STATE SMALL 

BUSINESS CREDIT 

INITIATIVE

Opportunities Exist to 

Improve Program 

Oversight

Report to Congressional Committees

December 2011

GAO-12-173

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-12-173, a report to 

congressional committees 

December 2011 

STATE SMALL BUSINESS CREDIT INITIATIVE

Opportunities Exist to Improve Program Oversight

Why GAO Did This Study

Congress enacted the Small Business 

Jobs Act of 2010 in September 2010 in 

response to concerns that small 

businesses have been unable to 

access capital that would allow them to 

create jobs. Among other things, the 

act aims to stimulate job growth by 

establishing the $1.5 billion State Small 

Business Credit Initiative (SSBCI) 

within the Department of the Treasury 

(Treasury) to strengthen state and 

territory (state) programs that support 

lending to small businesses and small 

manufacturers. Participating states are 

expected to leverage the SSBCI funds 

to generate an amount of private 

financing and investment at least 10

times the amount of their SSBCI funds 

(that is, a leverage ratio of 10:1). The 

act also requires GAO to audit SSBCI

annually. Accordingly, this report 

examines (1) which states applied for 

SSBCI funds and the planned uses of 

those funds; (2) Treasury’s 

implementation of SSBCI; and 

(3) Treasury’s efforts to measure 

whether SSBCI achieves its goals. 

GAO surveyed state SSBCI applicants 

(for a 100 percent response rate), 

analyzed data from Treasury case 

files, and interviewed officials from 

Treasury and eight participating states.

What GAO Recommends

GAO recommends that Treasury direct 

the SSBCI Program Manager to 

consider key attributes of successful 

performance measures when 

developing and finalizing SSBCIspecific performance measures. 

Treasury concurred with the report’s 

recommendation.

What GAO Found

Fifty-four of the 56 eligible states and territories submitted applications requesting 

a total of about $1.4 billion in SSBCI funds. According to GAO’s survey of SSBCI 

applicants, states plan to support 153 lending programs nationwide with SSBCI 

funds, 69 of which are new programs being created because of the SSBCI 

program. These lending programs include a variety of capital access programs 

and other credit support programs, with venture capital programs receiving the 

largest amount of funds among eligible program types. SSBCI applicants 

anticipate that their SSBCI funds will allow them to leverage up to $18.7 billion in 

new private financing and investment. Some applicants, however, expressed 

concern that achieving a 10:1 leverage ratio of private financing and investment 

to program funds could ultimately prove challenging, especially for states 

creating new programs. 

Treasury’s procedures for SSBCI have evolved throughout its implementation of 

the program. Treasury began approving applications for SSBCI funds in January 

2011 in accordance with guidance it issued in December 2010. However, 

Treasury did not finalize its application guidance and review procedures until 

April and May 2011, respectively. Some states indicated they delayed submitting 

their applications until Treasury’s guidance was finalized, with 37 states not 

submitting an application until June 2011—the deadline for applications. In 

addition, Treasury did not finalize its procedures for disbursing subsequent 

installments of funds to states until November 2011, citing potential different legal 

interpretations of the act’s disbursement requirements as the cause for the delay. 

Treasury is implementing a plan to monitor states’ compliance with program 

requirements, which will include sampling transaction-level data to evaluate the 

accuracy of the states’ annual reports. The Treasury Inspector General made 

recommendations in August 2011 to improve the tools Treasury will use to 

monitor state compliance.

Treasury has not yet established performance measures for the SSBCI program. 

Treasury officials noted they are considering several draft performance measures 

to assess the efficiency of the program. However, Treasury has not finalized its 

plans for measuring the SSBCI program’s performance. GAO and others have 

recognized the importance of using performance measures to gauge the 

progress of programs. GAO has also identified key attributes of successful 

performance measures. Given the preliminary nature of Treasury’s potential 

performance measures, assessing whether the measures reflect the attributes of 

successful performance measures is premature. Nonetheless, considering these 

attributes as it works to finalize the SSBCI-specific performance measures could 

help Treasury to develop robust measures. Until such measures are developed 

and implemented, Treasury will not be able to determine whether the program is 

achieving its goals.

View GAO-12-173 or key components.

For more information, contact A. Nicole 

Clowers at (202) 512-8678 or 

clowersa@gao.gov. 
Page i GAO-12-173 State Small Business Credit Initiative 

Letter 1 

Background 4

Most States Are Participating in SSBCI and Plan to Use the Funds 

to Support a Variety of Programs 9

Treasury’s Evolving Processes Have Created Some Delays 14

Treasury Is in the Process of Developing Performance Measures 

for SSBCI 18

Conclusions 21

Recommendation for Executive Action 21

Agency Comments and Our Evaluation 22

Appendix I Objectives, Scope, and Methodology 25

Appendix II Copy of GAO Questionnaire 28

Appendix III SSBCI Funds Applied for, Approved, and Disbursed, by Location, 

as of October 31, 2011 37

Appendix IV Planned Uses of SSBCI Funds, by Location 39

Appendix V Comments from the Department of the Treasury 41

Appendix VI GAO Contact and Staff Acknowledgments 42

Tables

Table 1: SSBCI Funds Applied for, Approved, and Disbursed, by 

Location, as of October 31, 2011 37

Table 2: Planned Uses of SSBCI Funds, by Location and Program 

Type (number of programs in parentheses) 39

Contents
Page ii GAO-12-173 State Small Business Credit Initiative 

Figures

Figure 1: Timeline of Major SSBCI Milestones 5

Figure 2: Distribution of SSBCI Funds Applied for by States and 

Territories 10

Figure 3: Planned Number and Type of New and Existing Programs 

to Receive SSBCI Funds Reported by States and 

Territories, from Aug. 15 to Sept. 14, 2011 11

Figure 4: Planned Uses of SSBCI Funds by Eligible Program Type 

Reported by States and Territories, from Aug. 15 to Sept. 

14, 2011 12

Abbreviations

CAP capital access program

GPRA Government Performance and Results Act of 1993

OCSP other credit support program

OMB Office of Management and Budget

SSBCI State Small Business Credit Initiative

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Page 1 GAO-12-173 State Small Business Credit Initiative 

United States Government Accountability Office 

Washington, DC 20548

December 7, 2011

Congressional Committees

Small businesses play a vital role in the U.S. economy, accounting for 

about half of private sector output and employing more than half of private 

sector workers.1 Because of their importance, Congress has grown 

increasingly concerned that small businesses might not be able to access 

enough capital to enable them to spur job creation in the nation’s ongoing 

economic recovery. In 2008 and early 2009, major disruptions of business 

credit markets made accessing credit difficult for small businesses. For 

example, a Wells Fargo survey showed that the number of small 

businesses having difficulty accessing credit had more than tripled 

between 2007 and 2010, with ultimately almost 40 percent of small 

businesses indicating that credit was difficult to obtain.2 Although most 

financial institutions reported in April 2010 that they were no longer 

tightening their small business lending standards, the Federal Reserve 

noted at the time that those lending standards “remained quite stringent.”3

The Secretary of the Department of the Treasury (Treasury) testified in 

June 2011 that small businesses were concentrated in sectors that had 

been especially hard-hit by the recession, including construction-related 

industries. As a result, during the depths of the crisis, the rate of job 

losses was almost twice as high in small businesses as it was in larger 

firms.4

The Small Business Jobs Act of 2010 created the State Small Business 

Credit Initiative (SSBCI) within Treasury to strengthen state programs that 

 

1

Small businesses are commonly defined as businesses with no more than 500 

employees for most manufacturing and mining industries and no more than $7 million in 

average annual receipts for most nonmanufacturing industries.

2

Gallup, Wells Fargo Small Business Survey, Quarter 3, 2010 (Princeton, NJ).

3

Board of Governors of the Federal Reserve System, National Summary of the April 2010 

Senior Loan Officer Opinion Survey on Bank Lending Practices (Washington, D.C.: May 3, 

2010) 2.

4

“The State of Small Business Access to Capital and Credit: The View from Secretary 

Geithner,” 112th Cong. 1 (2011) (statement of Timothy Geithner, Secretary of the United 

States Treasury).

 
 

Page 2 GAO-12-173 State Small Business Credit Initiative 

support lending to small businesses and small manufacturers.5 Funded 

with $1.5 billion, SSBCI was designed to help spur up to $15 billion in 

lending to small businesses. Under the program, participating states, 

territories, and the District of Columbia (states) are to use the federal 

funds for programs that leverage private lending to help finance small 

businesses and manufacturers that are creditworthy but have been 

unable to secure the loans needed to expand and to create jobs.6

 SSBCI 

is designed to allow states to build on existing or new models for state 

small business programs. 

The act also requires that we annually audit SSBCI.7

 Accordingly, this 

report examines (1) which states are participating in SSBCI and their 

planned uses of those funds, (2) Treasury’s implementation of the SSBCI 

program, and (3) Treasury’s efforts to measure whether the SSBCI 

program achieves its goals. 

To determine which states applied for and received SSBCI funds and the 

planned uses of the funds, we developed a Web-based questionnaire to 

collect information from the 54 states and territories that filed a Notice of 

Intent to Apply for SSBCI funds for which we achieved a 100 percent 

response rate.8

 On the basis of our application of recognized survey 

design practices and follow-up procedures, we determined that the data 

collected via our survey were of sufficient quality for our purposes. We 

also conducted interviews with Treasury officials, as well as selected 

state officials and financial institutions within those states, either via 

teleconference or site visits to inform our understanding of states’ planned 

uses of SSBCI funds. We limited our selection of states to interview to 

those states whose SSBCI applications had been reviewed and approved 

and for which the applicant had signed an allocation agreement by June 

 

5

Small Business Jobs Act of 2010, Pub. L. No. 111-240, 124 Stat. 2504 (2010) (codified at 

12 U.S.C. §§ 5701-5710). 

6

Throughout this report, the term “states” when used alone refers to the 50 states as well 

as the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of 

Northern Mariana Islands, Guam, American Samoa, and the United States Virgin Islands 

unless otherwise noted. 

7

12 U.S.C. § 5710(b). 

8

We did not survey municipalities in the two states—North Dakota and Wyoming—that did 

not submit a Notice of Intent to Apply for SSBCI funds. 
 

Page 3 GAO-12-173 State Small Business Credit Initiative 

30, 2011: California, Hawaii, Indiana, Kansas, Maryland, Missouri, North 

Carolina, and Vermont.

To evaluate Treasury’s implementation of the SSBCI program, we 

compared and contrasted Treasury’s SSBCI procedures and planned 

control activities with GAO’s internal control standards, including Internal 

Control in the Federal Government.

9

To review Treasury’s efforts to measure whether the SSBCI program 

achieves its goals of increasing small business investment and creating 

jobs, we discussed with Treasury their proposed performance metrics for 

the SSBCI program. We also interviewed Treasury officials as well as 

officials from the eight states that had signed a SSBCI allocation 

agreement with Treasury by June 30, 2011, to collect documentation that 

was used to inform our understanding of SSBCI program performance 

and Treasury’s metrics. A more detailed description of the scope of our 

We also interviewed Treasury 

officials about the types of training it provided its staff to help ensure 

compliance with its procedures. Additionally, we utilized data obtained 

through our questionnaire to identify the dates on which states submitted 

their SSBCI applications and whether Treasury required resubmission 

and reviewed a nonprobability sample of SSBCI applications consisting of 

all eight states that had signed an SSBCI allocation agreement by June 

30, 2011, to determine whether all aspects of these states’ applications 

were considered. We assessed whether Treasury followed its procedures 

and appropriately documented its decisions by analyzing the 

documentation of the application reviews. Because we used a 

nongeneralizable sample to select the applications to review, our findings 

cannot be used to make inferences about SSBCI applications of states 

that signed allocation agreements after June 30, 2011. However, we 

determined that the sample would be useful in providing illustrative 

examples on procedures and documentation practices applied by 

Treasury. Furthermore, we conducted interviews with Treasury officials 

about the type of testing the agency plans to perform of its controls to 

ensure compliance with SSBCI procedures, lessons learned about the 

review process, how they addressed problems, and their plans to follow 

up with states to ensure that SSBCI funds are used for the intended 

purposes outlined in approved applications for program funds.

 

9

GAO, Standards for Internal Control for the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999).
 

Page 4 GAO-12-173 State Small Business Credit Initiative 

review and the methods we used is contained in appendix I, and a copy 

of our questionnaire can be found in appendix II. 

We conducted this performance audit from February 2011 to December 

2011 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives. 

The Small Business Jobs Act of 2010 (the act) aims to address the 

ongoing effects of the 2007-2009 financial crisis on small businesses and 

stimulate job growth by establishing the SSBCI program, among other 

things. SSBCI is designed to strengthen state programs that support 

private financing to small businesses and small manufacturers that, 

according to Treasury, are not getting the loans or investments they need 

to expand and to create jobs. The act did not require a specific number of 

jobs to be created or retained as a result of SSBCI funds. 

The act appropriated $1.5 billion to be used by Treasury to provide direct 

support to states for use in programs designed to increase access to 

credit for small businesses. Using a formula contained in the act, 

Treasury calculated the amount of SSBCI funding for which each of the 

50 states, as well as the District of Columbia, the Commonwealth of 

Puerto Rico, the Commonwealth of the Northern Mariana Islands, Guam, 

American Samoa, and the United States Virgin Islands were eligible to 

apply.10 This formula takes into account a state’s job losses in proportion 

to the aggregate job losses of all states. (See app. III for more information 

on available funding by location). In addition to states, the act granted 

permission to municipalities to apply directly for funding under SSBCI in 

the event that a state either failed to file a Notice of Intent to Apply for its 

allocation of program funds by November 26, 2010, or, after filing a 

Notice of Intent, failed to submit an application to Treasury by June 27, 

2011. Treasury officials stated that municipalities granted permission to 

submit an application for program funds were generally subject to the 

same approval criteria and program requirements as states. 

 

10Treasury announced the 56 allocations on Oct. 8, 2010. 

Background 
 

Page 5 GAO-12-173 State Small Business Credit Initiative 

Municipalities were eligible to apply for up to the total amount of their 

state’s SSBCI allocation, but the final approved amounts were to be 

apportioned based on their pro rata share by population of all 

applicants.11

Figure 1: Timeline of Major SSBCI Milestones

Figure 1 provides a timeline of major SSBCI milestones.

The act allowed Treasury to provide SSBCI funding for two state program 

categories: capital access programs (CAP) and other credit support 

programs (OCSP). A CAP is a loan portfolio insurance program wherein 

the borrower and lender, such as a small business owner and a bank, 

contribute to a reserve fund held by the lender. Under the act, approved 

CAPs are eligible to receive federal contributions to the reserve funds 

held by each participating financial institution in an amount equal to the 

total amount of the insurance premiums paid by the borrower and the 

lender on a loan-by-loan basis. Amounts in the lender’s reserve fund are 

then available to cover any losses incurred in its portfolio of CAP loans.

For an SSBCI loan to be eligible for enrollment in a state’s approved 

CAP, the borrower must have 500 or fewer employees and the loan 

amount cannot exceed $5 million.

 

1112 U.S.C. § 5703(d)(6).
 

Page 6 GAO-12-173 State Small Business Credit Initiative 

In addition, the following types of OCSPs are eligible to receive SSBCI 

funds under the act:

• Collateral support programs: These programs supply cash collateral 

accounts to lenders to enhance the collateral coverage of borrowers. 

The accounts will cover all or a portion of the collateral shortfall 

identified by a lending institution. These programs can be designed to 

target certain regions or industries, such as equipment lending, in which 

a lender may be willing to fund at 80 percent loan-to-value, but a 

borrower may not be able to bridge the difference in cash at closing.12

• Loan participation programs: These programs enable small 

businesses to obtain medium- to long-term financing, usually in the 

form of term loans, to help them expand their businesses. States may 

structure a loan participation program in two ways: (1) purchase 

transactions, also known as purchase participation, in which the state 

purchases a portion of a loan originated by a lender and (2) 

companion loans, also known as co-lending participation or parallel 

loans, in which a lender originates one loan and the state originates a 

second (usually subordinate) loan to the same borrower. This 

program enables the state to act as a lender, in partnership with a 

financial institution, to provide small business loans at attractive 

terms.

• Direct loan programs: Although Treasury does not consider these 

programs to be a separate SSBCI program type, it acknowledges that 

some states may identify programs that they plan to support with 

SSBCI funds as direct loan programs. The programs that some states 

label as direct loan programs are viewed by Treasury as co-lending 

programs categorized as loan participation programs, which have 

lending structures that are allowable under the statute.

• Loan guarantee programs: These programs enable small businesses 

to obtain term loans or lines of credit to help them grow and expand 

their businesses by providing a lender with the necessary security, in 

the form of a partial guarantee, for them to approve a loan or line of 

credit. In most cases, a state sets aside funds in a dedicated reserve 

 

12Coverage is determined by the states and lenders, not to exceed 80 percent of the loan 

value; a lender must have at least 20 percent of its own capital at risk in each loan. In 

practice, collateral support is rarely provided for more than 50 percent of the loan value.
 

Page 7 GAO-12-173 State Small Business Credit Initiative 

or account to guarantee a specified percentage of each approved 

loan.

• Venture capital programs: These programs provide investment capital 

to create and grow start-ups and early-stage businesses, often in one 

of two forms: (1) a state-run venture capital fund (which may include 

other private investors) that invests directly in businesses or (2) a fund 

of funds, which is a fund that invests in other venture capital funds 

that in turn invest in individual businesses. Many factors, particularly 

resources and available talent, inform a state’s decision on which form 

to choose. For example, a state may choose to invest in a large 

venture fund that agrees to reinvest in that state an amount equal to 

that invested by the state, as opposed to trying to attract that same 

talent to a smaller fund capitalized with state money.

• Qualified loan or swap funding facilities: States may enter into 

qualifying loan or swap funding transactions under which SSBCI funds 

are pledged as collateral for private loans or credit lines. The private 

financing proceeds must, however, be used exclusively for the 

reserve or other accounts that back the credit support obligations of a 

borrowing CAP or OCSP. Presumably, fees paid by borrowers and 

lenders will provide a return to the providers of private capital.

• Other OCSPs: States were also able to submit an application to 

Treasury outlining their plans to support OCSPs that, though not able 

to be categorized in any of the above OCSP types, feature 

combinations of aspects of these eligible types.

OCSPs approved to receive SSBCI funds are required to target 

borrowers with an average size of 500 or fewer employees and to target 

support towards loans with average principal amounts of $5 million or 

less. In addition, these programs cannot lend to borrowers with more than 

750 employees or make any loans in excess of $20 million.

In applying for funding, applicants had to demonstrate that their CAPs 

and OCSPs could satisfy SSBCI criteria. For example, applicant states 

had to demonstrate that all legal actions had been taken at the state level 

to accept SSBCI funds and implement the state programs. States were 

also required to demonstrate that the state possessed the operational 

capacity, skills, and financial and management capacity to meet the 

objectives set forth in the act. In addition, each applicant was required to 

demonstrate a “reasonable expectation” that its participating programs, 

taken together, would generate an amount of private financing and 
 

Page 8 GAO-12-173 State Small Business Credit Initiative 

investment at least 10 times its SSBCI funding (that is, a leverage ratio of 

10:1) by the program’s end in December 2016.13

The act requires that each state receive its SSBCI funds in three 

disbursements of approximately one-third of its approved allocation. Prior 

to receipt of the second and third disbursements, a state must certify that 

it has expended, transferred, or obligated 80 percent or more of the 

previous disbursement to or for the account of one or more approved 

state programs. Treasury may terminate any portion of a state’s allocation 

that Treasury has not yet disbursed within 2 years of the date on which its 

SSBCI Allocation Agreement was signed. Treasury may also terminate, 

reduce, or withhold a state’s allocation at any time during the term of the 

Allocation Agreement upon an event of default under the agreement. 

Following the execution of the Allocation Agreement, states are required 

to submit quarterly and annual reports on their use of SSBCI funds.

Furthermore, each 

application had to include a report detailing how the state would use its 

SSBCI allocation to provide access to capital for small businesses in lowand moderate-income, minority, and other underserved communities, 

including women- and minority-owned small businesses.

14 All 

SSBCI Allocation Agreements, the primary tool signed by Treasury and 

each participating state, which outline how recipients are to comply with 

program requirements, will expire on March 31, 2017.

 

13Treasury’s SSBCI Policy Guidelines describe how states and territories were to 

calculate a weighted-average, private-leverage ratio when an applicant intended to apply 

for SSBCI funds to support multiple lending programs.

14The program’s reporting requirements are detailed in section 4.8 of the SSBCI allocation 

agreement. The obligations of participating states and territories to perform and report on 

progress will expire as outlined in the terms of the agreement.
 

Page 9 GAO-12-173 State Small Business Credit Initiative 

Nearly all of the states eligible for SSBCI funds submitted applications to 

Treasury. Fifty-four of the 56 states and territories that were eligible to 

apply for program funds submitted an application prior to the June 27, 

2011, deadline, although one state later withdrew its application.15 In total, 

states requested more than $1.4 billion in SSBCI funds—95 percent of 

the program’s appropriation—and only one applied for less than its 

maximum allocation.16

 

15North Dakota and Wyoming did not submit a Notice of Intent to Apply for SSBCI funds. 

According to a Wyoming official, the state did not apply because the state’s existing 

revolving loan fund has more than $9 million in available funds, and the state’s constitution 

prohibits taking an equity position in a business. North Dakota officials did not respond to 

our requests to discuss the state’s decision not to apply for funds. Alaska initially applied 

for its maximum SSBCI allocation before the June 27, 2011, deadline but subsequently 

withdrew its application. Alaska officials stated that the withdrawal was due to statutory 

and appropriations issues within their state that might have been resolved if more 

guidance had been available earlier in the application process.

Following the application deadline for states, 

Treasury received five additional applications from municipalities in three 

states—Alaska, North Dakota, and Wyoming—by the September 27, 

2011, deadline requesting a total of $39.5 million in program funds. Figure 

2 illustrates the distribution of SSBCI funds applied for by states and 

territories.

16Officials from American Samoa indicated that they initially requested $10,380,008 in 

their SSBCI application, though the territory was allocated the minimum SSBCI allocation 

amount of $13,168,350. According to Treasury officials, American Samoa’s request had 

increased to $10,418,500 during the review process. Treasury officials noted that they 

encouraged states to apply for the full amount of their allocation for which they could 

reasonably demonstrate all of the program’s eligibility criteria. As of Oct. 31, 2011, 

American Samoa’s application was still under review.

Most States Are 

Participating in SSBCI 

and Plan to Use the 

Funds to Support a 

Variety of Programs
 

Page 10 GAO-12-173 State Small Business Credit Initiative 

Figure 2: Distribution of SSBCI Funds Applied for by States and Territories

a

Puerto Rico 

b

Guam 

c

Northern Mariana Islands 

d

U.S. Virgin Islands 

e

American Samoa 
 

Page 11 GAO-12-173 State Small Business Credit Initiative 

Participating states indicated that they are planning to support various 

new, existing, and dormant (that is, previously suspended) lending 

programs with their respective SSBCI allocations. According to our survey 

results, states are planning to support 153 different lending programs, 69 

of which are new programs that were created to be supported by SSBCI 

funds (see fig. 3). Forty-one states indicated they are planning to support 

more than one program with their allocation. For example, Alabama plans 

to support a CAP, four loan participation programs, and a loan guarantee 

program, and New Jersey plans to support a loan participation program, 

four loan guarantee programs, five direct loan programs, and a venture 

capital program.

Figure 3: Planned Number and Type of New and Existing Programs to Receive 

SSBCI Funds Reported by States and Territories, from Aug. 15 to Sept. 14, 2011

Note: We asked officials from states and territories to report on the planned number and type of 

programs that they described in their SSBCI applications to Treasury. Our survey was administered 

from Aug. 15, 2011 through Sept. 14, 2011. 

States Plan to Use SSBCI 

Funds to Support a Variety 

of New and Existing 

Lending Programs
 

Page 12 GAO-12-173 State Small Business Credit Initiative 

According to our survey results, states are planning to support CAPs and 

all types of eligible OCSPs except loan and swap funding facilities (see 

fig. 4). Venture capital programs are to receive the largest amount of 

SSBCI funds of any program type. According to Treasury officials, states 

submitted their respective applications with plans for developing 

programs in response to unique gaps in local markets or the specific 

expertise of their staff. Consequently, there is variation in program design 

across states. For example, Treasury officials stated that Michigan plans 

to use its funds to support a collateral support program because of 

difficulties that manufacturing companies in the state were experiencing in 

obtaining credit. Specifically, Treasury officials noted that as these 

manufacturers’ real estate and equipment declined in value, they were 

facing difficulties in obtaining credit due to collateral shortfalls (see app. 

IV for more information on planned uses of funds by location).

Figure 4: Planned Uses of SSBCI Funds by Eligible Program Type Reported by 

States and Territories, from Aug. 15 to Sept. 14, 2011

Note: We asked officials from states and territories to report on the planned uses of SSBCI funds that 

they described in their application to Treasury. Our survey was administered from Aug. 15, 2011 

through Sept. 14, 2011. 

a

Other OCSPs cited by states included a working capital loan program, a small business credit 

guarantee program, and programs that featured combinations of program types. 
 

Page 13 GAO-12-173 State Small Business Credit Initiative 

States indicated that they expect SSBCI funds to result in a total of $18.7 

billion in new private financing and investment throughout the life of the 

program. In responding to our survey, officials from 39 of the states that 

applied for SSBCI funds indicated that they expect to achieve a private 

leverage ratio between 10:1 and 15:1, and 14 projected a ratio of 15:1 or 

greater.17 However, each participating state’s generation of an amount of 

private financing and investment at least 10 times its SSBCI allocation by 

December 2016 is not a requirement, and some states indicated that they 

believe reaching a 10:1 private leverage ratio could prove challenging.

For example, officials from one state expressed some concern that the 

state’s final leverage ratio may ultimately fall short of the estimate 

included in its approved application because the state was creating a new 

program and, therefore, did not have prior experience operating a similar 

program. Treasury officials noted that a state’s mix of programs, as well 

as the design of each individual program, drives the leverage estimates. 

For example, Treasury officials stated that private leverage ratios for 

CAPs tend to be the highest among program types and are evident 

immediately because the program design is such that the SSBCI subsidy 

per loan is quite small and is not dependent on subsequent private 

financing.18 However, the officials noted that OCSPs tend to have lower 

leverage ratios initially but may see those grow in later years as program 

funds are recycled for additional lending over time.

 

17In responding to our survey, states described a variety of different methodologies that 

they used to project the impact of their respective SSBCI allocations.

18The CAP programs achieve a minimum of 14:1 leverage immediately, since the 

maximum SSBCI subsidy per loan is 7 percent of the loan amount.

States Anticipate $18.7 

Billion in New Private 

Financing and Investment 

Due to SSBCI Funds, and 

Expected Leverage Ratios 

Vary
 

Page 14 GAO-12-173 State Small Business Credit Initiative 

With the enactment of the Small Business Jobs Act of 2010 on 

September 27, 2010, Treasury was tasked with quickly starting up an 

SSBCI program office and developing processes and guidance to 

implement this new program. After accepting Notices of Intent to Apply 

from states and territories by the end of November 2010, Treasury issued 

an initial set of policy guidelines and application materials via its website 

on December 21, 2010. According to Treasury officials, Treasury received 

a few applications shortly thereafter and was able to review and approve 

them and to obtain signed Allocation Agreements with and distribute first 

installments of funds to two states in January 2011. In response to 

feedback from states, discussions with other federal agencies, such as 

the Small Business Administration, and current trends in the small 

business banking arena, Treasury determined that it needed to revise its 

guidelines and application paperwork to better articulate what 

documentation was required for both the application and review 

processes. As a result, Treasury issued revised guidance materials and 

Allocation Agreements for applicants in April 2011 as well as a reviewers’ 

manual for its review staff in May 2011. According to our survey of SSBCI 

applicants, five states submitted the final version of their application to 

Treasury before these documents were finalized. Treasury officials told us 

that although they took steps to help ensure consistent treatment of 

applicants, Treasury did not revisit previously approved applications once 

review procedures were finalized. Treasury officials said they were 

confident that no additional review was required, as those early 

applications were from states with well-established programs. However, 

as a result of the revisions to the Allocation Agreement made in April 

2011, Treasury asked the two states that had signed the previous 

versions to sign an amended Allocation Agreement that incorporated the 

new terms.

Some states reported that they delayed submitting their applications until 

Treasury’s final application guidance was issued. According to our survey 

results, 37 states did not submit their final applications for SSBCI funds 

until June 2011, the month that applications were due. Despite the delay 

in providing application guidance, applicants generally viewed Treasury 

officials as helpful throughout the application process—providing answers 

Treasury’s Evolving 

Processes Have 

Created Some Delays

Treasury Revised Its 

Application Guidance and 

Review Procedures to 

Clarify Requirements and 

Thoroughly Reviewed 

Selected Applications
 

Page 15 GAO-12-173 State Small Business Credit Initiative 

to most questions immediately and determining answers as soon as 

possible when not readily available. Treasury officials stated that they 

also hosted multiple webinars and conference calls to field questions 

about the application process that were highly attended by states and 

territories.

In our review of the eight applications reviewed and approved before 

June 30, 2011, we found that Treasury considered each aspect of the 

application.19 Although only one of the applications we reviewed was 

processed under the revised application and review guidelines, we found 

that each application was subject to five stages of review: an initial 

review, a subsequent review by a quality assurance reviewer, review by 

the application review committee, a legal review, and final approval by the 

designated Treasury official. Our reviews of the applications and the 

experiences of the states suggest that applications were scrutinized in 

terms of their completeness as well as the eligibility of the programs for 

which states intended to use SSBCI funds. For example, Treasury 

reviewers noted that in one state’s application, the state proposed several 

modifications to its existing CAP, thereby bringing it under compliance 

with SSBCI requirements. Similarly, SSBCI applicants reported that 

Treasury scrutinized their applications. According to our survey results, 

50 of the 54 applicants reported they were required to resubmit at least 

parts of their applications for further review after their original 

submissions. For example, one state noted that Treasury wanted 

significant changes in its application, mainly in the areas of internal 

controls, mix of programs, and contractor oversight. Another state noted 

that Treasury determined that the state failed to specify that it was to 

match the borrower and lender premium between 2 percent and 3.5 

percent; Treasury officials asked the state to revise its application to 

reflect this information and submit an amended application.

As required under the act, Treasury is distributing SSBCI funds to 

recipients in three installments. As of October 31, 2011, Treasury had 

provided first installments to 46 states and territories, totaling about $424 

million. However, Treasury did not begin processing state requests for 

their second installment of funds until November 2011. According to 

 

19The scope of our review was limited to those applications that had completed the 

application and review processes and been approved by Treasury by June 30, 2011. 

Treasury reviewed and approved subsequent applications after this date.

Delays in Finalizing 

Disbursement Procedures 

Slowed the Disbursement 

of Funds
 

Page 16 GAO-12-173 State Small Business Credit Initiative 

Treasury officials, Treasury had previously not acted on these requests 

because they wanted to ensure that proper procedures were established 

to ensure all certifications made as part of the request were adequately 

substantiated. Specifically, they had to resolve how to determine whether 

80 percent of a state’s initial disbursement of funds has been expended, 

transferred, or obligated as required under the act.20

While Treasury was working to finalize these procedures, states were 

potentially delayed in receiving their remaining SSBCI funding. For 

example, officials from one state that we contacted told us they were 

ready for their second installment after their first installment was 

transferred to the accounts of their designated SSBCI lending programs, 

but they were told by Treasury officials that they would have to wait until 

the disbursement procedures were finalized. Consequently, the officials 

told us their state faced additional interest expenses as a result of the 

delay.

Treasury finalized its 

disbursement procedures for second and third installments of SSBCI 

funds at the beginning of November 2011. According to Treasury officials, 

as of that date, no state had yet expended 80 percent of its initial 

disbursement to support loans or investment to small businesses.

Treasury is implementing a multi-step plan to monitor recipient 

compliance with SSBCI program requirements. These steps include (1) 

collecting and reviewing quarterly and annual reports, as well as quarterly 

use of funds certifications, from recipients, (2) evaluating the accuracy of 

recipient-level reporting on an annual basis by sampling transaction-level 

data, (3) monitoring recipient requests for second and third installments of 

SSBCI funds, and (4) contacting recipients on a quarterly basis to inquire 

as to their adherence with plans outlined in their respective SSBCI 

applications, as well as monitoring requirements. Treasury has developed 

a secure, online system for states to report on those data fields included 

in the Allocation Agreements signed by states, including (1) total amount 

of principal loaned and of that amount, the portion that is from nonprivate 

 

20Treasury officials noted that their policy deliberations regarding the final process for 

approving subsequent disbursement requests included but were not limited to clarifying 

the meaning of the term “transferred.” On November 9, 2011, Treasury officials stated that 

they were updating the FAQ document on the SSBCI website to include specific examples 

of state-level uses of funds that will qualify as having been “expended, transferred, or 

obligated,” according to their finalized and approved disbursement procedures.

Treasury Is Implementing a 

Plan to Monitor Recipient 

Compliance with Program 

Requirements
 

Page 17 GAO-12-173 State Small Business Credit Initiative 

sources; (2) estimated number of jobs created or retained as a result of 

the loan; and (3) amount of additional private financing occurring after the 

loan closing. States are to provide these data to Treasury on an annual 

basis beginning in March 2012.21

Treasury officials told us they have also assigned three relationship 

managers to serve as the primary Treasury contacts for the SSBCI 

program. These managers, who have each been assigned 15 to 20 

recipients, are to hold quarterly phone conversations with recipients. 

During these calls, the managers are to ask a series of generic questions, 

as well as recipient-specific questions regarding plans the states 

described in their applications, such as hiring staff and monitoring the use 

of program funds.

Treasury officials told us they plan to 

sample states’ transaction-level data to help ensure the accuracy of state 

reporting. Specifically, the SSBCI compliance manager is to take samples 

of transaction-level data from all recipients in order to determine whether 

states are entering these data accurately, including verifying that 

transactions listed match the underlying loan or investment documents. 

Treasury officials noted that the system is to automatically flag any loans 

for which the data entered do not comply with program requirements.

The Treasury Inspector General recently made recommendations to 

further enhance Treasury’s oversight of SSBCI recipients. In August 

2011, the Inspector General issued a report describing the results of its 

review of SSBCI policy guidance and other key program documents, 

including allocation agreements.22

 

21Treasury is working with its system contractor to have version 2.0 of this system—the 

annual reporting system—up and running before the first annual reports are due in March 

2012. Treasury officials told us the quarterly reporting system became operational in 

October 2011.

The report made nine 

recommendations to improve Treasury’s compliance and oversight 

framework, including that Treasury’s guidance should clearly define the 

oversight obligations of recipients and specify minimum standards for 

determining whether recipients have fulfilled their oversight 

responsibilities. Treasury concurred with eight of the recommendations 

and has begun to take action to address them. Treasury disagreed with 

the Inspector General’s recommendation to make additional provisions for 

22Office of Inspector General, Department of the Treasury, State Small Business Credit 

Initiative: Treasury Needs to Strengthen State Accountability for Use of Funds

(Washington, D.C.: Aug. 5, 2011).
 

Page 18 GAO-12-173 State Small Business Credit Initiative 

states to certify their allocation agreements, stating that states certify that 

they are implementing their programs in compliance with SSBCI 

procedures as part of their quarterly reporting to Treasury.

Treasury officials told us that they have not yet established performance 

measures for the SSBCI program. Although Treasury plans to rely 

primarily on the department’s overall performance measures in evaluating 

the SSBCI program, officials noted they are considering several draft 

performance measures to assess the efficiency of the program. Treasury 

officials described to us some of the potential measures they are 

considering, but we are not including them in this report because they 

have not yet been finalized. Treasury officials told us that they have not 

finalized the program’s performance measures because they have been 

focused on starting up the program quickly to meet statutorily required 

deadlines. Furthermore, officials noted that because SSBCI is a 

multilayered program that is implemented at the state level and 

dependent upon private sector entities, Treasury’s ability to influence 

program outcomes will be limited. Therefore, Treasury officials have been 

trying to develop measures that focus on the aspects of the program 

under Treasury’s control. According to Treasury officials they do not have 

a time frame for fully developing and finalizing SSBCI-specific 

performance measures.

The potential performance measures described by Treasury do not 

currently include measures related to the number of jobs created or 

retained as a result of the SSBCI program. As required in their allocation 

agreements with Treasury, states are to report information on estimated 

jobs resulting from SSBCI programs on a per loan or investment basis. 

According to Treasury officials, gathering this information from the states 

serves two purposes: (1) it allows Treasury to track the progress of the 

states against the anticipated benefits articulated for their programs in their 

SSBCI applications and (2) it provides Treasury with a potential data point 

that may be useful when measuring overall program performance over 

time. However, Treasury’s ability to use this information moving forward 

could be limited, as the jobs data will be based on estimates and not actual 

jobs. In particular, as part of the SSBCI loan and investment application 

process, borrowers and investors are required to provide in their application 

paperwork estimates of the number of jobs to be created and retained as a 

result of participating in SSBCI programs. States then provide these 

estimates in their annual reports to Treasury. However, the states are not 

required to validate these jobs estimates, and they are not required to 

follow up with borrowers and investors to determine whether the actual 

Treasury Is in the 

Process of Developing 

Performance 

Measures for SSBCI
 

Page 19 GAO-12-173 State Small Business Credit Initiative 

number of jobs they were able to create or retain matched their original 

estimates. According to one lending official we spoke with, validating these 

estimates would be difficult and lenders could be discouraged from 

participating in the SSBCI program if they were required to track actual jobs 

created and retained. Concerned about the burden that reporting on actual 

jobs created and retained would place on the small businesses receiving 

SSBCI funds, Treasury officials told us that they elected to capture instead 

estimated jobs data at the time of the closing of the loan or investment. 

Treasury officials noted they are currently consulting with officials from the 

Small Business Administration to learn what methods that agency uses in 

measuring jobs using estimated data.

The importance of performance measures for gauging the progress of 

programs and projects is well recognized. Measuring performance allows 

organizations to track the progress they are making toward their goals 

and gives managers crucial information on which to base their 

organizational and management decisions. Leading organizations 

recognize that performance measures can create powerful incentives to 

influence organizational and individual behavior. In addition, the 

Government Performance and Results Act of 1993 (GPRA) incorporates 

performance measurement as one of its most important features.23 Under 

GPRA, executive branch agencies are required to develop annual 

performance plans that use performance measurement to reinforce the 

connection between the long-term strategic goals outlined in their 

strategic plans and the day-to-day activities of their managers and staff. 

The Office of Management and Budget (OMB) has also directed agencies 

to define and select meaningful outcome-based performance measures 

that indicate the intended result of carrying out a program or activity.24

Additionally, we have previously reported that aligning performance 

metrics with goals can help to measure progress toward those goals, 

emphasizing the quality of the services an agency provides or the 

resulting benefits to users.25

 

23Government Performance and Results Act of 1993, Pub. L. No. 103-62, 107 Stat. 285 

(1993).

24OMB, Program Assessment Rating Tool Guidance, No. 2007-02 (Washington, D.C.: 

Jan. 29, 2007).

25GAO, NextGen Air Transportation System: FAA’s Metrics Can Be Used to Report on 

Status of Individual Programs, but Not of Overall NextGen Implementation or Outcomes, 

GAO-10-629 (Washington, D.C.: July 27, 2010).
 

Page 20 GAO-12-173 State Small Business Credit Initiative 

We have also previously identified criteria to evaluate an agency’s 

performance measures. While GPRA focuses on the agency level, 

performance measures are important management tools for all levels of 

an agency—such as the bureau, program, project, or activity level—and 

these criteria are applicable at those levels as well. Among other criteria, 

we have identified nine key attributes of successful performance 

measures.26

(1) Linkage. Measure is aligned with division- and agency-wide 

goals and mission and clearly communicated throughout the 

organization.

These attributes include the following:

(2) Clarity. Measure is clearly stated, and the name and definition 

are consistent with the methodology used to calculate it.

(3) Measurable target. Measure has a numerical goal.

(4) Objectivity. Measure is reasonably free from significant bias or 

manipulation.

(5) Reliability. Measure produces the same result under similar 

conditions.

(6) Core program activities. Measures cover the activities that an 

entity is expected to perform to support the intent of the program.

(7) Limited overlap. Measure should provide new information beyond 

that provided by other measures.

(8) Balance. Balance exists when a suite of measures ensures that 

an organization’s various priorities are covered.

(9) Governmentwide priorities. Each measure should cover a priority 

such as quality, timeliness, and cost of service.

 

26GAO, Tax Administration: IRS Needs to Further Refine Its Tax Filing Season 

Performance Measures, GAO-03-143 (Washington, D.C.: Nov. 22, 2002).
 

Page 21 GAO-12-173 State Small Business Credit Initiative 

Given the preliminary nature of Treasury’s potential performance 

measures, assessing whether the measures will reflect the attributes of 

successful performance measures would be premature. Nevertheless, 

considering these attributes as it works to finalize SSBCI-specific 

performance measures could help Treasury to develop robust measures. 

Until such measures are developed and implemented, Treasury will not 

be able to determine whether the program is achieving its goals. 

In response to SSBCI’s short time frame, Treasury was able to design, 

implement, and execute an application process for the program in a 

matter of months. Appropriately, Treasury’s early efforts were focused on 

establishing the application process and the process for disbursing initial 

installments of funds to recipients as quickly as possible. Treasury is still 

in the process of developing performance measures for the SSBCI 

program. Measuring performance allows organizations to track progress 

toward their goals and gives managers crucial information on which to 

base decisions. At the program level, agencies can create a set of 

performance measures that addresses important dimensions of program 

performance and balances competing priorities. Performance measures 

that successfully address important and varied aspects of program 

performance are key elements of an orientation toward results. Effective 

performance measures can provide a balanced perspective on the 

intended performance of a program’s multiple priorities. While Treasury is 

considering potential draft performance measures, it has not fully 

developed or finalized a set of measures for the SSBCI program. Until 

such measures are developed and implemented, Treasury will not be in a 

position to determine whether the SSBCI program is effective in achieving 

its goals.

We are making one recommendation to Treasury to improve its 

implementation and oversight of the SSBCI program as follows:

• To help ensure that the performance measures for the SSBCI 

program are as robust and meaningful as possible, we recommend 

that the Secretary of the Treasury direct the SSBCI Program Manager 

to consider key attributes of successful performance measures as the 

program’s measures are developed and finalized.

Conclusions

Recommendation for 

Executive Action
 

Page 22 GAO-12-173 State Small Business Credit Initiative 

We provided a draft of this report to Treasury for review and comment. 

Treasury provided written comments that we have reprinted in appendix 

V. Treasury also provided technical comments, which we have 

incorporated, as appropriate.

In their written comments, Treasury agreed with our recommendation. 

Treasury noted that it will consider the key attributes of successful 

performance measures as it works to finalize measures for the SSBCI 

program.

We are sending copies of this report to the appropriate congressional 

committees, the Secretary of the Treasury, and other interested parties. 

The report is also available at no charge on the GAO website at 

http://www.gao.gov. 

If you or your staff members have any questions about this report, please 

contact me at clowersa@gao.gov or (202) 512-8678. Contact points for 

our Offices of Congressional Relations and Public Affairs may be found 

on the last page of this report. GAO staff who made major contributions to 

this report are listed in appendix VI.

A. Nicole Clowers

Director, Financial Markets 

 and Community Investment

Agency Comments 

and Our Evaluation
 

Page 23 GAO-12-173 State Small Business Credit Initiative 

List of Committees

The Honorable Debbie Stabenow

Chairwoman 

The Honorable Pat Roberts

Ranking Member 

Committee on Agriculture, Nutrition, and Forestry 

United States Senate

The Honorable Daniel K. Inouye 

Chairman 

The Honorable Thad Cochran 

Ranking Member

Committee on Appropriations 

United States Senate

The Honorable Tim Johnson 

Chairman 

The Honorable Richard C. Shelby 

Ranking Member 

Committee on Banking, Housing, and Urban Affairs 

United States Senate

The Honorable Kent Conrad 

Chairman 

The Honorable Jeff Sessions 

Ranking Member 

Committee on the Budget 

United States Senate

The Honorable Max Baucus 

Chairman 

The Honorable Orrin G. Hatch 

Ranking Member 

Committee on Finance 

United States Senate

The Honorable Mary L. Landrieu

Chair 

The Honorable Olympia J. Snowe

Ranking Member 

Committee on Small Business and Entrepreneurship 

United States Senate
 

Page 24 GAO-12-173 State Small Business Credit Initiative 

The Honorable Frank D. Lucas 

Chairman 

The Honorable Collin C. Peterson

Ranking Member 

Committee on Agriculture 

House of Representatives

The Honorable Hal Rogers 

Chairman 

The Honorable Norm Dicks 

Ranking Member 

Committee on Appropriations 

House of Representatives

The Honorable Paul Ryan 

Chairman 

The Honorable Chris Van Hollen 

Ranking Member 

Committee on the Budget 

House of Representatives

The Honorable Spencer Bachus 

Chairman 

The Honorable Barney Frank 

Ranking Member 

Committee on Financial Services 

House of Representatives

The Honorable Sam Graves 

Chairman 

The Honorable Nydia M. Velázquez 

Ranking Member 

Committee on Small Business 

House of Representatives

The Honorable Dave Camp 

Chairman

The Honorable Sander M. Levin 

Ranking Member

Committee on Ways and Means 

House of Representatives
Appendix I: Objectives, Scope, and 

Methodology

Page 25 GAO-12-173 State Small Business Credit Initiative 

To determine which states applied for and received State Small Business 

Credit Initiative (SSBCI) funds and the planned uses of the funds, we 

developed a Web-based questionnaire to collect information from the 54 

states and territories that filed a Notice of Intent to Apply for SSBCI funds 

with the Department of the Treasury (Treasury) by the November 26, 

2010 deadline.1

To minimize errors arising from differences in how questions might be 

interpreted and to reduce variability in responses that should be 

qualitatively the same, we conducted pretests with officials in three states, 

both in person and over the telephone. To help ensure that we obtained a 

variety of perspectives on our questionnaire, we selected officials from 

states planning to support various types of programs with SSBCI funds. 

Based on feedback from these pretests, we revised the questionnaire in 

order to improve response quality. For instance, in response to one state 

official’s comment that it would be difficult for respondents to answer with 

confidence how many capital access programs (CAP) and other credit 

support programs (OCSP) have recently been in operation across all 

municipalities in a state, we removed the historical and specific program 

budget questions and clarified our focus on the planned uses of SSBCI 

funds. We conducted two additional pretests with other state officials to 

ensure that the updated questionnaire was understandable.

The questionnaire included questions on the timing of 

applications for SSBCI funds, the receipt of funds to date, the intended 

uses of funds, and the potential impacts of program funds. See appendix 

II for a copy of the questionnaire.

After completing the pretests, we administered the survey. On August 4, 

2011, we began sending e-mail announcements of the questionnaire to 

the state and territory officials that had been identified as points of contact 

in a list provided to us by Treasury, notifying them that our online 

questionnaire would be activated in approximately 1 week. On August 15, 

2011, we sent a second e-mail message to officials in which we informed 

them that the questionnaire was available online and provided them with 

unique passwords and usernames. On August 26, 2011, we began 

making telephone calls to officials and sent them follow-up e-mail 

messages, as necessary, to ensure their participation as well as to clarify 

and gain a contextual understanding of their responses. By September 

 

1

We did not survey municipalities in the two states—North Dakota and Wyoming—that did 

not submit a Notice of Intent to Apply for SSBCI funds.

Appendix I: Objectives, Scope, and 

Methodology 
Appendix I: Objectives, Scope, and 

Methodology

Page 26 GAO-12-173 State Small Business Credit Initiative 

14, 2011, we had received completed questionnaires from 54 states and 

territories, for a 100 percent response rate.

We used standard descriptive statistics to analyze responses to the 

questionnaire. Because this was not a sample survey, there are no 

sampling errors. To minimize other types of errors, commonly referred to as 

nonsampling errors, and to enhance data quality, we employed recognized 

survey design practices in the development of the questionnaire and in the 

collection, processing, and analysis of the survey data. For instance, as 

previously mentioned, we pretested the questionnaire with state officials to 

minimize errors arising from differences in how questions might be 

interpreted and to reduce variability in responses that should be 

qualitatively the same. In addition, during survey development, we 

reviewed the survey to ensure the ordering of survey sections was 

appropriate and that the questions within each section were clearly stated 

and easy to comprehend. We also received feedback from survey experts 

who we asked to review the survey instrument. To reduce nonresponse, 

another source of nonsampling error, we sent out e-mail reminder 

messages to encourage officials to complete the survey. In reviewing the 

survey data, we performed automated checks to identify inappropriate 

answers. We further reviewed the data for missing or ambiguous 

responses and followed up with respondents when necessary to clarify 

their responses. On the basis of our application of recognized survey 

design practices and follow-up procedures, we determined that the data 

were of sufficient quality for our purposes.

In addition to the survey, we conducted interviews with Treasury officials, 

as well as selected state officials and financial institutions within those 

states either via teleconference or site visits to collect documentation that 

informed our understanding of states’ planned uses of SSBCI funds. We 

limited our selection of states to interview to those states whose SSBCI 

applications had been reviewed, approved, and for which the applicant 

had signed an allocation agreement by June 30, 2011: California, Hawaii, 

Indiana, Kansas, Maryland, Missouri, North Carolina, and Vermont.

To evaluate Treasury’s implementation of the SSBCI program, we 

compared and contrasted Treasury’s SSBCI procedures and planned 

control activities with GAO’s internal control standards, including Internal 

Control in the Federal Government.

2

 

2

We interviewed Treasury officials 

GAO/AIMD-00-21.3.1. 
Appendix I: Objectives, Scope, and 

Methodology

Page 27 GAO-12-173 State Small Business Credit Initiative 

about the types of training it provided its staff to help ensure compliance 

with its procedures. We also utilized data obtained through our 

questionnaire to identify the dates on which states submitted their SSBCI 

applications and whether Treasury required resubmission. Additionally, 

we reviewed a nonprobability sample of SSBCI applications consisting of 

all eight states that had signed an SSBCI allocation agreement by June 

30, 2011, to determine whether all aspects of these states’ applications 

were considered. We assessed whether Treasury followed its procedures 

and appropriately documented its decisions by analyzing the 

documentation of the application reviews. Because we used a 

nongeneralizable sample to select the applications to review, our findings 

cannot be used to make inferences about SSBCI applications of states 

that signed allocation agreements after June 30, 2011. However, we 

determined that the sample would be useful in providing illustrative 

examples on procedures and documentation practices applied by 

Treasury. Furthermore, we conducted interviews with Treasury officials 

about the type of testing the agency plans to perform of its controls to 

ensure compliance with SSBCI procedures, lessons learned about the 

review process, how they addressed problems, and their plans to follow 

up with states to ensure that SSBCI funds are used for the intended 

purposes outlined in approved applications for program funds.

To review Treasury’s efforts to measure whether the SSBCI program 

achieves its goals of increasing small business investment and creating 

jobs, we discussed with Treasury their proposed performance metrics for 

the SSBCI program. We also interviewed Treasury officials, as well as 

officials from the eight states that had signed a SSBCI allocation 

agreement with Treasury by June 30, 2011, to collect documentation that 

was used to inform our understanding of SSBCI program performance 

and Treasury’s metrics.

We conducted this performance audit from February 2011 to December 

2011 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.
Appendix II: Copy of GAO Questionnaire

Page 28 GAO-12-173 State Small Business Credit Initiative 

Appendix II: Copy of GAO Questionnaire
Appendix II: Copy of GAO Questionnaire

Page 29 GAO-12-173 State Small Business Credit Initiative 
Appendix II: Copy of GAO Questionnaire

Page 30 GAO-12-173 State Small Business Credit Initiative 
Appendix II: Copy of GAO Questionnaire

Page 31 GAO-12-173 State Small Business Credit Initiative 
Appendix II: Copy of GAO Questionnaire

Page 32 GAO-12-173 State Small Business Credit Initiative 
Appendix II: Copy of GAO Questionnaire

Page 33 GAO-12-173 State Small Business Credit Initiative 
Appendix II: Copy of GAO Questionnaire

Page 34 GAO-12-173 State Small Business Credit Initiative 
Appendix II: Copy of GAO Questionnaire 

Page 35 GAO-12-173 State Small Business Credit Initiative 
Appendix II: Copy of GAO Questionnaire

Page 36 GAO-12-173 State Small Business Credit Initiative 
Appendix III: SSBCI Funds Applied for, 

Approved, and Disbursed, by Location, as of 

October 31, 2011 

Page 37 GAO-12-173 State Small Business Credit Initiative 

Table 1 below contains the amounts of SSBCI funds that have been 

applied for, approved, and disbursed as of October 31, 2011. This 

information was provided by state and territory officials who responded to 

a GAO survey between August 15 and September 14, 2011 and by the 

U.S. Treasury on October 31, 2011.

Table 1: SSBCI Funds Applied for, Approved, and Disbursed, by Location, as of October 31, 2011

SSBCI-eligible

state /territory

SSBCI allocation amount

applied for by

state /territory

Amount of SSBCI funds

approved by Treasury

Amount of SSBCI funds

disbursed by Treasury

California $168,623,821 $168,623,821 $55,645,861

Florida 97,662,349 97,662,349 32,228,575 

Michigan 79,157,742 79,157,742 26,122,055 

Illinois 78,365,264 78,365,264 25,860,537 

New York 55,351,534 55,351,534 18,266,006 

Ohio 55,138,373 55,138,373 18,195,663 

Georgia 47,808,507 0 0 

Texas 46,553,879 46,553,879 15,362,780 

North Carolina 46,061,319 46,061,319 15,200,235 

Indiana 34,339,074 34,339,074 11,331,894 

New Jersey 33,760,698 33,760,698 11,141,030 

Alabama 31,301,498 31,301,498 10,329,494 

Tennessee 29,672,070 29,672,070 9,791,783 

Pennsylvania 29,241,232 29,241,232 9,649,607 

Missouri 26,930,294 26,930,294 8,886,997 

Maryland 23,025,709 23,025,709 7,598,484 

Wisconsin 22,363,554 22,363,554 7,379,973 

Massachusetts 22,032,072 22,032,072 7,270,584 

Washington 19,722,515 19,722,515 0 

Arizona 18,204,217 18,204,217 0 

South Carolina 17,990,415 17,990,415 5,936,837 

Virginia 17,953,191 17,953,191 5,924,553 

Colorado 17,233,489 17,233,489 5,687,051 

Oregon 16,516,197 16,516,197 5,450,345 

Kentucky 15,487,998 15,487,998 5,111,039 

Minnesota 15,463,182 15,463,182 5,102,850 

Puerto Rico 14,540,057 14,540,057 4,798,219 

Nevada 13,803,176 13,803,176 4,555,048 

Connecticut 13,301,126 13,301,126 4,389,372 

Arkansas 13,168,350 13,168,350 0 

Delaware 13,168,350 13,168,350 4,345,556 

Appendix III: SSBCI Funds Applied for, 

Approved, and Disbursed, by Location, as of 

October 31, 2011
Appendix III: SSBCI Funds Applied for, 

Approved, and Disbursed, by Location, as of 

October 31, 2011 

Page 38 GAO-12-173 State Small Business Credit Initiative 

SSBCI-eligible

state /territory

SSBCI allocation amount

applied for by

state /territory

Amount of SSBCI funds

approved by Treasury

Amount of SSBCI funds

disbursed by Treasury

District of Columbia 13,168,350 13,168,350 4,345,556 

Guam 13,168,350 13,168,350 4,345,556 

Hawaii 13,168,350 13,168,350 4,345,556 

Idaho 13,168,350 13,168,350 4,345,556 

Iowa 13,168,350 13,168,350 4,345,556 

Kansas 13,168,350 13,168,350 4,345,556 

Louisiana 13,168,350 13,168,350 4,345,556 

Maine 13,168,350 13,168,350 4,345,556 

Mississippi 13,168,350 13,168,350 4,345,556 

Montana 13,168,350 13,168,350 4,345,556 

Nebraska 13,168,350 13,168,350 4,345,556 

New Hampshire 13,168,350 13,168,350 4,345,556 

New Mexico 13,168,350 13,168,350 4,345,556 

Northern Mariana Islands 13,168,350 0 0 

Oklahoma 13,168,350 13,168,350 4,345,556 

Rhode Island 13,168,350 13,168,350 4,345,556 

South Dakota 13,168,350 13,168,350 4,345,556 

U.S. Virgin Islands 13,168,350 13,168,350 4,345,556 

Utah 13,168,350 13,168,350 4,345,556 

Vermont 13,168,350 13,168,350 4,345,556 

West Virginia 13,168,350 13,168,350 0 

American Samoaa 10,418,500 0 0 

Alaskab data not applicable data not applicable data not applicable

North Dakotac data not applicable data not applicable data not applicable

Wyomingc data not applicable data not applicable data not applicable

Total $1,420,895,102 $1,349,499,745 $424,127,983 

Sources: GAO survey and U.S. Treasury.

a

Officials from American Samoa indicated that they initially requested $10,380,008 in their SSBCI 

application, though the territory was allocated the minimum SSBCI allocation amount of $13,168,350. 

According to Treasury officials, American Samoa’s request had increased to $10,418,500 during the 

review process. Treasury officials noted that they encouraged states to apply for the full amount of 

their allocation for which they could reasonably demonstrate all of the program’s eligibility criteria. As 

of October 31, 2011, American Samoa’s application was still under review. 

b

Alaska initially submitted an application for its allocation of $13,168,350 but withdrew it during the 

review process. 

c

North Dakota and Wyoming did not file a Notice of Intent to Apply for their SSBCI allocation of 

$13,168,350 by the November 26, 2010, deadline. 
Appendix IV: Planned Uses of SSBCI Funds, 

by Location

Page 39 GAO-12-173 State Small Business Credit Initiative 

Table 2 below contains information on states and territories’ plans for the 

distribution of SSBCI funds among eligible program types, provided by 

officials between August 15 and September 14, 2011.

Table 2: Planned Uses of SSBCI Funds, by Location and Program Type (number of programs in parentheses)

State / territory

Amount of

SSBCI 

funds

applied for

Capital access

programs

Collateral support

programs

Loan participation

programs

Direct loan

programs

Loan guarantee

programs

Venture capital

programs

Other capital

support 

programs

American Samoa 10,380,008 $1,297,540 (1) $2,906,373 (1) $6,176,095 (1)

District of 

Columbia

13,168,350 13,168,350 (1)

Guam 13,168,350 1,316,835 (1) 4,608,923 (1) 7,242,592 (1)

Northern Mariana 

Islands

13,168,350 6,168,350 (1) 7,000,000 (1)

Puerto Rico 14,540,057 12,540,057 (1) 2,000,000 (1)

U.S. Virgin 

Islandsa

13,168,350 3,738,477 (1) 4,239,600 (1) 5,190,275 (1)

Alabama 31,301,498 11,301,498 (1) 10,000,000 (4) 10,000,000 (1)

Arizona 18,204,217 18,204,217 (1)

Arkansasb 13,168,350 1,080,473 (1) 5,080,474 (1) 2,080,474 (1) 4,926,929 (3)

Californiaa

168,623,821 

84,311,910 (1) 84,311,910 (1)

Colorado 17,233,489 2,000,000 (1) 15,233,489 (1)

Connecticut 13,301,126 13,301,126 (1)

Delaware 13,168,350 1,000,000 (1) 12,168,350 (1)

Florida 97,662,349 20,662,349 (1) 9,500,000 (1) 11,500,000 (2) 12,500,000 (2) 43,500,000 (1)

Georgia 47,808,507 47,808,507 (2)

Hawaii 13,168,350 13,168,350 (1)

Idaho 13,168,350 13,168,350 (1)

Illinois 78,365,264 6,365,264 (1) 20,000,000 (1) 17,000,000 (1) 15,000,000 (1) 20,000,000 (1)

Indiana 34,339,074 1,500,000 (1) 32,839,074 (1)

Iowa 13,168,350 5,000,000 (1) 3,168,350 (1) 5,000,000 (1)

Kansas 13,168,350 10,534,680 (1) 2,633,670 (1)

Kentucky 15,487,998 5,162,666 (1) 5,162,666 (1) 5,162,666 (1)

Louisiana 13,168,350 8,000,000 (1) 5,168,350 (1)

Maine 13,168,350 10,168,350 (2) 3,000,000 (1)

Maryland 23,025,709 1,500,000 (1) 15,025,709 (2) 6,500,000 (1)

Massachusetts 22,032,072 1,500,000 (1) 20,532,072 (2)

Michigan 79,157,742 4,200,000 (1) 34,478,871 (1) 34,478,871 (1) 6,000,000 (1)

Minnesotac 15,463,182 3,112,779 (1) 5,172,066 (1) 6,065,558 (2) 1,112,779 (1)

Mississippi 13,168,350 13,168,350 (1)

Missouri 26,930,294 10,000,000 (1) 16,930,294 (4)

Montana 13,168,350 13,168,350 (1)

Nebraska 13,168,350 13,168,350 (2)

Appendix IV: Planned Uses of SSBCI Funds, 

by Location
Appendix IV: Planned Uses of SSBCI Funds, 

by Location

Page 40 GAO-12-173 State Small Business Credit Initiative 

State / territory

Amount of

SSBCI 

funds

applied for

Capital access

programs

Collateral support

programs

Loan participation

programs

Direct loan

programs

Loan guarantee

programs

Venture capital

programs

Other capital

support 

programs

Nevada 13,803,176 13,303,176 (1) 500,000 (1)

New Hampshirea 13,168,350 1,453,116 (1) 2,594,851 (1) 3,930,680 (1) 3,113,821 (1) 2,075,881 (1)

New Jersey 33,760,698 13,500,000 (1) 9,760,698 (5) 5,500,000 (4) 5,000,000 (1)

New Mexico 13,168,350 13,168,350 (1)

New York 55,351,534 18,994,204 (1) 10,405,173 (1) 25,952,157 (1)

North Carolina 46,061,319 46,061,319 (1)

Ohio 55,138,373 5,000,000 (1) 35,138,373 (1) 15,000,000 (1)

Oklahoma 13,168,350 13,168,350 (3)

Oregon 16,516,197 4,016,197 (1) 2,500,000 (1) 10,000,000 (1)

Pennsylvania 29,241,232 20,241,232 (3) 9,000,000 (1)

Rhode Island 13,168,350 2,168,350 (1) 11,000,000 (2)

South Carolina 17,990,415 17,990,415 (1)

South Dakota 13,168,350 13,168,350 (1)

Tennessee 29,672,070 29,672,070 (1)

Texas 46,553,879 10,553,879 (1) 36,000,000 (1)

Utah 13,168,350 11,851,515 (1) 1,316,835 (1)

Vermont 13,168,350 1,037,700 (1) 12,130,650 (3)

Virginia 17,953,191 2,953,191 (1) 15,000,000 (1)

Washington 19,722,515 6,000,000 (1) 5,000,000 (1) 8,722,515 (1)

West Virginia 13,168,350 827,601 (1) 551,734 (1) 7,651,010 (1) 4,138,005 (1)

Wisconsin 22,363,554 3,000,000 (1) 3,363,554 (1) 16,000,000 (2)

Total $ 282,786,932 (27) $156,957,400 (12) $ 278,547,523 (32) $70,359,728 (14) $210,210,111 (25) $336,467,264 (35)$85,527,652 (8)

Source: GAO survey.

Note: North Dakota and Wyoming did not file a Notice of Intent to apply for SSBCI funds. Alaska 

submitted an application to Treasury but it was subsequently withdrawn during the review process. 

a

The information provided by the U.S. Virgin Islands, California, and New Hampshire does not exactly 

equal each state’s respective SSBCI allocation amount due to rounding. 

b

Arkansas officials initially provided $482,840 of the state’s allocation amount separately as 

administrative expenses. Though this amount has been evenly distributed across the 6 programs the 

state plans to support in the table above, these numbers should only be viewed as estimates as the 

actual funds provided to each of the programs may be different to the extent that the distribution of 

administrative costs are unequal across these programs. 

c

Minnesota officials initially provided $563,895 of the state’s allocation amount separately as 

administrative expenses. Though this amount has been evenly distributed across the 5 programs the 

state plans to support in the table above, these numbers should only be viewed as estimates as the 

actual funds provided to each of the programs may be different to the extent that the distribution of 

administrative costs are unequal across these programs. 
Appendix V: Comments from the Department 

of the Treasury

Page 41 GAO-12-173 State Small Business Credit Initiative 

Appendix V: Comments from the Department 

of the Treasury
Appendix VI: GAO Contact and Staff 

Acknowledgments

Page 42 GAO-12-173 State Small Business Credit Initiative 

A. Nicole Clowers, (202) 512-8678, clowersa@gao.gov

In addition to the individual named above, Paul Schmidt, Assistant 

Director; Pamela Davidson; Jill Lacey; Marc Molino; Patricia Moye; Deena 

Richart; Christine San; Jennifer Schwartz; and Chad Williams made key 

contributions to this report.

Appendix VI: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments

(250592)
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