(Washington, DC) – U.S. Senator Jeanne Shaheen (D-NH), Chair of the U.S. Senate Committee on Small Business and Entrepreneurship, urged Shalanda Young, the White House Office of Management and Budget director, to prioritize small businesses in the Administration’s Fiscal Year (FY) 2025 Budget Request.
The full text of the letter is below.
Dear Director Young:
As you prepare the Administration’s Fiscal Year (FY) 2025 Budget Request, I write to urge that your request include the funding necessary to allow the Small Business Administration (SBA) to continue its work serving America’s 33.2 million small businesses.
Small businesses have shown incredible resilience over the last few years. They continue to grow despite hardships in the wake of the COVID pandemic and continue to be the driving force behind the American economy. As we prepare for FY 2025, it is imperative that SBA is provided sufficient funding to continue its essential work to ensure the continued growth of our national economy and the well-being of local communities across the U.S. As Chair of the Senate Committee on Small Business and Entrepreneurship and member of the Senate Committee on Appropriations, I urge you to invest in the success of our small businesses and give particular attention to the following programs:
District offices are a critical line of communication and resources for small businesses and have long been understaffed. I secured language in the FY 2023 Financial Services and General Government (FSGG) Appropriation Bill requesting a report from SBA on staffing and budget levels for each SBA district office. The report stated that increased budgetary demands, including increased employee costs and administrative requirements, have strained the agency’s ability to add and maintain more field staff. I was disappointed to see flat funding for field offices in FY 2023 despite the clear need for increased resources on the ground. In the FY 2024 FSGG Appropriations Bill, as a follow-up to this report, I requested the inclusion of language encouraging SBA to ensure that each state has no fewer than seven full-time staffers across its district. I recognize that we are operating in a challenging fiscal environment, but this only makes resources on the ground and in communities increasingly essential. I urge you to support this critical resource and include adequate funding in the President’s annual Budget Request for district offices to permit a minimum of seven full-time staffers in each district.
Entrepreneurial Development and Small Business Development Centers
SBA's entrepreneurial development ecosystem is comprised of 63 Small Business Development Centers (SBDCs), 146 Women's Business Centers (WBCs), more than 10,000 SCORE volunteers across more than 230 local chapters and 28 regional Veterans Business Outreach Centers (VBOCs). These resource partners provide free and low-cost counseling services and training to small business owners and entrepreneurs. Research has shown a direct correlation between counseling and the profitability, longevity and growth of small businesses. In order to ensure the continued success of these programs, it is critical that SBA's resource partners receive sufficient funding.
All of SBA’s resource partners are essential to the entrepreneurial development ecosystem and require full funding to continue serving our small businesses and entrepreneurs. I was therefore disappointed to see that the Administration proposed a $19 million funding cut for SBDCs in FY 2024, the single largest cut in the proposed budget.
The SBDC program is our federal government's flagship management and technical assistance program for small businesses and has broad bipartisan support. SBDC offices provide targeted counseling and technical assistance in all areas of business management to small businesses and entrepreneurs across the country. In FY 2022, SBDCs helped clients start more than 20,000 new businesses, counseled more than 306,000 unique clients and assisted clients in obtaining $7.86 billion dollars in capital for their businesses, supporting over 1.28 million jobs with a funding level of $140 million dollars. The SBDC program is clearly effective, and a $19 million funding cut would have major repercussions for entrepreneurs across the U.S. As you know, the FSGG Subcommittee recommended that SBDCs receive $140 million in funding in FY 2024, the same as the FY 2023 enacted level and a rejection of the Administration’s proposed $19 million cut. However, $140 million is still insufficient for SBDCs to maximize their impact. Therefore, I support $175 million in funding for SBDCs in FY 2025, the same amount the committee has requested for the past three fiscal years and which is sufficient to allow SBDCs to best serve our small business owners and entrepreneurs.
State Trade Expansion Program
The State Trade Expansion Program (STEP) was created by the Small Business Jobs Act of 2010 to help small businesses sell their products overseas. Recognizing the success of the program and the importance of ensuring that small businesses have access to foreign markets, Congress reauthorized STEP for five years at $30 million per year as part of the Trade Facilitation and Enforcement Act of 2016 (P.L.114-125). STEP awards competitive grants to states and territories to support small business trade missions, international marketing efforts, business counseling, export trade show exhibits and other promotional activities. STEP has proven to be an effective and efficient use of funding. According to SBA, the program achieved a return on federal taxpayer investment of over 43:1 in FY 2022. Since its creation, the program has awarded $235.5 million in grants and directly supported over 13,000 small businesses' international expansion and export growth.
Supporting our small businesses and helping them find success in the international marketplace represents a long-term investment that fosters economic resilience and the growth of local businesses. According to the Office of the United States Trade Representative, three quarters of world purchasing power and over 95 percent of world consumers are outside America’s borders. In FY 2021, a total of 278,362 firms exported goods worth $1.6 trillion from the United States. Of those exporters, 271,241, or over 97 percent, were small and medium businesses and exported goods worth $541.6 billion. STEP has proven to be a highly effective program and is a key tool for securing our long-term economic well-being. I respectfully request that the President’s annual Budget Request include full funding in the amount of $30 million for STEP in FY 2025.
Office of Inspector General
On November 13th, I sent a letter to the Financial Services and General Government (FSGG) Appropriations Subcommittee expressing my support for the president’s $14 million supplemental request for SBA’s Office of Inspector General (OIG). I reiterate my full support for OIG and respectfully request that they be provided the funding they need to continue their vital work. In the last three years, OIG’s work has led to 1,180 indictments, 936 arrests and 613 convictions. This small office has managed to collect more than $13 billion in investigative recoveries, fines and forfeitures despite functioning on an average budget of less than $24 million. Additionally, in FY 2021, OIG issued 19 reports with 119 recommendations for improving the agency's operations, identifying improper payments and strengthening controls to reduce fraud and unnecessary losses in SBA programs. OIG has clearly demonstrated that it delivers impressive results with the limited resources available to it and is an office with a high return on investment. The committee takes fraud seriously, as I know you all do. I respectfully urge you to include appropriate funding for OIG in the President’s annual Budget Request, allowing it to expand its work and fully investigate those who took advantage of SBA’s COVID loan relief programs.
COVID Economic Injury Disaster Loans
As you know, Congress acted decisively and expeditiously at the beginning of the COVID-19 pandemic to provide extraordinary relief to America’s small businesses. The COVID Economic Injury Disaster Loan (EIDL) program was one of SBA’s relief programs that brought much needed assistance to small business owners and entrepreneurs during the height of the pandemic and supported them through an unprecedented time.
During FY 2023 and FY 2024, SBA will service nearly 3.6 million COVID-EIDL loans. As you know, SBA requested a transfer of $227 million in their FY 2024 budget for necessary expenses in administering COVID-EIDL loans, but the funding that the Administration sought to transfer was rescinded by the Fiscal Responsibility Act of 2023. To try and address this shortfall, the FSGG Appropriations Subcommittee worked to include more than $47 million in funding for OIG and more than $381 million for salaries and expenses (including COVID-EIDL servicing) in the bill passed out of committee this July. This amount, however, is still insufficient. SBA will need adequate funding to service COVID-EIDL loans for the life of millions of loans still outstanding, which can be as long as 30 years. SBA rose to the challenge during the pandemic and administered necessary economic relief to millions of people and it will need ongoing support as it continues to see this challenge through. I respectfully request that the President’s annual Budget Request include adequate funding for SBA to continue servicing these loans.
I appreciate your consideration of my priority funding requests for the SBA in FY 2025, and I thank you for your continued support of America’s small businesses and entrepreneurs.