Small Businesses

Small businesses are an important driver of the nation’s economic growth. The Small Business Administration (SBA) oversees programs that provide small businesses and entrepreneurs with counseling and training, access to capital and federal contracts, and disaster assistance. In addition, SBA provided more than $1 trillion in relief funds to assist small business affected by COVID-19. 

However, there are a number of additional opportunities (as well as priority recommendations) to improve how SBA and other federal agencies implement and oversee programs to assist small businesses. 
For instance: 

• Fraud. Some of SBA’s COVID funds went to fraudsters—the Department of Justice charged hundreds of individuals and is investigating many more. SBA has not had timely access to some external data sources—such as tax data—that could help prevent fraud. SBA’s Small Business Innovation Research and Small Business Technology Transfer programs—which aim to help small businesses bring new technologies to market—are also vulnerable to fraud.
• COVID-19 Economic Injury Disaster Loans. As of April 2022, SBA had provided 3.9 million Economic Injury Disaster Loans in response to COVID-19, totaling about $378 billion. For eligible applicants to this program, SBA also provided millions of grants totaling about $27.5 billion. However, SBA has not communicated important information about this program, such as expected processing times, to potential and actual program participants in an effective or timely manner.

Number of Economic Injury Disaster Loan Applications and Average Processing Times, by Month Application Accepted, March 2020–February 2021

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• Other COVID-19 programs. SBA administered two other programs to support businesses affected by COVID-19—the Shuttered Venue Operators Grant program, which was intended to help businesses in the arts and entertainment industries, and the Restaurant Revitalization Fund, which was intended to help businesses in the food service industry. SBA could improve its oversight of both these programs, including by managing potential fraud risks.
• Disaster planning. SBA’s Disaster Loan Program helps small businesses, homeowners, and renters rebuild or replace damaged property or continue business operations during disasters. Some communities may face barriers in accessing the recovery assistance that SBA and other federal agencies provide, such as rural communities. SBA should also assess gaps in loan outcomes in underserved communities and coordinate with other agencies to design and establish processes across recovery programs that address access barriers.
• Required reports. Annual reporting by agencies on federal programs can help agencies meet their statutory responsibilities and inform congressional decision-making and oversight. As such, SBA should take steps to improve the timeliness and completeness of its annual reports to Congress for several of its programs. These include 1) the Small Business Innovation Research and Small Business Technology Transfer programs; 2) the 8(a) Business Development Program, which is intended to help socially and economically disadvantaged small businesses; and 3) veterans business outreach centers, which help veteran-owned businesses access capital.
• Assistance to tribes. SBA is one of many federal agencies that provide assistance to tribal entities for economic development. SBA, in coordination with tribes, should establish a plan for periodically analyzing and publicly reporting the amount of economic development assistance provided by SBA to tribal entities. It should also use this analysis to identify opportunities to improve assistance to tribal entities.
• Veterans. The Small Business Act seeks to improve small businesses’ access to capital. The act provides for special consideration for small businesses owned by veterans to participate in SBA lending programs, but SBA does not have policies and procedures for complying with those requirements. 
• Subcontracts. Certain federal contracts that go to large businesses must have small business subcontracting plans. Under these plans, contractors have to make a good-faith effort to offer subcontracting opportunities to small businesses. Agencies are supposed to notify SBA representatives about proposed contracts with these plans for possible review. However, agencies can’t always provide data to show if this happened. Agencies also didn’t ensure that contractors submitted subcontracting reports, or that the reports were accurate.
• Advocating for small businesses. Federal agencies with procurement powers are required to establish an Office of Small and Disadvantaged Business Utilization to advocate for small businesses and fulfill a number of related requirements. However, agencies varied in how they complied with these requirements.  

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