59–010 

1Originally, title II of the Act of July 30, 1953, c. 282, 67 Stat. 232 was designated as the 

Small Business Act of 1953. A plethora of amendments in subsequent Congresses led to a rewrite in 1958. Pub. L. No. 85–536, Sec. 1, 72 Stat. 384 (1958). The Act is codified at 15 U.S.C. 

631–657s. 

Calendar No. 109 

114TH CONGRESS REPORT " ! SENATE 2d Session 114–241 

THE SMALL BUSINESS DEVELOPMENT CENTERS 

IMPROVEMENT ACT OF 2015 

APRIL 21, 2016.—Ordered to be printed 

Mr. VITTER, from the Committee on Small Business and 

Entrepreneurship, submitted the following 

R E P O R T 

[To accompany S. 999] 

The Committee on Small Business and Entrepreneurship, to 

which was referred the bill (S. 999) to amend the Small Business 

Act to provide for improvements to small business development 

centers, having considered the same, reports favorably thereon 

with an amendment (in the nature of a substitute) and recommends that the bill, as amended, do pass. 

I. INTRODUCTION

The Small Business Development Centers Improvement Act of 

2015 (S. 999) was introduced by the Committee’s Chair, Senator 

David Vitter, on April 16, 2015. 

The purpose of the Small Business Development Centers Improvement Act of 2015 is to improve the Small Business Development Centers (SBDCs) program and ensure SBDCs continue successful delivery of entrepreneurial development services to small 

businesses. SBDCs represent a key component of the Small Business Administration’s (SBA) counseling and training programs for 

small businesses. In order to continue these services, the Small 

Business Development Centers Improvement Act of 2015 (by 

amending the Small Business Act 1 requires limitations on the creation and funding of SBA initiatives outside those mandated by 

Congress. The legislation also strengthens the quality, scope, and 


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2 Id. at 631(a) 3The grantee agrees to provide services throughout a state. For reasons not relevant to H.R. 

4121, two states—California and Texas—do not have statewide grantees. 

performance of SBDCs through enhanced SBDC marketing and 

data privacy, allowance for accepting participation fees from community partners, responsible spending, broader servicing areas, 

and improved grant distribution. 

During the markup of the bill, the Vitter amendment to the bill 

was approved by voice vote. The Vitter amendment removes the requirement for an annual report on all entrepreneurial development 

activities undertaken in the current fiscal year. The bill, as amended, was also approved unanimously by voice vote. 

II. HISTORY (PURPOSE & NEED FOR LEGISLATION)

The United States has consistently recognized the need to encourage entrepreneurship as a means to combat unemployment 

and promote economic development. Therefore, the SBA’s mission, 

as evinced in the Small Business Act, 15 U.S.C. Sec. 631–57p, is 

to ‘‘aid, counsel, assist, and protect, insofar as is possible, the interests of small business concerns . . .’’ 2 In carrying out its mission 

to provide small businesses with assistance, the SBA oversees a 

number of programs that offer counseling to potential entrepreneurs and extant small business owners. The SBA itself does 

not generally carry out this training; in most circumstances, the 

agency enters into a cooperative agreement with another organization to offer such services. These parties are termed as resource 

partners by the SBA and are required to obtain a significant portion of their operating budgets from non-federal sources (be they 

private donors or state funds). 

The largest such program is set out in Sec. 21 of the Small Business Act, 15 U.S.C. 648. The program is denominated as the SBDC 

Program because the resource partners—SBDC grantees—operate 

service centers where small business owners and potential entrepreneurs can receive free counseling. Typically, the grantee is an 

institution of higher education (but not always) and the grantee 

agrees to offer these services throughout a state or through a portion of the state.3 Since its inception, the SBDC program has been 

extremely successful in training and counseling small firms. For 

example, in fiscal year (FY) 2013, SBDCs trained over 330,000 clients and counseled over 201,000 clients. Further, in FY 2013 

SBDCs assisted small business clients in obtaining $4.5 billion in 

financing. 

While the SBDC program has achieved many notable results, the 

program has not received a comprehensive modernization in several years. The Committee also has learned of certain operational 

challenges faced by SBDC grantees that hinder their ability to offer 

services to small business owners. The Committee has determined 

that these operational issues should be rectified legislatively. The 

majority of necessary legislative changes would be minor, such as 

statutorily prescribing that SBDCs may market their services and 

collect fees at partnership events, as well as eliminating the Administrator’s ability to reimburse the SBA for administrative expenses associated with the SBDC program. In this case, as federal 

funding becomes scarcer, it is necessary to update the Small Business Act to ensure that SBDCs receive all funding allocated in the 


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budget, and are able to obtain matching funds through self-promotion of the benefits of their program and fostering a fruitful relationship with local community partners. 

The SBA has three other resource partners focused on entrepreneurial training. Although their missions and scope of service territories also vary, the Women’s Business Centers (WBCs) and Veteran Business Outreach Centers (VBOCs) operate in a fashion akin 

to that of the SBDCs. The other major entrepreneurial outreach 

program, SCORE, operates somewhat differently. Although SCORE 

also offers free advice (from volunteer active and retired business 

executives), SCORE is provided almost all of its funds from those 

appropriated by Congress. The SBA also is required to provide offices and other ancillary services to SCORE at no charge to SCORE 

or its clients. 

III. HEARINGS & ROUNDTABLES

In the 112th Congress: 

The Committee held a number of hearings during the 112th Congress related to the SBDCs and oversight of entrepreneurial development programs at the SBA. On July 21, 2011, the Committee 

held a hearing titled, ‘‘Entrepreneurial Development: Obstacles and 

Opportunities for Supporting, Sustaining and Growing America’s 

Entrepreneurs,’’ which heard from relevant trade associations, 

small business owners, and the SBA regarding SBA’s entrepreneurial development programs and possible legislative proposals to 

improve/reauthorize these programs. On November 29, 2012, the 

Committee held a hearing titled, ‘‘Creating Jobs and Growing the 

Economy: Legislative Proposals to Strengthen the Entrepreneurial 

Ecosystem.’’ This hearing was held to consider S. 3442, the SUCCESS Act, which included provisions limiting grant distribution to 

higher education institutions and eliminating the geographical restrictions for SBDC assistance after a presidentially-declared natural disaster. 

In the 113th Congress: 

In the 113th Congress, the House Committee on Small Business 

held hearings relevant to the SBDCs and other entrepreneurial development programs at the SBA. One hearing, entitled ‘Entrepreneurial Assistance: Examining Inefficiencies and Duplication 

Across Federal Programs’ on March 20, 2013, specifically examined 

inefficiencies, redundancies and other challenges to in the SBA entrepreneurial assistance programs. A witness from the Government 

Accountability Office (GAO) discussed a recent GAO report that addressed particular challenges to the SBDC program, including 

missed opportunities for more collaboration with other public and 

private programs as well as difficulties in obtaining data on the 

progress of SBDCs. 

On April 18, 2013, the Committee held a hearing entitled ‘‘The 

Budget Outlook for the Small Business Administration’’ at which 

members, on a bipartisan basis, raised concerns with the then- administrator about the impact that these new initiatives would have 

on existing resource partners. Some members expressed concerns 

that creating new programs, rather than utilizing existing programs and resources, would cause confusion and result in less aid 

being delivered overall. Several members thought that the services 


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provided under the new SBA initiatives could be provided under 

existing programs. 

On March 5, 2014, the House Committee on Small Business approved the Small Business Development Centers Improvement Act 

of 2014 (H.R. 4121). H.R. 4121 would have banned the SBA from 

prohibiting applicants receiving grants under the SBDC program 

from marketing and advertising their services. Additionally, the 

legislation would have revised privacy requirements, directed the 

SBA to consult with SBDC associations to develop documents governing data collection activities, would have prohibited the SBA 

from awarding grants under the SBDC program to entities other 

than not-for-profit institutions of higher education, and would have 

removed the geographic proximity requirement in situations involving a presidentially-declared disaster area. The Committee passed 

the bill, as amended, by voice vote. 

IV. DESCRIPTION OF BILL

S. 999 would require that all SBA-created initiatives be delivered 

through those authorized programs specifically cross-referenced in 

this subsection. The exceptions to this overall prohibition, in subsections (a)(2)(A)–(E), relate to assistance offered to: small business 

concerns owned by an Indian tribe; activities and programs in support of a member of the Armed Forces, including the Reserves and 

National Guard, a veteran, or a spouse of a service member or a 

veteran; the PRIME, STEP, and FAST programs; and other initiatives in operation at the time the Committee considered this bill. 

The Small Business Act is silent on the question of whether 

SBDCs can market and advertise its products and services. This 

bill amends Section 21 of the Act to ensure the SBDCs are able to 

market and advertise their products and services. Greater awareness of the services available through the SBDCs will allow more 

small businesses to receive entrepreneurial assistance without imposing any more financial burdens on SBDCs, the SBA, or the taxpayer. 

In order for the SBA to provide Congress with information to 

properly evaluate entrepreneurial development programs, the SBA 

has attempted to gather better performance data. Some of the 

newly required information would force SBDCs to capture and report data that small businesses are reluctant to share. In cases 

where this information is of little value to the government, these 

requirements place an unnecessary burden on the SBDCs and will 

dissuade some small businesses from seeking SBDC assistance. 

This bill requires the Administrator to consult with the Association 

of Small Business Development Centers on the creation of documents governing data collection activities related to SBDCs. 

In order to obtain funding, SBDC grantees must match funds 

provided by the federal government with non-federal sources, such 

as private donations or state funds. Therefore, SBDCs often work 

alongside other community partners—such as a local chamber of 

commerce—to host events as a partnership or a co-sponsor. In 

these instances, a participation fee may be charged to businesses 

by the partnership or cosponsoring party. However, under current 

law SBDCs are not allowed to collect the necessary fee. Therefore, 

this bill permits SBDCs to collect fees or other income related to 

the operation of partnerships or co-sponsorships. This authorization 


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does not alter the no-cost counseling provided by SBDCs to individual small businesses. 

Under current law, up to $500,000 of authorized funding to 

SBDCs could be utilized by the Administrator to pay for examination expenses associated with reviewing SBDCs. No other entrepreneurial development program has an allocation of funds to reimburse the SBA for the agency’s administrative expenses. This section eliminates the award of $500,000 of SBDC grant monies to reimburse the SBA for program administration. 

This bill enables SBDCs to operate in other states, regardless of 

geographical proximity to the SBDC. Currently, SBDCs can only 

operate out-of-state if such activities are in a bordering state or 

otherwise ‘‘in close geographical proximity to the SBDC.’’ By allowing SBDCs to work within any state, SDBCs with extensive experience in particular natural disasters can assist other states which 

have significantly less experience during a disaster. 

A majority of SBDC grantees are partnered with higher education institutions which bolster SBDCs ability to obtain private 

matching funding as required under law. This bill prohibits entities 

other than institutions of higher education from becoming grantees 

under § 21. An exception is provided for current SBDC grantees 

that are not institutions of higher education. These institutions 

may continue to renew their status as a grantee until they no 

longer wish to do so or the SBA determines that these grandfathered grantees are incapable of providing such services. 

The amendment removes the annual report on entrepreneurial 

development programs. 

V. COMMITTEE VOTE

In compliance with rule XXVI (7)(b) of the Standing Rules of the 

Senate, the following vote was recorded on April 23, 2015. 

A motion to adopt the Small Business Development Centers Improvement Act of 2015, a bill to amend the Small Business Act to 

provide for improvements to small business development centers, 

as amended by the Vitter amendment, was approved unanimously 

by voice vote with the following Senators present: Senators Vitter, 

Risch, Fischer, Gardner, Ernst, Ayotte, Enzi, Shaheen, Cantwell, 

Cardin, Heitkamp, Booker, Coons, Hirono, and Peters. 

VI. COST ESTIMATE

In compliance with rule XXVI (11)(a)(1) of the Standing Rules of 

the Senate, the Committee estimates the cost of the legislation will 

be equal to the amounts discussed in the following letter from the 

Congressional Budget Office: 

MAY 29, 2015. 

Hon. DAVID VITTER, 

Chairman, Committee on Small Business and Entrepreneurship, 

U.S. Senate, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for S. 999, the Small Business Development Centers Improvement Act of 2015. 


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If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Susan Willie. 

Sincerely, 

KEITH HALL. 

Enclosure. 

S. 999—Small Business Development Centers Improvement Act of 

2015 

S. 999 would direct the Small Business Administration (SBA) to 

develop procedures to collect data about Small Business Development Centers (SBDCs) that receive grants from the agency. The 

bill also would amend rules affecting SBDCs by, for instance, allowing them to market their services. 

Based on information from the SBA, CBO estimates that implementing S. 999 would cost less than $500,000 per year over the 

2016–2020 period, assuming availability of appropriated funds, for 

additional data collection and monitoring activities. Enacting S. 

999 would not affect direct spending or revenues; therefore, pay-asyou-go procedures do not apply. 

S. 999 contains no intergovernmental or private-sector mandates 

as defined in the Unfunded Mandates Reform Act and would not 

affect the budgets of state, local, or tribal governments. 

The CBO staff contact for this estimate is Susan Willie. The estimate was approved by Theresa Gullo, Assistant Director for Budget 

Analysis. 

VII. EVALUATION OF REGULATORY IMPACT

In compliance with rule XXVI (11)(b) of the Standing Rules of the 

Senate, it is the opinion of the Committee that no significant additional regulatory impact will be incurred in carrying out the provisions of this legislation. There will be no additional impact on the 

personal privacy of companies or individuals who utilize the services provided. 

VIII. SECTION-BY-SECTION ANALYSIS

Section 1. Short title 

This section provides for the title, ‘‘Small Business Development 

Centers Improvement Act of 2015’’. 

Section 2. Use of authorized entrepreneurial development programs 

Currently, the Administrator is creating and separately funding 

initiatives developed by the agency. This section provides that all 

SBA-created initiatives must be delivered through the programs 

authorized in sections 7(j), 7(m), 8(a), 8(b)(1), 21, 22, 29, and 32 of 

the Small Business Act. The exceptions to this restriction, in subsections (a)(2)(A)–(E), are as follows: small business concerns 

owned by an Indian tribe; activities and programs in support of a 

member of the Armed Forces, including the Reserves and National 

Guard, a veteran, or a spouse of a service member or a veteran; 

the PRIME, STEP, and FAST programs; and other initiatives in 

operation at the time the Committee considered this bill. 


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Section 3. Marketing of services 

The Small Business Act is currently silent on the question of 

whether SBDCs can market and advertise their products and services. Greater awareness of the services available through the 

SBDCs will allow more small businesses to receive entrepreneurial 

assistance without imposing any more financial burdens on SBDCs, 

the SBA, or the taxpayer. This section amends Section 21 of the 

Small Business Act by adding a new subsection (o), which restricts 

the Administrator from prohibiting applicants receiving grants 

under Section 21 of the Small Business Act from marketing and 

advertising their services to individuals and small businesses. This 

ensures the SBDCs are able to market and advertise their products 

and services. 

Section 4. Data collection 

In order for the SBA to provide Congress with information to 

properly evaluate entrepreneurial development programs, the SBA 

has attempted to gather better performance data. Some of the new 

required information would force SBDCs to capture and report data 

that small businesses are reluctant to share. In cases where this 

information is of little value to the government, these requirements 

place an unnecessary burden on the SBDCs and will dissuade 

small businesses from seeking SBDC assistance. This section requires the Administrator to consult with the Association of Small 

Business Development Centers on the creation of documents governing data collection activities related to SBDCs. 

Section 5. Fees from private partnerships and co-sponsorships 

In order to obtain funding, SBDC grantees must match funds 

provided by the federal government with non-federal sources, such 

as private donations or state funds. Therefore, SBDCs often work 

alongside other community partners, such as a local chamber of 

commerce, to host events as a partnership or a co-sponsor. In these 

instances, a participation fee may be charged to businesses by the 

partnership or cosponsoring party. However, under current law 

SBDCs are not allowed to collect the necessary fee. Therefore, this 

bill permits SBDCs to collect fees or other income related to the operation of partnerships or co-sponsorships. This authorization does 

not alter the no-cost counseling provided by SBDCs to individual 

small businesses. 

Section 6. Equity for Small Business Development Centers 

Under current law, up to $500,000 of authorized funding to 

SBDCs could be utilized by the Administrator to pay for examination expenses associated with reviewing SBDCs. No other entrepreneurial development program has an allocation of funds to reimburse the SBA for the agency’s administrative expenses. This section eliminates the award of $500,000 of SBDC grant monies to reimburse the SBA for program administration, consistent with other 

entrepreneurial development programs. 

Section 7. Assistance to out-of-state small businesses 

Currently, SBDCs can only operate out-of-state if such activities 

are in a bordering state or otherwise ‘‘in close geographical proximity to the SBDC.’’ This restricts SBDCs that have specialized exVerDate Sep 11 2014 06:26 Apr 22, 2016 Jkt 059010 PO 00000 Frm 00007 Fmt 6659 Sfmt 6602 E:\HR\OC\SR241.XXX SR241

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perience dealing with certain natural disasters from assisting 

SBDCs in other regions outside of the current statutory limitations 

that are inexperienced with said natural disaster. For example, 

during Hurricane Sandy SBDCs in the affected and neighboring 

states had relatively little experience responding to major hurricane disasters compared to Gulf state SBDCs. Affected states during Hurricane Sandy could have greatly benefited from the Gulf 

states’ SBDC assistance; however, current statutory law restricts 

their aid. Consequently, this provision enables SBDCs to operate in 

other states, regardless of geographical proximity to the SBDC, 

which follows the precedent of WBCs and SCORE, neither of which 

have territorial limitations. 

Section 8. Confidentiality requirements 

The SBA’s current operational guidelines for the SBDC program 

require that SBDCs collect certain information on the businesses 

they counsel. This information is the basis for some of the performance metrics the agency uses to determine the effectiveness of the 

SBDCs in fulfilling their mission. Some of the information collected 

for this purpose, while relevant and necessary for the SBA and 

SBDCs, is sensitive information that small businesses wish to have 

treated as confidential. This sensitive information—such as the 

name of business—is not necessary to develop performance metrics. 

However, its forced disclosure could dissuade businesses from seeking assistance through the SBDCs, thereby undermining the intent 

of Congress when it created the SBDCs. Therefore, this section 

amends Section 21(a)(7)(A) of the Small Business Act to prohibit 

the SBA from distributing and sharing SBDC client information 

with other parties. This reinforces longstanding efforts to ensure 

the confidentiality of information that small businesses provide to 

SBDCs. 

Section 9. Limitation on awards of grants to Small Business Development Centers 

A majority of SBDC grantees are partnered with higher education institutions which bolster SBDCs ability to obtain private 

matching funding as required under law. This section prohibits entities other than institutions of higher education from becoming 

grantees under Section 21. An exception is provided for current 

SBDC grantees who are not institutions of higher education. These 

institutions may continue to renew their status as a grantee until 

they no longer wish to do so or the SBA determines that these 

grandfathered grantees are incapable of providing such services. 

Additionally, this provision also clarifies that this new limitation 

should not prohibit grant recipients from entering into grants, contracts, or cooperative agreements with any other entity. 

Æ 


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