www.sba.gov/advocacy

Office of Advocacy

Annual Report of the

Office of Economic Research

FY 2013

January 2014
Created by Congress in 1976, the Office of Advocacy of the U.S. Small Business 

Administration (SBA) is an independent voice for small business within the federal 

government. Appointed by the President and confirmed by the U.S. Senate, the Chief 

Counsel for Advocacy directs the office. The Chief Counsel advances the views, concerns, and interests of small business before Congress, the White House, federal agencies, federal courts, and state policy makers. Economic research, policy analyses, and 

small business outreach help identify issues of concern. Regional Advocates and an 

office in Washington, DC, support the Chief Counsel’s efforts.

For more information on the Office of Advocacy, visit http://www.sba.gov/advocacy, 

or call (202) 205-6533. Receive email notices of new Office of Advocacy information 

by signing up on Advocacy’s Listservs at http://www.sba.gov/updates.
i

Foreword

We are pleased to present this fiscal year 2013 annual report for the Office of 

Advocacy’s Office of Economic Research (OER). Advocacy places a high 

value on sound economic research, which contributes to sound policies for 

small business. The office strives to provide our small business stakeholders 

with timely and actionable information about the current economic climate. 

Throughout more than 35 years of existence, the Office of Advocacy has 

conducted economic research as part of its core mission. In 1976, Public 

Law 94-305 assigned to Advocacy the task of examining “the role of small 

business in the American economy and the contribution which small business 

can make in improving competition.”

In FY 2013, Advocacy produced 22 contract and internal research reports 

on a variety of topics including access to capital, small business exporters, 

entrepreneurship, and minority- and women-owned businesses. In addition 

to these reports, Advocacy economists participated in roundtables and 

conferences about various small business topics. They also conducted 16 

presentations to audiences that included policymakers, academics, and/or the 

media. These outreach efforts are important for small business stakeholders 

around the country. 

We appreciate our stakeholders’ contributions in support of the best 

possible research on small business, and we look forward to hearing from you 

in the year ahead. For more information about the Office of Advocacy, visit 

our website at www.sba.gov/advocacy.

Winslow Sargeant, Ph.D.

Chief Counsel for Advocacy 

Janemarie Mulvey, Ph.D.

Director, Office of Economic Research
iii

Contents

Foreword i

Introduction 1

Advocacy Research Reports, FY 2013 3

Advocacy Research 3

Access to Capital 3

Employment 4

Entrepreneurship and Innovation 5

General 6

International Trade 6

Minority- and Women-owned Businesses 7

Regulations 7

Retirement and Pensions 8

Data Access 10

Small Business Data Resources Tool 10

Downloadable Firm Size Data 10

Statistics of U.S. Businesses 11

Business Dynamics Statistics 11

Business Employment Dynamics 11

Nonemployer Statistics 12
1

Introduction

One of the Office of Advocacy’s earliest mandates was “to examine the role of 

small business in the American economy and the contribution which small business can make in improving competition, encouraging economic and social mobility...and providing an avenue through which new and untested products and 

services can be brought to the marketplace.”1

In fiscal year 2013, small business was a focus of national debates about 

economic growth, job creation, and the regulatory environment. The Office 

of Economic Research responded to the pressing need for new and timely 

information on small firms by making more information readily available in 

updated formats and by commissioning research on key topics that included: 

• Access to Capital

• Employment

• Entrepreneurship and Innovation

• International Trade

• Minority- and Women-owned Businesses

• Regulations

• Retirement and Pensions

Within these topics was an emphasis on the the Great Recession’s impact on 

small businesses in terms of access to capital, retirement assets, and exporting. As 

FY 2013 marked the fourth year of the economic recovery, Advocacy’s research 

focused on factors affecting slow employment growth among small businesses 

since the recovery began. Another study examined the role of federally funded 

research in promoting entrepreneurship and innovation. In addition, Advocacy 

continued quarterly updates of its two recurring publications, the Small Business 

Quarterly Bulletin and the Quarterly Lending Bulletin. 

The Office of Advocacy continues to partner with the U.S. Census Bureau to 

collect and report important data on small business. Advocacy economists process 

and analyze the data to produce easy-to-understand statistical tables and reports 

downloadable from Advocacy’s website. 

In FY 2013, the Office of Advocacy also provided information in easily accessible matrix form about its work products and resource partners. Small Business 

Data Resources is a listing of online databases by federal agency or private sector 

source and topic. The listed databases are hotlinked to their websites and keyed to 

the small-business-related topics on which they provide information. 

In FY 2013, Advocacy’s Office of Economic Research advanced the mission 

of providing small business research that is timely and relevant for use by the 

many stakeholders interested in small business contributions to the U.S. economy.

1 Public Law 94-305, 1976.
3

Advocacy Research 

Reports, FY 2013

In FY 2013, Advocacy’s Office of Economic Research produced reports on 

a a variety of topics ranging from small business growth following the Great 

Recession, access to capital, small business exporters, and entrepreneurship. This 

section lists Advocacy’s FY 2013 research reports by topic area. Visit the Office 

of Advocacy website for research reports available online: http://www.sba.gov/

advocacy/7540/. 

Advocacy Research

Access to Capital

Quarterly Lending Bulletin, First Quarter 2013

http://www.sba.gov/sites/default/files/files/SBL_2013Q1(1).pdf

Victoria Williams, Office of Advocacy

Small businesses saw gradual strengthening in the overall economy in the first 

quarter of 2013 as borrowing conditions continued to improve. Borrowing by 

small firms contracted slightly during December 2012 and March 2013. In general, 

bankers reported stronger demand along with eased bank lending policies for 

business loans. (June 2013)

Quarterly Lending Bulletin Fourth Quarter 2012

http://www.sba.gov/sites/default/files/files/SBL_2012Q4(2).pdf

Victoria Williams, Office of Advocacy

Financial conditions were supportive of economic growth, and borrowing 

conditions for small firms gradually improved. The declines in small business 

lending stabilized, and small business borrowing turned up for the first time in 10 

quarters. (March 2013)

Quarterly Lending Bulletin Third Quarter 2012

http://www.sba.gov/sites/default/files/files/SBL_2012Q3.pdf

Victoria Williams, Office of Advocacy

Small business loans outstanding in all loan sizes declined less than 1 percent in 

third quarter 2012. Declines were less pronounced in small business commercial 

real estate loans. Small business demand for loans was unchanged on net. 

(December 2012)
4 Annual Report of the Office of Economic Research, FY 2013

Quarterly Lending Bulletin Second Quarter 2012

http://www.sba.gov/sites/default/files/files/SBL_2012Q2.pdf

Victoria Williams, Office of Advocacy

U.S. economic activity increased in the first half of 2012 at a slower pace than at 

the end of 2011, and total lending to small firms inched downward. The decline 

was generated primarily by commercial real estate loans; in general, the climate 

was supportive of economic growth. (November 2012)

Small Business Lending in the United States, 2012

http://www.sba.gov/advocacy/7540/719311 

Victoria Williams, Office of Advocacy

Research Summary No. 414

This annual report reviews the small business lending activities of institutional 

depository lenders, including commercial and cooperative banks, federal and 

state savings banks, and savings and loan associations. The lenders are ranked on 

their overall small business lending nationally and on a state-by-state basis. Small 

business loans are defined as business loans under $1 million; micro business loans 

are those under $100,000; macro loans are those between $100,000 and $1 million. 

Two data sources are used—Consolidated Reports of Condition and Income 

or “Call Reports” and reports required under the provisions of the Community 

Reinvestment Act—CRA reports. Please note that the report examines total 

small business lending and does not distinguish SBA lending from total lending. 

(December 2012)

How Did the Financial Crisis Affect Small Business Lending in the United States?

http://www.sba.gov/advocacy/7540/361941

Rebel A. Cole

Research Summary No. 399

This study uses data from numerous sources from the period 1994-2011 to analyze 

bank lending to U.S. firms. The study finds that bank lending to U.S. businesses 

declined significantly following the crisis; and the decline hit small firms harder 

than large firms. Please note that the report examines total small business lending 

and does not distinguish SBA lending from total lending. (November 2012)

Employment

Geography of Employment Growth: The Support Networks for Gazelle IPOs

http://www.sba.gov/advocacy/7540/623801

Martin Kenney and Donald Patton

Research Summary No. 412

In this research study, Martin Kenney and Donald Patton explore the network 

of support for gazelles that take their companies public through initial public 

offerings (IPOs). This entrepreneurial support network, or ESN, is composed of 

law firms, venture capitalists, and lead investment bankers—the core of the team 

needed to launch an IPO. The authors examine the overall impact of these actors 

on gazelles’ employment growth. (May 2013)
5

Entrepreneurship and Innovation

Patent Trends Among Small and Large Innovative Firms 

During the 2007-2009 Recession

http://www.sba.gov/advocacy/7540/608931

1790 Analytics, LLC

Research Summary No. 411

According to the National Bureau of Economic Research (NBER), the Great 

Recession commenced in December 2007 and ended in June 2009. This research 

examines whether observable differences in patent behavior between small and 

large firms occured during this 2007-2009 period. (May 2013)

Product Innovations by Young and Small Firms

http://www.sba.gov/advocacy/7540/621871

Jose Plehn-Dujowich

Research Summary No. 408

This study investigates whether the age of a business is linked to innovation and 

productivity—specifically whether young firms have an edge on older firms. 

Previous research on innovation has shown that small businesses are more 

efficient at innovation than large businesses. (May 2013)

University Science Faculty Ventures into Entrepreneurship

http://www.sba.gov/advocacy/7540/586391

Audretsch Economic Research

Research Summary No. 409

This study surveys university scientists about their entrepreneurial activities, 

employing a database of scientists funded by grants from the National Science 

Foundation (NSF). (May 2013)

Utilizing the Kauffman Firm Survey to Predict Growth in Venture Size and Scope 

among Small Firm Startups: 2004 Startups Tracked through 2008

http://www.sba.gov/advocacy/7540/556421

Timothy Bates, Alicia Robb, and Simon Parker (Beacon Economics LLC)

Research Summary No. 405

The study identifies some of the factors that predict growth among startups and 

very young ventures and provides insights into small firm growth dynamics. The 

researchers find two key features of small business startups likely to endure, operate 

profitably, and expand: 1) the involvement of capable entrepreneurs possessing 

appropriate human capital for operating their business; and 2) the assembly of, 

and access to, sufficient financial capital to achieve efficient scale to exploit 

opportunities. (April 2013)
6 Annual Report of the Office of Economic Research, FY 2013

General

Quarterly Bulletin, First Quarter 2013

http://www.sba.gov/sites/default/files/files/SBQB_2013q1.pdf

Brian Headd, Office of Advocacy

Demand for small business loans, the employment size of start-ups, employment 

in small firms, and proprietors’ income were all on the rise. Included are charts that 

show that small firms were rising from the depths of the most recent downturn. 

(June 2013)

Quarterly Bulletin, Fourth Quarter 2012

http://www.sba.gov/sites/default/files/files/SBQB_2012q4pdf.pdf

Brian Headd, Office of Advocacy

Small businesses across America continued to show modest improvement as the 

nation pushed through its economic recovery. The most promising indicators of 

Advocacy’s analysis were the declining number of bankruptcies and proprietors’ 

growing income. (March 2013)

Quarterly Bulletin, Third Quarter 2012

http://www.sba.gov/sites/default/files/files/SBQB_2012q3.pdf.

Brian Headd, Office of Advocacy

The small business data showed positive movement, with business bankruptcies 

on the decline and an increase in income for business owners. Two metrics that 

showed mixed results were the growth of self-employed individuals and tightening 

loan demand. (December 2012)

International Trade

The Impact of Credit Availability on Small Business Exporters

http://www.sba.gov/advocacy/7540/556961

Joe Peek

Research Summary No. 404

A dramatic drop in U.S. exports during the 2008-2009 financial crisis and Great 

Recession stimulated interest in investigating the relationship between trade 

finance and small business exports. This research examines how and why the 

tightening of credit affected small firm exporters. (April 2013)
7 Annual Report of the Office of Economic Research, FY 2013

Minority- and Women-owned Businesses

The Viability of the Minority-Oriented Venture Capital Industry

http://www.sba.gov/advocacy/7540/622441

William E. Jackson III and Timothy Bates

Research Summary No. 407

The number of minority-oriented equity capital funds grew significantly during the 

period of the 1990s. Early financial performance was positive; but more recently, 

these funds have invested in fewer minority-owned businesses and have increased 

their non-minority-owned high-tech investments. This research examines these 

equity capital funds and public support for these funds to evaluate these changes. 

(May 2013)

Venture Capital, Social Capital and the Funding of Women-led Businesses

http://www.sba.gov/advocacy/7540/561201

JMG Consulting, LLC & Wyckoff Consulting, LLC

Research Summary No. 406

Entrepreneurs need access to financial capital to fund their ventures, and those 

with marketable products may seek financing from venture capital (VC) firms. 

This study focuses on women entrepreneurs’ access to equity funding and the 

influence of social networks on venture capital investment decisions. (April 2013)

Access to Capital among Young Firms, Minority-owned Firms, Women-owned 

Firms, and High-tech Firms

http://www.sba.gov/advocacy/7540/584931

Alicia Robb, Marin Consulting, LLC

Research Summary No. 403

The availability of capital is crucial for small business startup, survival, and 

growth. This study investigates how the youngest small firms, especially hightech firms and firms owned by women and minorities, were financed during the 

evolving financial environment of the Great Recession. (May 2013)

Regulations

Research on State Regulatory Flexibility Acts

http://www.sba.gov/advocacy/7540/632371

Microeconomic Applications

Research Summary No. 413

The purpose of this research study on states’ regulatory flexibility activity was 

to evaluate to what extent states went to mitigate the impact of state regulations 

on small businesses. The Regulatory Flexibility Act (RFA) at the federal level 

requires agencies to minimize the impact of their regulations on small entities 

without compromising their regulatory objectives. States’ versions of the RFA, the 

research indicates, are/have been following different paths to the requirements and 

are having mixed results. (May 2013)
8 Annual Report of the Office of Economic Research, FY 2013

Independent Regulatory Agency Compliance With The Regulatory Flexibility Act

http://www.sba.gov/advocacy/7540/610401

Microeconomic Applications, Inc.

Research Summary No. 410

The Office of Advocacy is often asked if there is a noticeable difference in the RFA 

compliance patterns of independent agencies compared with executive-branch agencies. 

Independent federal agencies are subject to the Regulatory Flexibility Act, as amended. 

Because they fall outside of presidential authority, however, independent agencies are not 

subject to executive orders concerning regulatory impact analysis or to OMB review of 

analysis. The objective of this study is to characterize and assess the RFA compliance of 

independent agencies. (May 2013)

Retirement and Pensions

Financial Viability and Retirement Assets: A Look at Small Business Owners and 

Private Sector Workers

http://www.sba.gov/advocacy/7540/372811

Jules Lichtenstein, Office of Advocacy

Research Summary No. 401

Income security during retirement may depend on whether you were a business owner 

or a wage and salary worker. The accumulation of differential patterns of assets and 

participation in individual retirement plans can be a function of your status as a business 

owner or an employee. (December 2012)

Retirement, Recessions, and Older Small Business Owners

http://www.sba.gov/advocacy/7540/372751

Tami Gurley-Calvez, Kandice Kapinos, and Donald Bruce

Research Summary No. 400

The researchers’ key findings are that small business owners nearing retirement (over 

age 50) are significantly less likely than employees to have pension or retirement plans, 

including 401(k)s, on their current job. This finding occurs regardless of the extent of 

self-employment in an individual’s career (whether part-time, full-time, or for a short 

or long period). At the same time, small business owners tend to have significantly 

greater IRA and Keogh plan savings than employees, even after controlling for key 

sociodemographic characteristics. A third key finding is that small business owners and 

employees have similar retirement savings behavior during recessions; the probability 

of having a pension and the value of IRA/Keogh accounts are largely stable through 

recessions. (December 2012)
10

Data Access

While not a data collection agency, in fiscal year 2013 the Office of Advocacy 

continued to organize downloadable data related to small businesses and provide 

links to data on its website, www.sba.gov/advocacy/849/12162. Data cover 

businesses with and without employees—employer and nonemployer firms. About 

three-quarters of firms are nonemployer firms; but the larger share of receipts and 

payroll are in employer firms. The bulk of employer firms are small firms, but data 

are also provided on large firms for comparison purposes.

Researchers, policymakers, small business trade associations, small businesses 

and members of the media interested in small business can use the data to investigate the status and role in the economy.

Small Business Data Resources Tool

http://www.sba.gov/advocacy/847/125821 

The Office of Advocacy provides a valuable research tool for small business 

researchers and policymakers—a hyperlinked listing of Small Business Data 

Resources. The tool lists databases by federal agency or private sector source, 

hyperlinks the listings to their websites, and keys them to the small-businessrelated topics on which they provide information—all in two one-page summaries. 

Key topics include demographics, employment, exports, finance, firm size data, 

firms and establishments, health care, income and sales, pension coverage, taxes, 

and training. 

Although the list includes many of the most widely used data resources, 

Advocacy notes that inclusion of any specific database on the list does not 

constitute an endorsement by the Office of Advocacy or the Small Business 

Administration.

Downloadable Firm Size Data 

http://www.sba.gov/advocacy/849/12162 

The Office of Advocacy posts firm size data from a number of sources on 

its website. For research purposes, Advocacy defines a small business as an 

independent business having fewer than 500 employees, but many firm size 

classes are provided. Firm size data for employer firms are from the Statistics 

of U.S. Businesses (SUSB), Business Dynamics Statistics (BDS), and Business 

Employment Dynamics (BED) programs. Data on nonemployers are available 

from the Nonemployer Statistics (NE) program. The programs are annual and are 

from the U.S. Census Bureau, except for the Business Employment Dynamics, 

which is quarterly and from the U.S. Department of Labor, Bureau of Labor 

Statistics. BDS and BED have an age component. All of the programs are 

essentially based on the universe of private-sector businesses.
11 Annual Report of the Office of Economic Research, FY 2013

Detailed data on owner and business characteristics are available from the U.S. 

Census Bureau’s Survey of Business Owners (SBO) in years ending in 2 or 7. The 

SBO, which is part of the Economic Census, provides data and a microdataset 

for activity in 2007. With data collection now beginning for economic activity in 

2012, data will be available in 2015 (see www.census.gov/econ/sbo/ for details). 

Statistics of U.S. Businesses

The Office of Advocacy partially funds the U.S. Census Bureau to produce annual 

data by employer firm size in the Statistics of U.S. Businesses (SUSB) program. 

SUSB’s employer data include the number of firms, number of establishments, 

employment, and annual payroll for employment firm size categories by location 

and industry. Receipts and data by receipt size class are available in Economic 

Census years (i.e. years ending in 2 or 7). A firm is defined as an aggregation of 

all establishments owned by a parent company (within a geographic location and/

or industry) with some annual payroll. The data consist of static and dynamic 

data. Static data provide a “snapshot” of firms at a point in time. Dynamic data 

follow firms from year to year and report job creation and destruction and business 

births and deaths. Much of the data is listed in time series format with some data 

available as far back as 1988, but the latest data available lags a few years.

The industry detail available is at the NAICS 6-digit level, meaning that data 

is available for over 1,000 industries. Geographic data for some of the data items 

is also available at the county and metropolitan statistical area level, but data this 

detailed tends to be aggregated to a relatively high industry level.

Business Dynamics Statistics

Business Dynamics Statistics (BDS) include employer firm data by firm age.2

BDS contains annual data for states, major industry, and some metropolitan 

statistical area data. While a relatively new datasource, Census provides a plethora 

of historical data for BDS with data going back to 1977, but the most current 

data lags a few years. BDS provides the number of firms, establishments, and 

employment, along with some dynamics, so firm and job creation can be analyzed. 

Business Employment Dynamics

Business Employment Dynamics (BED) contains employer firm data with 

a focus on employment changes from establishment entry, growth, decline, 

and exit. Much of the information dates to mid-1992.3

 The data are quarterly 

and some establishments may close and reopen during the year. Fortunately, 

BLS presents the data in two ways to capture the seasonal firms by listing 

2 See the background paper, Business Formation and Dynamics by Business Age: Results from the New Business 

Dynamics Statistics, by John Haltiwanger, Ron Jarmin, and Javier Miranda for information on the data program, 

www.ces.census.gov/docs/bds/bds_paper_CAED_may2008_dec2.pdf

3 See the background paper Measuring Job and Establishment Flows with BLS Longitudinal Microdata by 

Timothy Pivetz, Michael Searson, and James Spletzer for information about the data program, www.bls.gov/

opub/mlr/2001/04/art2full.pdf.
12

establishment openings—establishments that did not exist in the previous 

quarter—and establishment births—establishments that did not exist in the 

previous year. Classifications are similar for closings and deaths. Some 

employment data are by firm size such as job creation and destruction, but much 

of BED is establishment-based and does not contain an establishment or firm 

size component. Annually, BED provides the number of firms and employment 

by firm size.

Fortunately, BED quarterly data only lags a few quarters, giving users the best 

insight into current small business conditions.

Nonemployer Statistics

Nonemployer data provides the number of firms and receipts by state, metropolitan 

statistical area (MSA), and county with industry detail. A nonemployer firm is 

defined as one that has no paid employees, has annual business receipts of $1,000 

or more ($1 or more in the construction industries), and is subject to federal income 

taxes. Note that nonemployer businesses can have more than one owner and are 

a business. Thus, referring to the nonemployer data as self-employed data (which 

is the occupation of someone) is not entirely accurate. Nonemployers account for 

about three percent of business receipts, and about three-quarters of all businesses. 

The nonemployer section also contains capital expenditure data for both employers 

and nonemployers.

With nonemployer and SUSB data in recent years, the U.S. Census Bureau has 

begun using noise infusion for disclosure avoidance. This allows them to provide 

more data instead of merely providing a disclosed code for a data cell.