.”

Senator Snowe also praised Administrator Mills’ efforts in reining in administrative expenses at the agency. “I have said that all Federal agencies, including the Small Business Administration, must tighten their belts during this difficult economic time, and I commend Administrator Mills for her effective management in this regard. In particular, I would note that the increase in the Executive Direction budget from FY 2012 to FY 2013 is negligible at just $115,000, down 21 percent from the FY 2011 level of $26.7 million. Further, agency-wide overhead costs are largely held steady or reduced in this year’s budget request. Karen is demonstrating that the Federal government can and must do more with less, and I appreciate her leadership.”

PHOTO: Senator Snowe speaks with SBA Administrator Karen G. Mills prior to today’s hearing.