Annual Report

1998

Office of the

Chief Financial Officer
TABLE OF CONTENTS

Page

Message From The Administrator........................................................................................................ iii

Executive Summary............................................................................................................................. iii

Agency Overview................................................................................................................................. 1

Mission and Organization ................................................................................................................ 1

Agency Funds.................................................................................................................................. 2

Agency Financial Position................................................................................................................ 2

Strategic Planning............................................................................................................................ 3

Agency Fees and Charges................................................................................................................ 6

Office of the Chief Financial Officer................................................................................................. 8

Vision Statement......................................................................................................................... 8

Organization Chart...................................................................................................................... 8

Accomplishments........................................................................................................................ 8

Impact of Federal Credit Reform ................................................................................................... 12

Credit Management ....................................................................................................................... 13

SBA’s Management Integrity Program .......................................................................................... 13

Audit Resolution And Follow-Up.............................................................................................. 14

GAO Liaison............................................................................................................................. 15

FMFIA Report.......................................................................................................................... 15

SBA Program Description and Analysis.............................................................................................. 17

Capital Access............................................................................................................................... 17

Business Loan Program............................................................................................................. 17

Development Company Assistance (Section 504)...................................................................... 21

Small Business Investment Company Program .......................................................................... 23

Surety Bond Assistance............................................................................................................. 26

International Trade.................................................................................................................... 28

Disaster Assistance ........................................................................................................................ 29

Entrepreneurial Development......................................................................................................... 33

Business Initiatives.................................................................................................................... 33

Veterans’ Affairs....................................................................................................................... 34

Women’s Business Ownership................................................................................................... 34

Small Business Development Centers........................................................................................ 35

Welfare to Work ....................................................................................................................... 36

One Stop Capital Shop.............................................................................................................. 36

Native American Affairs............................................................................................................ 37

Government Contracting & Minority Enterprise Development ....................................................... 38
Government Contracting........................................................................................................... 39

Minority Enterprise Development.............................................................................................. 40

Technology............................................................................................................................... 41

Size Standards .......................................................................................................................... 41

HUBZone ................................................................................................................................. 42

Small Business Advocacy .............................................................................................................. 42

Acronyms........................................................................................................................................... 44

Financial Statements........................................................................................................................... 45

Introduction................................................................................................................................... 46

Principal Statements ...................................................................................................................... 47

Total Liabilities Covered by Budgetary Resources ......................................................................... 47

Total Liabilities Not Covered by Budgetary Resources .................................................................. 47

Footnotes To Principal Statements................................................................................................. 55

Supplementary Schedules .............................................................................................................. 68

Independent Audit of Financial Statements......................................................................................... 83

Auditor’s Report ..............................................................................Error! Bookmark not defined.

Agency Response .............................................................................Error! Bookmark not defined.
A MESSAGE FROM

THE ADMINISTRATOR OF THE 

U.S. SMALL BUSINESS ADMINISTRATION

AIDA ALVAREZ

The SBA is pleased to present its Chief Financial Officer’s FY 1998

Annual Report that includes its audited financial statements with related

program and financial information. This is the third straight year that the 

Agency’s financial statements have received an unqualified opinion from 

its independent auditors and we are very proud of this accomplishment. 

This reflects the priority that the U.S. Small Business Administration

(SBA) has placed on improved financial management since the enactment 

of the CFO Act of 1990.

As the 20th Administrator of the SBA my primary goal is to help small businesses succeed. This

includes providing access to capital and credit, Federal procurement opportunities, assistance to develop 

entrepreneurial skills, loans to help the victims of natural disasters, welfare-to-work initiative support, 

and advocacy for the interests of small business. These efforts are especially important to small

businesses in America’s New Markets. Also, as SBA prepares for the 21st century, I am committed to 

making SBA a 21st century leading-edge institution. As such, the modernization of SBA’s processes,

systems and workforce is also one of my top priorities. This report provides further information on

these SBA activities during the past fiscal year. 

The SBA has also embarked on the full integration of the Government Performance and Results Act

(GPRA) through increased strategic management for all decisions and activities affecting resources and 

programs. As such, performance measures have been developed for all key programs and activities and 

are used to monitor Agency accomplishments in preparation for the first reporting under GPRA in

March of 2000. In addition, we are committed to implement the COSO (Committee of Sponsoring

Organizations of the Treadway Commission) system of internal controls over the next 3 years. These 

controls will place SBA at the forefront of the Federal Government in terms of strengthening its internal 

control environment using standards that exceed current Federal guidelines, but are consistent with

those required of all major financial institutions nationwide. 

Over the past few years, the SBA has aggressively centralized activities and increased its privatization of 

functions to maximize the service levels provided to America’s small businesses and to further leverage 

reduced Federal resource levels. For its financial assistance programs, SBA has delegated more

responsibility for loan underwriting, servicing and liquidation activities to its private sector lending

partners. This same transition from direct SBA assistance to increased reliance on our resource partners 

has also been implemented in all of SBA’s management and technical assistance programs. These

changes have increased SBA’s need to develop comprehensive oversight and management control

systems to ensure that the Agency’s mission is accomplished in the most effective and efficient manner. 

Additionally, where SBA still retains loan underwriting and servicing responsibilities, we have

centralized these activities to increase consistency of program delivery, increase productivity through

the use of automation and to increase overall efficiency and effectiveness in serving our small business 
customers. Finally, SBA has outsourced the servicing activity for 30 percent of its disaster home loans 

to a private-sector servicing contractor and has initiated an asset sales program in FY 1999 to begin the 

sale of its $10 billion direct loan portfolio.

As an Agency committed to reaching out to new markets and modernization, SBA will put its

customers first, train and empower its employees, and create community-based partnerships to expand 

its outreach and increase its efficiency. Our goal is to continue the SBA’s proud tradition of providing 

needed assistance to small businesses in order to promote economic growth and to provide

opportunities for small business success in an era of reduced Federal resources.

Sincerely,

Aida Alvarez

Administrator
iii

EXECUTIVE 

SUMMARY

The Small Business Administration (SBA) was established in 1953 

as an independent Agency of the Federal Government to

administer a range of Federal programs and policies focused on

the Nation’s small business community.

The mission of the U.S. Small Business Administration is to

maintain and strengthen the Nation’s economy by aiding,

counseling, assisting and protecting the interests of small

businesses effectively and efficiently. SBA also helps businesses

and citizens recover from disasters.

In large part, the strength of today’s economy is the result of the 

strength of our country’s small businesses. Small businesses

employ 54 percent of the private workforce in the United States

and are responsible for 51 percent of the private domestic

product; small business incorporations are increasing, while small 

business failures and bankruptcies are decreasing.

Agency 

Accomplishments

The SBA’s FY 1998 accomplishments reflect the SBA’s

continued role in providing greater access to capital for the

Nation’s entrepreneurs who in turn are creating the jobs that are 

the heart of today’s healthy economy. 

As the table below shows, SBA lending has increased for all of

America’s small businesses since the beginning of the Clinton

Administration.

Number of Loans %

FY 92 FY 98 Increase

Total Lending 26,381 47,198 79%

Women 3,588 11,084 209%

African American 739 1,921 160%

Hispanic American 1,356 3,264 141%

Asian American 1,583 5,195 228%

Native American 129 461 257%

Veterans 3,720 5,912 59%

Agency Program 

Highlights

7(a) Loan Program. In FY 1998, the SBA guaranteed a total of 

38,974, 7(a) loans providing $8.6 billion in financing to our

Nation’s small businesses. FY 1998’s total dollar volume was the 

second highest in the history of the program. The program has

doubled its number of loans during the last 6 years.
iv

504 Development Company Program. SBA’s 504 program

grew from $894 million in debentures financed in FY 1992 to

$2.45 billion in FY 1996. After a decrease in FY 1997 to

$1.4 billion, the 504 program increased to $1.77 billion in

FY 1998. Overall, the program has grown more than 81 percent 

during the last 6 years.

Small Business Investment Company Program (SBIC). The 

SBIC program continues to attract record levels of private capital. 

In FY 1998, SBIC licensees made 3,456 financings to small

businesses with a dollar amount of nearly $3.2 billion. The SBA 

received more than $16 million in profit participation from SBICs 

in FY 1998.

Government Contracting/Minority Enterprises Development. 

Major achievements included instituting a pilot program for

electronic filing and processing of 8(a) applications, and

implementing an automated management information system. The 

SBA also published regulations establishing the procedural

framework for centralizing firms and processing protests

challenging the disadvantaged status of firms claiming to be small 

disadvantaged businesses for purposes of receiving certain price

and evaluation credits in Federal procurements. The Agency also 

promulgated final regulations for the newly created HUBZone

Empowerment Contracting Program, and implemented an

automated management information system.

Disaster Assistance Program. SBA’s disaster assistance

program provided $728.1 million in loans to small businesses and 

individuals for rebuilding after disasters struck 41 states, Guam,

the Federated Republic of Micronesia and the Northern Marianas. 

International Trade. In 1998, the SBA initiated partnership

agreements with its counterparts in Mexico and Argentina to

foster improved cooperation and global business opportunities for 

U.S. small businesses in these markets. The SBA also worked

with Egypt to assist its efforts to develop small businesses through 

the Gore-Mubarak Commission. 

Small Business Innovation and Research (SBIR) and Small

Business Technology Transfer (STTR) Programs. Small 

businesses participating in SBA’s SBIR and STTR programs

support Federal research and development efforts contributing to

America’s national defense programs and safety and health

projects. 
v

Women’s Business Ownership. The Office of Women’s

Business Ownership (WBO) provides assistance to women

business owners. The Women’s Business Center Program serves 

the nation’s nearly 8.5 million women-owned businesses through

technical, financial and management information, training and

counseling. In FY 1998, the WBO provided managerial,

marketing and procurement assistance to nearly 12,000 women

through its 28 funded sites.

Counseling and Training. An estimated 1 million small business 

entrepreneurs received management training and counseling from

SBA’s national network of business education and assistance

programs. This network includes the Service Corps of Retired

Executives (SCORE), approximately 1,000 Small Business

Development Centers (SBDCs), and 52 Business Information

Centers (BICs). 

Internet Access. The SBA’s home-page, SBA OnLine, received 

more than 2 million hits per week by fiscal year end, and continues 

to grow. This service benefits the Agency’s customers by making 

useful information readily available.

One Stop Capital Shop. The One Stop Capital Shop (OSCS) is 

the SBA’s Empowerment Zone (EZ)/Enterprise Community (EC) 

signature contribution. It is an alternative delivery mechanism for 

the Agency’s products to areas that have been underserved by

SBA. OSCSs are cost effective, customer friendly and represent a 

working model of the public/private partnership.

Veterans’ Affairs. The SBA is establishing an outreach program 

to provide enhanced business development assistance to eligible 

veterans in accordance with SBA’s Reauthorization Act of 1997. 

In fiscal year 1998, we initiated a study of assistance to veterans. 

The SBA soon will award outreach grants to assist eligible

veterans with entrepreneurial training, and will finish a

comprehensive guide to assist in the start-up and expansion of

businesses by eligible veterans.

Welfare to Work. The SBA is playing a leadership role in the

President’s welfare to work initiative. SBA resource partners

provide entrepreneurial training to former welfare recipients with

the skill and drive to start their own business. SBA’s extensive

network of field offices and resource partners connect small

business owners with local service providers to provide training

for welfare recipients. 
vi
Page 1

AGENCY 

OVERVIEW

MISSION AND 

ORGANIZATION

Mission Statement The mission of the Small Business Administration (SBA) is to

maintain and strengthen the Nation’s economy by aiding,

counseling, assisting, and protecting the interests of small

businesses and by helping businesses and families recover from

disasters.

Strategic Goals To accomplish its mission, the SBA has adopted the following

strategic goals to guide its management and program decisions 

over the next five years:

1. Increase opportunities for small business success.

2. Transform SBA into a 21st century leading edge institution.

3. Help businesses and families recover from disasters.

4. Lead small business participation in welfare-to-work.

5. Serve as a voice for America’s small businesses.

Organization The SBA is a decentralized organization with more than

100 locations nationwide, including field office locations in all

50 states, the District of Columbia, Puerto Rico, the Virgin

Islands, and Guam. There is a full service district office in every 

state. A number of smaller branch offices and central office duty 

stations (CODs) supplement the larger geographic areas. The

SBA has 10 regional offices, 70 district offices and 15 branch 

offices. The Agency also has a number of centers that approve

disaster or business loans, and provide servicing to its disaster or 

business loan portfolios. In FY 1998, the Agency employed

4,379 full time equivalent (FTE) personnel (including

1,288 disaster FTEs) and had an annual operating budget of

$370 million, excluding the non-credit program initiatives.
Page 2

AGENCY FUNDS The SBA’s programs and operations are financed through five

appropriation accounts: Salaries and Expenses; Office of

Inspector General; Business Loans Program Account; Disaster

Loans Program Account and Surety Bond Guarantees Revolving

Fund. For budget reporting purposes, SBA funds are maintained 

in the following accounts:

• Business Loans Program Account

• Business Direct Loan Financing Account

• Business Guaranteed Loan Financing Account

• Business Loan Fund Liquidating Account

• Disaster Loans Program Account

• Disaster Direct Loan Financing Account

• Disaster Loan Fund Liquidating Account

• Surety Bond Guarantees Revolving Fund

• Pollution Control Equipment Fund Liquidating Account

• Business Assistance Trust Fund

• Salaries and Expenses Account

• Office of Inspector General Salaries and Expenses Account

The two Salaries and Expense Accounts generally receive annual 

appropriations. The other SBA accounts generally utilize annual

appropriations, multi-year and no-year appropriations, and

indefinite appropriations. Since FY 1992, the credit program

activities of the SBA have been subject to the Federal Credit

Reform Act (FCRA). New program and financing accounts were 

established in FY 1992 under FCRA to finance all credit activities 

occurring after September 30, 1991. The program accounts

receive appropriations to the extent of anticipated credit program 

levels. The financing accounts include payments from credit

program accounts and other cash flows resulting from direct loan 

obligations or loan guarantee commitments.

The Business Assistance Trust Fund is a “gift authority” account

and does not receive any appropriated funds.

AGENCY FINANCIAL 

POSITION

The financial position of the Agency at FY 1998 year-end is

summarized as follows.

• Total assets $15.9 billion

• Total liabilities $15.88 billion

• Total loan portfolio $46.9 billion

• Total reserves for losses $3.5 billion
Page 3

The following chart illustrates SBA’s operational costs over the

past 10 years in both constant (using 1987 as a benchmark) and

nominal dollars (actual expenditure). 

0.0

1,000.0

2,000.0

3,000.0

4,000.0

5,000.0

89 90 91 92 93 94 95 96 97 98

0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000 6,000.0

 Employees (FTEs)

 Dollars 

 Constant 87 Dollars

EXPENSES & STAFFING TRENDS

Salaries & Expenses

Excluding Disaster & Non-Credit Initiatives

STRATEGIC PLANNING The Agency has implemented a strategic planning process linked

to the performance management process for all employees and

managers. This process translates the Administrator’s goals and

objectives into workable plans. These goals are listed on page 1.

The strategic goals are achieved through an annual performance

plan. The annual goals are evaluated against performance

indicators. The performance indicators are linked to annual

performance measures for program managers administering SBA

programs.

SBA’s 5 year strategic plan included:

• Increase the aggregate number of general business loans;

Certified Development Company (CDC), equity capital,

export working capital and surety bond guarantees.

• Increase the number and percentage of underserved small

businesses and entrepreneurs receiving direct SBA assistance

or help through our business partners.

• Increase the number, dollar volume, and percentage of Federal 

contracts awarded to small businesses, women owned

businesses, and small and disadvantaged businesses.

• Increase the number and percentage of start-up businesses

receiving SBA assistance.

• Expand the number of resource partners and tailor their

programs to the needs of special populations, as well as new

entrepreneurs and those expanding their businesses.
Page 4

• Improve coordination among SBA resource partners and other 

community resources, and among SBA resources with other

Federal programs.

• Develop a comprehensive Agency-wide internal control plan

that is guided by COSO standards and assign responsibility for 

managing and implementing the plan. 

• Educate the entire organization about internal controls and

ensure that all managers are accountable for implementing and 

managing the internal control system.

• Establish protocol for lender oversight, establish loan program 

credit standards, service standards, and mission standards to

measure lender performance.

• Maintain accurate current data on small businesses from the

Bureau of the Census and other sources.

• Analyze and disseminate research to policy makers and small

business stakeholders on small business characteristics that are 

relevant to the formulation of public policy.

• Ensure improved, across-the-board, Federal agency

compliance with the Regulatory Flexibility Act; meaningful

small business participation in the regulatory and the

legislative process, and improve coordination between Federal 

and state regulatory agencies to reduce the burden on small

businesses.

Performance Indicators An essential element of the Government Performance and Results 

Act (GPRA) strategic plan is performance measures, which focus 

on outcomes. The SBA has used a number of specific program

performance indicators since 1992 to measure its performance. 

The description and analysis (D&A) section of this report presents 

the collected data using asterisks on charts and shading on

tables to indicate GPRA performance measures.

As part of its performance objectives, the SBA places special

emphasis on directing its assistance efforts to those small business 

groups who are most under-represented in the marketplace;

particularly veterans, women and minorities. 
Page 5

The following chart indicates the percentage of approved loans

for different types of businesses.

Note: Percentages based on dollar value of loans approved in FY 1998.

Corporations 76%

Individuals 19%

Partnerships 5%

Service Industries 34%

Retail Trade 27%

Manufacturing 17%

Wholesale Trade 9%

Others 12%

Existing Businesses 75%

New Businesses 25%

Minorities 25%

Veterans 13%

Women 17%

Others 45%

76%

5%

19%

9%

12%

34%

17%

27%

25%

75%

45%

25%

17%

13%
Page 6

The geographic distribution of SBA’s loan guarantee programs is 

depicted on the following chart.

AGENCY FEES 

AND CHARGES

In accordance with the CFO Act, 31 U.S.C.§902(a)(8), the SBA

biennially assesses its level of user fees and other charges. As an

integral part of the President’s budget process, the SBA assesses and

calculates the current and future revenues and the current and future

costs of programs and activities. The SBA evaluates the level of

current revenues in terms of their sources and amounts, increasing or

decreasing these revenues through adjustments to the level of user fees 

charged, interest rates charged, or other means.

SBA Financial Assistance By Region

FY 1998 Total Lending - Business

X $497

VIII $634

IX $3,956

VI $2,431

VII $414

IV $1,456

V $1,444

III $683

II $927

I $581

Total SBA Lending for Fiscal Year: $13,023

(Dollars in Millions)

IX $3,956
Page 7

As part of the President’s budgets, the SBA proposed the following

adjustments to current revenue sources:

1. As part of the development of the Small Disadvantaged Business

(SDB) program proposed in FY 1998, firms seeking SDB

certification would pay a fee to have their ownership and control

attested by private-sector firms under contract with the SBA. The 

fees would be set to cover the costs of these contracts.

2. For FY 1999, SBA proposed that the loan interest rate for disaster 

victims would increase to the cost of funds to the Treasury. This 

proposal was not adopted by the Congress.

3. For FY 2000, SBA proposes that the up-front guarantee fee and

the on-going guarantee fee for Section 7(a) loans approved up to

$150,000 be standardized. The up-front fee will be set at 2 percent 

and the on-going fee will be set at 30 basis points of the

outstanding loan balance and a fee charged for PLP reviews.

4. For the FY 1999 and FY 2000 President’s budgets, the fees for the 

504 Certified Development Company debenture program are set to 

equal a 0 percent subsidy rate. Therefore, for FY 1999, the fee to 

the loan borrowers was reduced from 0.775 percent to 0.729

percent. For FY 2000, this fee will be further reduced to 0.60

percent. A fee is proposed for SBIC reviews for late FY 1999 and 

FY 2000.

5. During FY 1998, the surety bond guarantee program assessed the 

viability of the capitalization of the revolving fund and the current 

market fees charged for surety bonding. It was determined that

SBA’s fee structure was excessive compared to market rates and

that the fund could sustain a reduced fee structure. As such, both 

the contractor and surety fee were reduced in FY 1998.

6. As part of the development of the proposed FY 2000 America’s

Private Investment Corporation (APIC) program to be

administered by HUD (with input from the SBA), an appropriate

fee structure was set taking into consideration potential tax credits 

and other program revenues to give incentive to investing in “new 

markets” areas.

7. In order to increase credit and capital into the Administrator’s

“new markets” areas, fees and costs in most of SBA’s credit and

capital programs were reviewed to determine any necessary

changes needed to give incentive to participants. In some cases,

regulatory changes were proposed in lieu of fee changes.
Page 8

OFFICE OF THE CHIEF 

FINANCIAL OFFICER

Vision Statement The Small Business Administration’s Office of the Chief Financial 

Officer (OCFO) will be a recognized leader in the Federal

financial management community. We will effectively support the 

Administrator in the accomplishment of the SBA mission. Our

systems will be modern, user friendly and efficient. Our

operations will be disciplined, accountable and responsive. The

information we provide will be timely, understandable, accurate

and complete. The staff will be recognized as the best in their

fields. 

Organization Chart The Chief Financial Officer (CFO) reports directly to the SBA

Administrator. The office includes the essential financial 

management functions shown in the following chart.

Chief Financial Officer

Office of

Planning and

Budget

Office of

Financial

Administration

Office of

Financial

Systems

Office of

Financial

Analyses

Denver

Finance

Center

Chief

Financial Officer

SBA

Administrator

Accomplishments Recent financial management improvements made by the Office

of the Chief Financial Officer follow.

• Subsidy Rates – Improvements in SBA’s analytical

capabilities and processes resulted in more accurate, stable,

timely, and credible subsidy rates. SBA contracted with

outside experts for pre-execution validation of the FY 2000

estimates. The SBA prepared for asset sales by developing a 

model to produce predicted Government hold values. 

• Productivity and Production – The Denver Finance

Center’s (DFC) productivity improved by 8.2 percent from

FY 1997. The DFC processed over 9.3 million transactions 

(collections, disbursements, account servicing,

reconciliations, etc.) during FY 1998, an increase of 6.2

percent over the prior year. 
Page 9

• CFO Report – The SBA received an unqualified opinion

on its FY 1998 financial statements from the independent

auditors. The SBA is one of only seven Federal agencies;

and the only credit agency, to receive an unqualified opinion 

for the past 3 years. 

• SBA Internal Controls – One of the Administrator’s

initiatives is to transform SBA into a leading edge agency for 

the 21st century. This involves focusing on stronger internal 

controls by implementing a system developed by the

Committee of Sponsoring Organizations (COSO) of the

Treadway Commission. Coordination between the CFO and 

the IG has facilitated COSO awareness throughout the SBA.

• Contracting Out of Servicing - A Congressionally

mandated special initiative was accomplished after nearly 2

years of planning and effort. SBA awarded a contract for

servicing 30 percent of the disaster home loan portfolio to

Computer Data Systems Incorporated (CDSI) in June 1998. 

During FY 1998 the OCFO assisted in the development of

accounting requirements and the manual processing of

transactions while automated procedures were being

implemented to make this project possible.

• Outsourcing of Collections - One of the major initiatives

accomplished in FY 1998 was the outsourcing of receipt

processing to several lockbox financial partners. This effort

has had a fundamental impact on how DFC has historically

collected and processed loan payment receipts. It has

reduced the incoming mail flow from approximately

40,000 items on a daily basis to fewer than 1,000. It has also 

allowed the reorganization of operating facilities and moved

the SBA closer to being a 21st century leading edge

institution, by further developing electronic processing

capabilities. DFC completed programming and system

modification for moving collection processing to the privatesector lockboxes and adapted emergency lockbox

methodology for collection processing by CDSI. The use of 

lockbox partners in the private sector, paid by Treasury,

represents a significant savings to the SBA.
Page 10

• Guarantee Fee Receivables – This project was initiated to

analyze and correct weaknesses in the Agency’s collection of 

about $45 million of delinquent guarantee fees. FY 1998 

saw the conclusion of the year-long Agency pilot study of

delinquent fees, the transition of the project into full

production by one of the service centers, and the

development of a new fee billing system. 

• Asset Sales – During FY 1998 the OCFO began the

development of functional accounting requirements to

support the planned sale of more than $10 billion in

Government loan assets.

• Reporting Transition – During FY 1998, the Agency began 

transferring its financial reporting function from Washington 

DC to the DFC. This transition will continue into FY 1999 

as the DFC, with support from Headquarters staff, assumes

FY 1999 reporting and develops FY 1999 year-end financial 

statements.

• Systems Development –The OCFO made improvements to

our electronic processing during FY 1998. A lender database 

was developed and the DFC worked in partnership with The 

Money Store to develop an electronic means of paying and

receiving participant payments and information. This work

was part of SBA’s compliance with the Debt Collection

Improvement Act.

• Core Accounting System – The OCFO worked on the

acquisition and implementation of a modern core accounting 

and general ledger system. SBA hired a contractor to assist 

in formalizing software evaluation methodology. The OCFO 

evaluated several commercially available accounting systems

and contacted current users to evaluate consumer satisfaction 

with the systems. Also, the OCFO drafted system vision

documents, completed Casewise diagrams, shared the system 

vision with SBA program officials and prepared system

development plans referencing the vision for submission to

the system modernization committee.
Page 11

• Annual Audit Follow-up - Several items were identified in

the Management Letter accompanying our FY 1997 annual 

audit which needed special attention in FY 1998. The OCFO 

worked with the Office of Small Business Development

Centers (SBDC) to begin a reconciliation of financial records 

with those of the grantees and to develop a new electronic

method of managing grants (to be tested during FY 1999.) 

Next, the OCFO undertook a reconciliation of General

Ledger (GL) accounts within the administrative accounting

system, FFS. The staff worked with the SBIC office to

validate a prior-year review of account balances and to refine 

processing requirements to assure these accounts remain

reconciled. Finally, continued emphasis throughout the year 

reduced the reconciliation of cash items with Treasury to

historical low levels and by improving internal controls and

research, the OCFO resolved an independent IG review item 

involving duplicate disbursements.
Page 12

IMPACT OF FEDERAL 

CREDIT REFORM

The passage of the Federal Credit Reform Act (FCRA) has

significantly affected budgeting and accounting for the Agency’s

credit programs since FY 1992. The FCRA provides an estimate 

of the costs of the Agency’s financial assistance programs. 

Under the FCRA, SBA is required to calculate a subsidy rate for 

each loan program. This rate estimates the net present value of all 

cash outflows and inflows. The rate calculation takes into

consideration such factors as the expected repayments on the

loans and the interest rate differential between the rate charged the 

borrower on SBA held loans and the rate at which funds are

borrowed by the Treasury. The final product is a rate that reflects 

the percentage of each dollar approved which is subsidized by the 

Federal Government. This subsidy rate is the cost of assistance

efforts to the taxpayer, excluding administrative costs. A

summary table of SBA loan programs showing subsidy rates and

other information follows:

LOAN PROGRAM SUMMARY - FY 1998 BUDGET

Dollars Rounded to Thousands

Appropriated 

Program Level

Subsidy Rate 1/ Subsidy Budget 

Appropriation

Subsidy Cost Per 

Loan Made 2/

Average Loan 

Amount 3/

Business Direct Loans:

Microloans $28,676 10.31% $2,956 $44 $431

Business (Gty)

7(a) Business $9,199,301 2.14% $196,662 $5 $214

7(a) Delta $153,418 3.35% $5,141 $20 $583

Microloans Gty. $9,991 8.16% $815 $50 $609

Development Company (Gty)

504 Dev. Co. $3,000,000 0.00% $0 $0 $365

504 Delta $26,944 0.72% $194 $3 $404

Investment Company (Gty)

SBIC Debentures $488,000 1.93% $9,418 $131 $6,788

SBIC Participating Securities $700,000 2.19% $15,355 $202 $9,211

Disaster Assistance (Dir.) $1,022,869 23.46% $239,965 $6 $26

Note: All appropriated program levels reflect “gross” value of loans to be made. SBA performance 

indicators are shaded.

1/ This figure is calculated by dividing the subsidy budget appropriation by the appropriated program 

level rounded to the fourth decimal place. Source: OMB Standard Form 132, Apportionment

Schedule.

2/ This figure is calculated by multiplying the subsidy rate and the average loan amount.

3/ This figure is calculated by dividing the dollar value of loans made for each program by the total

number of loans made in FY 1998.
Page 13

CREDIT 

MANAGEMENT

The SBA has been active in improving its credit management and 

debt collection practices to collect all delinquent debt in a costeffective manner. The debt collection tools utilized by SBA

include: the use of SBA attorneys appointed as Special Assistant 

United States Attorneys (SAUSA) to augment the Department of 

Justice collection efforts, the IRS tax refund offset, On-line 

Payment and Collection / Treasury Offset Programs

(OPAC/TOPS), referrals to Treasury for private collection agency 

actions, and Federal salary offset. For FY 1998, these five tools 

were responsible for the collection of a total of $15.84 million in 

delinquent Federal debt as summarized by the following chart.

Dollars Collected in FY 1998 By Debt Collection Tool*

Department of Justice / SAUSA Collections $15,143,823

Internal Revenue Service 497,533

OPAC/TOPS Offset 161,704

Collection Agencies 26,559

Federal Salary Offset 6,698

*SBA performance indicator.

SBA’s 

MANAGEMENT 

INTEGRITY 

PROGRAM

Under SBA’s continuous efforts to deliver efficient programs

while maintaining effectiveness and integrity, accomplishments

have been achieved toward bringing the Agency into the 21st

century. While working on achievement of this goal, SBA is

cognizant of the formal implementation of the Federal Managers’ 

Financial Integrity Act (FMFIA), the Chief Financial Officers

(CFO) Act of 1990, OMB Circulars A-50, A-76, A-123, A-127 

and A-130, and the responsibility to support results-oriented 

management as defined in the GPRA.

Initiating its transformation into a leading edge Agency for the 21st

century, SBA has focused on stronger internal controls through

the implementation of a system developed by the Committee of

Sponsoring Organizations (COSO) of the Treadway Commission. 

The SBA COSO initiative began with the establishment of a Risk 

Management Committee, hiring a professional staff, engaging

PricewaterhouseCoopers for consultation, conducting diagnostic

reviews; and by enhancing SBA’s focus on subsidy rate, credit

risk management, lender monitoring, program oversight, and

reviews by the SBA’s IG.
Page 14

A Quality Service Review (QSR) process was utilized for SBA

field locations in 1998. The QSR is a systematic and proactive

process review of field activities. There were 22 QSRs

conducted in 1998. They identified vital information to be

reviewed by Headquarters. Headquarters’ review disclosed both 

“best practices” for laudatory achievements and weaknesses in

operations which resulted in corrective action in the field. In its 

Headquarters’ review, SBA recognized weaknesses in

questioning techniques used by the review teams and also

recognized functional areas that had gone “undone” due to

changes and/or movement of the mission.

The SBA is in the process of implementing its Management’s 

Assessment Process (MAP). MAP will be a facilitated meeting of 

individuals from a program office or function brought together to 

identify and reinforce management objectives, assess risk

associated with accomplishment of those objectives, review of

existing controls or the lack thereof, and the development of an

action plan; as necessary, to strengthen identified “gaps” in the

controls. The MAP will produce documentation of controls,

identify weaknesses complete with an action plan to strengthen

them, and test and evaluate the results of the action plan. MAPs 

will emphasize management’s obligation to monitor their

environment’s internal control program.

Audit Resolution 

And Follow-Up

The SBA’s policy and procedures require management to resolve 

audit findings and recommendations promptly, ensure that timely

corrective actions are taken, and maintain accurate records on

audit recommendations. The Office of the Chief Financial Officer 

maintains an audit follow-up system to monitor the

implementation of the audit recommendations. Data kept within

the system is used to prepare semiannual reports on audit

resolution for the President and the Congress. Other objectives of 

the system are to:

• Track final actions taken to implement audit management

decisions.

• Provide a complete record of actions taken on both monetary

and non-monetary audit recommendations.

• Prepare the semiannual reports on the status of management

actions.
Page 15

During FY 1998, the Agency's program managers continued to

demonstrate a commitment to timely resolution and

implementation of OIG audit recommendations. A total of

130 recommendations were implemented during the fiscal year

and 19 recommendations remain open.

GAO Liaison The Office of the Chief Financial Officer carries out the Agency’s 

GAO liaison function. The OCFO facilitates all GAO information 

requests including entrance interviews with SBA management and 

other assistance. The OCFO also provides a monthly report to

the SBA management on the status of GAO reviews.

FMFIA Report The SBA reported in its FY 1998 Federal Managers’ Financial 

Integrity Act (FMFIA) report that its financial systems and

administrative management processes provide assurance that the

objectives of Section 2 (Material Weaknesses) and Section 4 

(Financial System Non-Conformances) of the FMFIA are being

achieved. Based on results of a variety of management reviews

(e.g., Vulnerability Assessments, program reviews of field

operations and Inspector General audits), the Agency has

concluded that further improvements are needed in its internal

controls. The SBA has begun implementation of the COSO

system of internal controls along with other improvements to

strengthen credit program risk management, lender oversight,

credit subsidy model management, and field office reviews.

During FY 1998, three items were resolved and two new material 

weaknesses were identified. The SBA reported a total of seven

unresolved items: i.e., five program material weaknesses and

two financial system material non-conformances.

The program material weaknesses pertained to the following 

program areas:

• Minority Enterprise Development

• Small Business Development Centers

• Surety Bond Guarantees

• Office of the Chief Financial Officer

The financial system material non-conformance weaknesses

pertained to the Office of the Chief Financial Officer.
Page 16

Appropriate corrective actions and milestones for improvement of 

the remaining weaknesses are scheduled for FY 1999 and beyond. 

The SBA is confident that the actions it has begun to implement, 

the COSO systems of internal controls and other improvements 

will further strengthen SBA’s internal controls.
Page 17

SBA PROGRAM 

DESCRIPTION 

AND ANALYSIS

CAPITAL ACCESS The SBA provides financial assistance to underserved small

businesses. The SBA’s programs are designed to complement the 

private sector in providing loans, guarantees, bonding, and other

forms of financial assistance to this critical sector of our economy.

For purposes of this report, Capital Access includes five program 

areas, which are listed and discussed below. These program areas 

are:

1. Business Loan Program

2. Development Company Assistance

3. Investment Company Assistance

4. Surety Bond Assistance

5. International Trade

Each of these five program areas is discussed in detail below.

Business Loan 

Program

Program Description The business loan program, authorized by Section 7(a) of the

Small Business Act, is SBA’s largest financial assistance program. 

Banks and certain non-bank lenders make loans, which are

guaranteed at percentages, varying from 50 percent to 90 percent.

The SBA is authorized to make direct and guaranteed loans under 

several specific loan programs. In FY 1996, direct loans under

the general business loan program were eliminated, except for

Microloan direct lending. Under the general business loan

program, business loans are guaranteed by the SBA for varying

amounts (up to 90 percent of the total loan amount or a maximum 

of $750,000). An initial guarantee fee ranging from 2 percent to 

3 7/8 percent is charged, depending on the size of the loan. 
Page 18

The SBA has three types of programs through which private

lenders may make SBA-guaranteed business loans: the regular

program, the certified lenders program (CLP), and the preferred 

lenders program (PLP). Under the regular program, the private

lender accepts the loan application; the SBA performs the credit

analysis and retains final loan-making authority. The CLP

program operates like the regular program except that the SBA 

promises a decision in 3 days. Under the PLP program, the lender 

performs the credit analysis and makes the credit decision. The

CLP and PLP programs are of great benefit to lenders and loan

applicants, as well as the SBA, which is able to leverage its 

resources more effectively to provide quicker assistance to more

small businesses.

In response to the President’s effort to make Government more

efficient, the SBA has taken great strides to streamline several of 

its lending programs. Implementation of the LowDoc program,

which simplifies the application process for guarantee assistance,

has significantly reduced the amount of time and resources

required. In FY 1995, the SBA centralized the processing of PLP 

loans. Loan packages are now given a 24-hour turnaround to the 

participating lender. This has reduced the number of SBA

personnel necessary to process PLP loans and has resulted in a

more uniform program. In FY 1995, the SBA began a pilot

program called FA$TRAK program with 18 lenders. Under this 

streamlined and expedited loan program, lenders use mostly their 

own forms and procedures to process smaller SBA guaranteed

loans. In exchange for the increased authority and flexibility,

lenders accept a 50 percent guarantee. In FY 1998, the SBA

renamed this program SBAExpress, increased the maximum loan 

amount under this program to $150,000, and opened the program 

to additional lenders. 

In addition to these guaranteed loans, the SBA Microloan

program provides small scale financing ($25,000 maximum) on a

short term basis for equipment, inventory, supplies and working

capital through Microloan intermediaries. The SBA makes direct 

loans, and on a pilot basis, provides loan guarantees to

intermediaries who in turn make direct loans to small businesses.
Page 19

Program Performance The following highlights significant developments for the business 

loan program.

• The number of loan approvals has been steadily increasing

since FY 1986, with a prominent rise from FY 1991 through 

FY 1995. The number of loan approvals has declined since FY 

1995 and the number and dollar amount of loan approvals

decreased in FY 1998 from FY 1997.

• Purchases declined in the 7(a) program for FY 1998.

• Charge-offs decreased in the 7(a) program for FY 1998.

The PLP, CLP and SBAExpress programs that rely heavily on

lender credit analysis have been growing steadily in the past

several years. Also, LowDoc loans represented 26 percent of the 

number of loan approvals and 7 percent of gross dollar amount of 

approvals in FY 1998. The following chart depicts each

program’s share as a percentage of total number of loans made in 

FY 1998. 

PERCENTAGE SHARE OF BUSINESS LOAN PROGRAMS

# of Loans

Standard 18%

PLP 34%

CLP 8%

LowDoc 26%

SBAExpress 14%

18%

8%

34%

26%

14%
Page 20

During FY 1998, SBA guaranteed 38,974 loans for $8.6 billion, 

(net of decreases and cancellations). Historical loan approval

information is summarized in the following graph.

The following table shows a decrease in loan approvals in number 

and a decrease in the dollar volume from FY 1997 to FY 1998. 

The data shows that the portfolio currency rate (which includes

SBA’s purchased and guaranteed loans) showed an increase to

91.8 percent in FY 1998 from 81.3 percent in FY 1997. We

believe that the primary reason for this change is the increased

accuracy and timeliness in reporting by lenders. (FY 1997 was

the first year of the monthly lender reporting system.)

BUSINESS LOANS FY 1997 FY 1998 CHANGE %

CHANGE

Net Approvals ($) 9.0B 8.6B (0.4B) (4.4%)

Net Approvals (#) 43,068 38,974 (4,094) (9.5%)

Portfolio Current (%) 81.3% 91.8% 10. 5 12.9%

Portfolio PastDue/Delinquent(%)14.4% 3.9% (10. 5) (72. 9%)

Portfolio in Liquidation (%) 4.3% 4.3% ------ -----

Purchases ($) 418.3M 409.7M (8.6M) (2.1%)

Purchases (#) 4000 4526 526 13.2%

Charge Offs ($) 310.8M 264.9M (45.9M) (14.8%)

Charge Offs (#) 4152 4018 (134) (3.2%)

Charge-offs as a % of 

Disbursements 7.77% 7.52% (0.25%) (3.2%)

Charge-offs as a % of 

Outstanding Portfolio 1.42% 1.16% (0.26%) (18.3%)

Note: SBA performance indicators are shaded in the table.

BUSINESS LOANS

0

2,000,000,000

4,000,000,000

6,000,000,000

8,000,000,000

10,000,000,000

89 90 91 92 93 94 95 96 97 98

0

20,000

40,000

60,000

Guaranteed Loans in $

Approvals in #

* SBA performance indicator

Annual Approvals in Dollars and Numbers*
Page 21

During FY 1998, 4,526 loans for a total of $409.7 million were

purchased from the lenders and 4,018 loans representing $264.9

million were charged off. Historical loan purchases and chargeoff information is summarized in the following graph.

Certified Development 

Company Assistance 

(Section 504)

Program Description The SBA’s Development Company program was created to give

small business owners the means to expand, modernize, and

compete in the economy by providing long-term, fixed asset

financing. 

The Development Company program, also known as the

Section 504 program, permits loans to be made to small

businesses by Certified Development Companies (CDCs). CDCs 

are generally non-profit organizations sponsored by private

interests or by state or local governments. CDCs are certified by 

the SBA and are focused on economic development in their

community or region. 

Each loan package must be approved by the SBA and show that 

the assistance will have a significant economic impact on the

community in which the project is located, primarily through job

creation or retention. Each package includes at least a 10 percent 

equity injection by the small firm, generally a 50 percent bank loan 

with a lien position ahead of the SBA guaranteed debenture and

the balance as a debenture issued by the CDC and 100 percent

guaranteed by the SBA. The average SBA exposure was

$365,000 per debenture in FY 1998.

BUSINESS LOANS

0

200,000,000

400,000,000

600,000,000

89 90 91 92 93 94 95 96 97 98

75.0

80.0

85.0

90.0

95.0

Charge-Offs in $

Purchases in $

Portfolio Currency

Rate in %

Currency Rate* and Charge-Offs Compared

* SBA performance indicator

Charge off and purchase dollars represent gross as opposed to SBA share.
Page 22

Program Performance The following highlights significant developments for the

Section 504 program.

• Lending increased steadily from FY 1989 to FY 1996. 

However, a decline in FY 1997 was recorded due to decreased 

demand, possibly resulting from increased fees imposed that

year that resulted in a zero subsidy rate. In FY 1998, volume 

rebounded somewhat, exceeding the FY 1997 approval

numbers and registering the second highest volume year in the 

history of the program. Fees were reduced for borrowers in

FY 1998.

• Purchases, both in dollars and numbers, increased in FY 1998 

over FY 1997. 

• Charge-offs, both in dollars and numbers, decreased in

FY 1998 over FY 1997. 

During FY 1998, 4,847 loans were approved through the

504 program for a total gross dollar amount of $1.77 billion. The 

following graph illustrates that, after steadily increasing since

FY 1989, there was a drop off in the number and dollar volume of 

development company approvals in FY 1997. The FY 1998 

numbers show an increase in the number and dollar volume of

loan approvals over FY 1997. 

CDCs have provided more than $12 billion in 504 financing to

assist more than 36,000 small businesses in total projects of about 

$32 billion, including equity and bank financing. Based on criteria 

used estimate job creations, CDCs have reported that

approximately 890,000 jobs have been created or retained as a

result of projects funded by the 504 program.

DEVELOPMENT COMPANY LOANS

0

1,000,000,000

2,000,000,000

3,000,000,000

89 90 91 92 93 94 95 96 97 98

0

2,000

4,000

6,000

8,000

Approvals in $

Approvals in #

* SBA performance indicator

Annual Approvals in Dollars and Numbers*
Page 23

The following table shows the increase in volume and dollar

amount of Section 504 loan approvals in FY 1998 over FY 1997. 

The table also shows that the purchases increased somewhat in

FY 1998 as a result of past program growth and charge-offs 

decreased in FY 1998 from FY 1997 levels.

DEVELOPMENT 

COMPANY LOANS FY 1997 FY 1998 CHANGE %

CHANGE

Net Approvals ($) 1,436M 1,769M 333M 23.2%

Net Approvals (#) 4,045 4,847 802 19.8%

Purchases ($) 49.7M 62.2M 12.5M 25.2%

Purchases (#) 203 233 30 14.8%

Charge Offs ($) 30.5M 27.7M (2.8M) (9.2%)

Charge Offs (#) 171 127 (44) (25.7%)

Charge-offs as a % of 

Disbursement 3.35% 3.13% (0.22%) (6.6%)

Charge-offs as a % of 

Outstanding Portfolio 0.47% 0.39% (0.08%) (17.0%)

Note: SBA performance indicators are shaded in the table.

The following graph shows that SBA’s development company

purchase dollars increased in FY 1998 and charge-offs decreased. 

Small Business 

Investment Company 

Program

Program Description The Small Business Investment Company (SBIC) program was

established to address the need for venture capital by small

emerging enterprises and to improve their opportunities for

growth, modernization, and expansion. The program provides

financing through SBICs, which utilize their own capital, along

with funds obtained through the sale of SBA-guaranteed 

debentures and participating securities.

Charge-Offs in $

Purchases in $ 

DEVELOPMENT COMPANY LOANS

Charge-Offs and Purchases

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

89 90 91 92 93 94 95 96 97 98
Page 24

SBICs provide equity capital, long-term loans, debt-equity 

investments and management assistance to qualifying small

businesses. The SBICs share in the success of the small

businesses as they grow and prosper.

As of September 1998, the SBA portfolio of active companies

was composed of 245 SBICs with capital resources of $8.6 billion 

and 73 Specialized SBICs (SSBICs) with capital resources of

$353 million.

Program Performance The following highlights significant trends or developments for

this program.

• SBIC leverage approvals continued to increase, as interest in

the participating securities program remained high.

• Licensing activity also remained high, especially among

potential participating securities issuers.

• The amount of leverage in liquidation as a percentage of total

outstanding program leverage has continued to decline from 39 

percent in FY 1994 to 9.7 percent in FY 1998.

• A new interim funding process, just-in-time funding, was

implemented that provides SBICs with the flexibility to time

their takedowns of leverage based on expected financing of

small businesses.

• The terms of SBA’s leverage commitments to SBIC’s were

extended so that the funds can be drawn down over a 5-year 

period, similar to the investment cycle of the SBIC’s.

During FY 1998, SBICs made 3,456 investments to small

businesses for a total of approximately $3.2 billion. 

The following graph displays the financing activity for the SBIC

program over the past 10 years. This financing is in the form of

debentures, preferred stock and participating securities. The

participating securities program, initially authorized in FY 1992 

and implemented in FY 1994, defers the SBIC’s obligation for

interest payments, and allows SBA to participate in the earnings

of the SBIC’s portfolio attributable to the participating securities

financings. As of September 1998, the SBA received more than

$16 million in profit participation from SBICs. The number of

SBIC licenses granted remained high in FY 1998 with 31 new 

licenses. In addition, interest in the program was also high with

68 applications for licenses filed during FY 1998.
Page 25

The total private capital of SBIC licensees in FY 1998 was

$578.3 million. Of the $1,161.6 million in SBIC funding

approvals (obligations) in FY 1998, the participating security

program accounted for $700 million (60.3 percent) and the

debenture program accounted for $461.1 million (39.7 percent). 

SBA no longer makes preferred stock purchases under this 

program. SBIC’s provided additional capital funding that totaled 

the $3.2 billion investments in small businesses.

The following table shows improved performance of the portfolio 

during FY 1998, as evidenced by an improvement in the portfolio 

currency rate, a reduction in the number and size of purchases,

and an improvement in the portfolio liquidation percentage and in 

charge offs of completed liquidation cases.

INVESTMENT

COMPANY LEVERAGE FY 1997 FY 1998 CHANGE %

CHANGE

Approvals ($) 372.6M 1,161.6M 789.0M 211.8%

Approvals (#) 75 144 69 92.0%

Portfolio Current ($) 85.4% 90.3% 4.9% 5.7%

Portfolio PastDue/Delinquent (%)0.1% 0.0% (0.1%) (100.0%)

Portfolio Liquidation ($) 14.6% 9.7% (4.9%) (33.4%)

Purchases ($) 37.5M 12.6M (24.9M) (66.4%)

Purchases (#) 27 16 (11) (40.7%)

Charge Offs ($) 136.9M 36.4M (100.5M) (73.4%)

Charge Offs (#) 159 48 (111) (69.8%)

Charge-offs as a % of 

Disbursement 8.67% 8.62% (0.05%) (0.6%)

Charge-offs as a % of 

Outstanding Portfolio 7.56% 1.86% (5.7%) (75.4%)

Note: SBA performance indicators are shaded in the table.

INVESTMENT COMPANY LOANS

0

500,000,000

1,000,000,000

1,500,000,000

89 90 91 92 93 94 95 96 97 98

0

50

100

150

200

Guarantee Loans

Approvals in #

Annual Approvals in Dollars and Numbers *

* SBA performance

indicator
Page 26

The following graph indicates investment company trends over the 

past 10 years. In FY 1997, charge-offs rose significantly as prior 

year losses resulting from the legislatively mandated preferred

stock buyback and liquidation charge-offs were recognized. The 

purchase figure for FY 1998 includes $2 million of active SBIC

debentures that were placed on demand pending refinancing. The 

portfolio currency rate includes SBA’s purchased and guaranteed 

loans. This rate increased from 85.4 percent in FY 1997 to 90.3 

percent in FY 1998.

Surety Bond 

Assistance

Program Description The Surety Bond Guarantee (SBG) program assists certain small

business contractors in obtaining the required bid, performance,

and payment bonds for construction, service, and supply

contracts. These bonds provide security for the project owner

against loss resulting from the contractor’s failure to fulfill the

obligations of the contract.

The SBG program is not considered a credit program under the

guidelines of the Federal Credit Reform Act because there is no

guarantee of principal and/or interest payments. Therefore, no

subsidy calculations are made for this program.

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

160,000,000

89 90 91 92 93 94 95 96 97 98

0.0

20.0

40.0

60.0

80.0

100.0

Charge-Offs in $

Purchases in $

Portfolio Currency Rate in %

INVESTMENT COMPANY LOANS

Currency Rate* and Charge-Offs Compared

* SBA performance indicator

Charge off and purchase dollars represent gross as opposed to SBA share.
Page 27

Program Performance The following highlights trends or developments for the SBG

program.

• Approvals have fluctuated over a 10-year period. FY 1998 

showed a decrease over the previous year.

• In FY 1998, 2,860 final bonds were guaranteed for

$531 million in contract amount. 

• $16.6 million in claims were paid, and $5.9 million was

recovered in FY 1998.

In FY 1998, SBA approved 10,445 bid bond applications

representing potential contracts worth nearly $2.4 billion. The

Agency guaranteed 2,860 final bonds amounting to $531 million 

in contract value of which SBA’s share was $414 million.

The following chart shows that SBA’s dollar volume of surety

bond approvals has fluctuated over much of the 10-year period. 

The SBG volume usually tracks with the construction industry. 

The average contract amount of final bond approvals decreased

from $203,593 in FY 1997 to $185,492 in FY 1998 indicating

that SBA is assistance is going to smaller contractors.

The following table compares FY 1998 program volume and

claims with FY 1997 results.

SURETY BOND

GUARANTEE FY 1997 FY 1998 $

CHANGE

%

CHANGE

Approvals $ 806.7 M 531M (275.7M) (34.2%)

Approvals # 4,021 2,860 (1,161) (28.9%)

Claims $ 13.0 M 16.6M 3.6M 27.7%

Recoveries $ 4.6 M 5.9M 1.3M 28.3%

Note: Reflects gross approvals.

SURETY BOND GUARANTEES

0

500,000,000

1,000,000,000

1,500,000,000

89 90 91 92 93 94 95 96 97 98

0

5,000

10,000

15,000

Dollar Amount

# of Bonds

Annual Approvals in Dollars and Numbers

Data obtained from Surety Bond Guarantee Report of Surety Bonds and Allotments
Page 28

As the following graph shows, recoveries increased in FY 1998 

over the two previous fiscal years resulting from intensified

recovery efforts.

International Trade

Program Description The Office of International Trade (OIT) oversees the Agency’s

programs designed to help U.S. small businesses export their

products. The Agency delivers both business development and

financial assistance programs.

The SBA initiated partnership agreements with its counterparts in 

Mexico and Argentina to foster improved cooperation and

business opportunities for small businesses in these markets in

FY 1998. The SBA remains a member of the GoreChernomyrdin Commission and is actively working with the

banking and small business communities to encourage American

small businesses to explore exporting opportunities in the Russian 

Federation. The SBA is also working with Egypt to assist its

effort to develop small businesses through the Gore-Mubarak 

Commission. During FY 1999, the SBA will sponsor trade

missions to Ireland, Mexico, and Canada to promote increased

exporting opportunities for U.S. small business. Such SBA

efforts to promote small business exports and development

internationally are expected to have long-term positive results.

The SBA’s Export Working Capital Program (EWCP) and the

International Trade Loan Program come under the 7(a) Loan

program for export purposes are available to help U.S. small

businesses transact export deals and finance facilities and

equipment.

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

89 90 91 92 93 94 95 96 97 98

Recoveries

Claims

SURETY BOND GUARANTEES

Annual Recoveries and Claims
Page 29

The OIT provides a wide array of trade finance and counseling

services to small business exporters through its Headquarters’

staff and trade finance specialists located at 19 U.S. Export

Assistance Centers (USEACs). These centers combine the

resources of the SBA, the Department of Commerce, the ExportImport Bank and other public and private-sector partners. Expert 

assistance is also provided through the SBA’s business assistance 

resources (SCORE, SBDCs, SBA offices) and through online

information services. The OIT also develops publications to assist 

small businesses enter the international marketplace and obtain

trade financing for their exporting efforts. 

DISASTER 

ASSISTANCE

Program Description The SBA assists victims of physical disasters such as earthquakes, 

floods, and hurricanes by extending direct loans to individuals and 

businesses. Loans are made at favorable terms and conditions for 

uninsured losses of real and personal property, and economic

injury caused by a disaster. The Disaster Loan Program is the

primary form of Federal assistance for non-farm, private sector

losses and is the only form of SBA financial assistance not limited 

to small businesses. 

Three major types of disaster assistance are provided:

Home Disaster Loans - Loans to homeowners or renters to

repair or replace damage to homes or personal property owned by 

the applicant. Renters are eligible only for personal property

loans. 

Business Physical Disaster Loans - Loans to businesses of all

sizes to repair property owned by the businesses, including

damaged inventory and supplies.

Economic Injury Disaster Loans (EIDL) - Working capital

loans to small businesses and small agricultural cooperatives to

assist them through recovery from the disaster. 
Page 30

The program is administered through four area offices. These

areas and their share of Disaster Assistance are depicted on the

chart below.

Note: The above dollar amounts represent “net loan approvals” (after increases, decreases and cancellations).

Program Performance The following highlights significant trends or developments for the 

Disaster Assistance Program.

• Loan approvals have fluctuated significantly from year to year, 

due to the nature of the program. For FY 1998, 30,154 loans 

were approved for $728.1 million. 

• Portfolio currency rate increased to 87.9 percent from 86.8

percent in FY 1997.

• Charge-offs increased for FY 1998 reflecting past increases in

program activity. 

Area I

$58.9

Area II

$302.6 Area III

$132.0

Area IV

$234.6

FY 1998 SBA Disaster Assistance By Area

(Dollars in Millions)
Page 31

The following graph shows that SBA’s dollar volume of disaster

loan approvals fluctuates from year to year. From FY 1991 

through FY 1993, approvals significantly increased in response to 

Hurricane Hugo, Hurricane Andrew, Hurricane Iniki, Typhoon

Omar, the Los Angeles riots, the Great Midwest floods and severe 

coastal storms on the east coast. During FY 1994, in the

aftermath of the Northridge earthquake, SBA approved more than 

125,000 loan applications at a value of more than $4.1 billion. 

The continuing activity from Northridge, together with floods and 

hurricanes, caused the high activity in FY 1995. Floods and

hurricanes in FY 1996, FY 1997 and FY 1998 kept the level of

activity at just around $1 billion for those years. 

Since the inception of the program in 1953, the Agency has

approved 1,448,610 disaster loans for more than $26.6 billion.

As can be seen from the following table, SBA approved

30,154 disaster loans for $728.1 million in FY 1998. SBA

continued to streamline the disaster loan process, achieving

unprecedented response times. 

DISASTER ASSISTANCE FY 1997 FY 1998 CHANGE %

CHANGE

Approvals ($) 1,138.6M 728.1M (410.5M) (36.1%)

Approvals (#) 49,515 30,154 (19,361) (64.2%)

Portfolio Current ($) 86.8% 87.9% 1.1% 1.3%

Portfolio PastDue/Delinquent ($) 6.2% 4.5% (1.7%) (27.4%)

Portfolio Liquidation ($) 7.1% 7.7% 0.6% 8.5%

Charge Offs ($) 106.4M 119.7M 13.3M 12. 5%

Charge Offs (#) 5,708 7,493 1785 31.3%

Charge-offs as a % of 

Disbursement 8.27% 8.55% 0.28% 3.4%

Charge-offs as a % of 

Outstanding Portfolio 1.51% 1.70% 0.19% 12.6%

Note: SBA performance indicators are shaded in the table.

DISASTER LOANS

Dollar Amount

Number of Loans

Annual Approvals in Dollars and Numbers*

* SBA performance indicator

0

1,000,000,000

2,000,000,000

3,000,000,000

4,000,000,000

5,000,000,000

89 90 91 92 93 94 95 96 97 98

0

50,000

100,000

150,000
Page 32

The following graph shows that the SBA’s disaster portfolio

currency rate remained relatively constant over most of the 10-

year period. Charge-off volume peaked in FY 1989 due to

aggressive charge-off policies implemented. Since FY 1989, these 

efforts have resulted in a relatively stable currency rate. 

Significant increases in the number of new loans starting in

FY 1990 increased charge-off activity in the following years. 

The SBA has been actively improving its credit management and

debt collection practices. Five successful debt collection tools

used for outstanding disaster loans include use of SBA attorneys

appointed as Special Assistant United States Attorneys to

augment the Department of Justice collection efforts, the IRS

offset, OPAC/TOPS offset, referrals to Treasury for the use of

private collection agencies and Federal salary offset. The

following chart shows the disaster dollars collected by each debt

collection tool for FY 1998. 

Disaster Dollars Collected Per Debt Collection Tool*

Department of Justice / SAUSA Collections $18,207,580

Internal Revenue Service 4,931,157

OPAC/TOPS Offset 847,231

Collection Agencies 86,041

Federal Salary Offset 310,232

*SBA performance indicator.

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

89 90 91 92 93 94 95 96 97 98

78

80

82

84

86

88

90

92

Charge-Offs in $

Currency Rate in %

DISASTER LOANS

Currency Rate* and Charge-Offs Compared

* SBA performance indicator
Page 33

ENTREPRENEURIAL

DEVELOPMENT

The SBA provides management assistance in the form of training 

and counseling programs. The program offices overseeing SBA’s 

primary management assistance programs are:

• Business Initiatives

• Veterans’ Affairs

• Women’s Business Ownership

• Small Business Development Centers

• Welfare to Work

• One Stop Capital Shop

• Native American Affairs

Business Initiatives Business Initiatives (BI) encompasses a diverse mix of business

information, education, training and counseling resources offered

to the public. The BI program oversees the operation of

52 Business Information Centers (BICs) and the Service Corps of 

Retired Executives (SCORE) counseling and training program. 

BI also provides training to small businesses through

cosponsorships with private sector entities and offers other

training and information through its for-sale publications program, 

an electronic bulletin board, SBA OnLine and other internet-based 

services.

Business Information Centers are often established through

partnerships between the SBA and for-profit entities, other

Federal agencies, and non-profit organizations. BICs offer clients 

the latest computer technology, hardware and software, an

extensive small business library of hard copy books and

publications and management videotapes to help entrepreneurs

plan their business, expand an existing business or venture into 

new business areas.

The Service Corps of Retired Executives (SCORE) counsels and

trains the largest number of start-up business owners each year. 

Through one-on-one counseling and workshops, SCORE makes

approximately 354,000 contacts with business owners annually. 

With some 390 chapters and 14,000 volunteers, the services of a 

SCORE volunteer are readily available within a few hours drive of 

most businesses. All counseling is provided free of charge to the 

client.
Page 34

Veterans’ Affairs The Office of Veterans’ Affairs (OVA) oversees the Agency’s

assistance to veterans and works with the SBA program offices to 

provide special consideration to veterans. The office designs

procurement and management training programs specifically for

veterans and coordinates veterans’ training and counseling with

other agencies or departments. 

The OVA coordinates national veterans’ programs such as the

Veterans Business Training, Procurement and Technology

Transfer Conferences, and the Transition Assistance program for

military personnel. The OVA promotes entrepreneurship and

assists small businesses affected by base closings and military

downsizing.

The SBA is establishing an outreach program to provide enhanced 

business development assistance to eligible veterans in accordance 

with SBA’s Reauthorization Act of 1997. In FY 1999, the SBA 

will award legislatively mandated outreach grants to assist eligible 

veterans with entrepreneurial training and will develop a

comprehensive guide to assist veterans in the start-up and

expansion of their businesses.

Women’s

Business

Ownership

The Office of Women’s Business Ownership (OWBO) provides

assistance to the increasing number of women business owners

and acts as their advocate in the public and private sectors. 

OWBO is the only office in the Federal Government specifically

focusing on the women business owner. It serves the Nation’s

nearly 8.5 million women-owned businesses through technical,

financial and management information, training, and counseling. 

OWBO manages the Women’s Business Center Program (WBC), 

a public-private partnership which supports a network of

69 women’s business centers in 38 states, the District of Columbia 

and Puerto Rico. Of these centers, 28 are currently funded

physical sites and six additional sites were awarded grants for

FY 1999. For FY 1998 the 28 funded sites provided financial,

managerial, marketing and procurement assistance to more than

18,300 women. 

Part of the WBC network is the Online Women’s Business Center 

on the Internet at http://www.onlinewbc.org. Launched in

January 1998, the free interactive web site offers business

counseling, training, mentoring, and live chats in English and

Spanish. It also details the wide range of programs and services

offered by the SBA to women entrepreneurs. It has received

more than 1.5 million hits from over 100 countries. 
Page 35

All WBCs are linked electronically through an intranet,

OWBOZONE, to provide a free flow of information. The 

OWBO has also established a Women’s Home Page in the SBA

web site, http://www.sba.gov/womeninbusiness .

The Women’s Network for Entrepreneurial Training (WNET) is a 

mentoring program for women business owners. The WNET

program links seasoned entrepreneurs with women whose

businesses are poised for growth at 116 roundtables nationwide -

a 36 percent increase since FY 1997.

The Women’s Prequalification Pilot Loan program is a nationwide 

program that enables women to prequalify for an SBA loan

guarantee before going to the bank. Since June 1994, more than 

$80 million in loans have been made to women under this

program. 

Women’s business ownership is expected to climb to nearly 50

percent of all businesses by the year 2000; women now own 8.5

million businesses, representing $43 billion in revenues. In

FY 1998, 24 percent of all SBA loans were made to women,

representing $1.8 billion.

Small Business

Development Centers

The Small Business Development Center (SBDC) program plays a 

major role in delivering management and technical assistance,

economic development and management training to existing and

prospective small businesses. This is accomplished through

cooperative agreements with lead SBDC centers working with

universities, colleges, and state agencies to conduct small business 

counseling and training. 

The SBDC network includes more than 1,000 sites, including one 

in every state (four in Texas), the District of Columbia, Puerto

Rico, the U.S. Virgin Islands and Guam. In FY 1998, SBDCs

reported that they counseled 237,655 individuals and provided

19,634 training sessions to 309,382 people.
Page 36

Welfare to Work The SBA is playing a leadership role in the President's welfare to 

work initiative. In each city and state across the country, the

SBA is using its extensive network of field offices and resource

partners to connect thousands of small business owners planning 

to hire employees, with local service providers who train welfare 

recipients. In FY 1998, the SBA received more than 70,000

commitments from small businesses to hire welfare recipients. 

The SBA is also providing entrepreneurial training to former

recipients with the skill and drive to start their own businesses. 

To date, the SBA has provided training to nearly 30,000 welfare 

recipients

One Stop Capital Shop The One Stop Capital Shop (OSCS) is SBA’s contribution to the 

Empowerment Zone (EZ)/Enterprise Community (EC). It is an

alternative delivery mechanism for the Agency’s products to areas 

that have been underserved by the SBA. OSCS are cost effective, 

customer friendly and serve as a working model of public/private 

partnership.

The OSCS brings the SBA's business development and capital

resources together in one location with other federal, state, local

and private sector resources to leverage and complement those

resources and provide customer convenience. The OSCS

provides the economic tools for sustained economic development 

and growth.

Local communities are required to be stakeholders in the process 

to determine goals, mission, partners and day to day operation. 

The SBA’s presence does not duplicate, rather it complements

and leverages other available financial and technical assistance

resources. The SBA provides the equipment and reference

materials for a Business Information Center (BIC) and up to two 

SBA full-time employees. In general, the communities are

required to house and maintain the BIC as well as the OSCS and 

bring together the other partners.

There are a total of 15 One Stop Capital Shops in operation. The 

first EZ/EC OSCS opened on November 6, 1995, in Boston. 

During FY 1998, the OSCSs served more than 41,000 clients; 

OSCS referrals resulted in 435 loans for more than $80 million, 

created more than 1,500 new jobs and retained more than 2,000

existing jobs within Empowerment Zone/Enterprise communities. 

OSCSs trained and counseled more than 12,000 AfricanAmericans, 2,300 Hispanics, 100 Native Americans, and

300 Asian Americans and provided assistance to more than

7,400 women. For its outstanding work, the OSCS program

received two Hammer Awards from the Vice President in 1998.
Page 37

Native 

American Affairs

The SBA Office of Native American Affairs (ONAA) is the only

office in the Federal Government, which solely assists Native

American small business clients, including individuals, tribally

owned small businesses and small businesses located in Native

American communities. The primary focus of ONAA is economic 

development and job creation through small business ownership

and education.

The ONAA formulates policy, develops legislative and program

initiatives that ensure Native American individuals have access to 

business development resources, training and services. SBA

coordinates the delivery of services to Native Americans with

other SBA program offices, SBA resource partners (SBDC &

SCORE), Federal and State agencies, Tribal governments,

National Native American organizations, and Tribal colleges to

educate, develop and expand Native American owned businesses. 

SBA’s accomplishments in the Native American community:

• Provided operational funding for 14 Tribal Business

Information Centers (TBICs) in California, North Carolina,

Minnesota, North Dakota, South Dakota and Montana.

• In FY 1998, Reservation-based TBICs served 3,000 clients, 

provided 4,892 hours of business counseling, held

200 workshops, and assisted in the completion of 200 business 

plans and 120 loan packages, and were instrumental in the

startup of 170 new businesses. 

• At the end of FY 1998 there were 404 Native American

owned business concerns participating in the 8(a) Business 

Development program.

• The SBA made 461 loans totaling $76.5 million to Native

American-owned businesses in FY 1998.

• Participated in an inter-agency conference, “Building

Economic Self-Determination in Indian Communities,” which

addressed strategies for building strong tribal economies as

well as the need to identify opportunities and incentives for

doing business in the Indian communities.
Page 38

Program Budget and 

Performance

Program information on Entrepreneurial Development programs

is shown in the table below.

ENTREPRENEURIAL 

DEVELOPMENT FY 1997 FY 1998 CHANGE %CHANGE

SCORE:

Training Events (#) 4,381 5,079 698 15.9%

Training Attendees (#) 109,303 105,169 (4,134) (3.8%)

New Counseling Cases (#) 163,705 167,445 3,740 2.3%

Counseling Hours (#) 342,676 393,434 50,758 14.8%

Veterans:

Guarantee Loans (#) 6,607 5913 (694) (10.5%)

Guarantee Loans ($) 1,500M 1,371M (129M) (8.6%)

Women’s Bus. Ownership:

Women’s Business Centers (#) a

28 34 6 21.4%

WBC Programs Served (#) 8,140 18,321 10,181 125.1%

Exporting:

Guarantee Loans (#) 861 961 100 11.6%

Guarantee Loans ($) 278M 312M 34M 12.2%

Counseling Cases (#) 401 413 12 2.9%

Counseling Hours (#) 141M 158M 17M 12.1%

SBDC:

Training Events (#) 19,293 19,634 341 1.7%

Training Attendees (#) 315,406 309,382 (6,024) (1.9%)

Counseling Cases(#) 245,766 237,655 (8,111) (3.3%)

Counseling Hours(#) 1,254,857 1,271,412 16,555 1.3%

a The above numbers of trained and counseled clients only reflect activity

from 18 WBCs that were operational prior to the 10 new sites.

GOVERNMENT 

CONTRACTING & 

MINORITY 

ENTERPRISE 

DEVELOPMENT

These offices administer SBA’s programs to provide Federal

contracting opportunities and research and development

assistance to small businesses. These offices include:

• Government Contracting

• Minority Enterprise Development

• Technology

• Size Standards

• HUBZone
Page 39

GOVERNMENT 

CONTRACTING

Program Description The Office of Government Contracting ensures that small

businesses receive a fair share of Government contracts and

subcontracts. This objective is carried out through various

component programs, including the Prime Contracts,

Subcontracting Assistance, Natural Resources Sales Assistance,

Certificate of Competency, and Procurement Policy and Liaison

programs. 

The Prime Contracts program is carried out primarily with the

assistance of Procurement Center Representatives (PCR) who

monitor requirements for and promote small business participation 

in Federal procurement. The Breakout Program provides small

businesses procurement opportunities in Federal procurements.

Through the Subcontracting Assistance program, the SBA ensures 

that small businesses receive maximum practicable opportunity to 

participate as subcontractors on Federal contracts. The SBA’s

Commercial Market Representatives (CMRs) perform compliance 

reviews to ensure that prime contractors make a good-faith effort 

to subcontract to small businesses. 

The Natural Resources Sales Assistance program aids and assists

small businesses in obtaining their fair share of Federal property

offered for sale or disposal in accordance with public law. Efforts 

have been concentrated on the sale of Federal timber, royalty oil, 

coal leases, and other mineral leases. 

The SBA also maintains an electronic gateway for procurement

information called PRO-Net. PRO-Net is an internet accessible

database of small businesses interested in doing business with the 

U.S. Government and also provides an electronic gateway to the

Commerce Business Daily, Agency home-pages and other sources 

of procurement opportunities. PRO-Net also serves as a central

on-line register that identifies firms certified as 8(a) program

participants and HUBZone small business concerns.

The Certificate of Competency (COC) program authorizes the

SBA to certify a small company’s “capability, competency, credit, 

integrity, perseverance and tenacity” to perform a specific

Government contract. This certification provides contracting

opportunities to small businesses.
Page 40

Program Budget 

and Performance Information for this program is shown in the table below.

GOVERNMENT 

CONTRACTING FY 1997 FY 1998 CHANGE %

CHANGE

Subcontracting Compliance 

Reviews (#)

1,718 1,436 (282) (16.4%)

Needs Assessments (#) 526 250 (276) (52.5%)

Specific Referrals (#) 4,540 1,841 (2,699) (59.6%)

Firms Counseled (#)121,227 14,000 (7,227) (34.1%)

PRO-Net - Firms Registered (#) 171,000 178,056 7,056 4.1%

PRO-Net - Demonstrations (#) 43 55 12 27.9%

Small Business Set-Asides 11.0 B 11.5B (est) .5B 4.5%

Savings through BPCR & COC 

programs

75.9 M 52.5M (est) (23.4M) (30.8%)

MINORITY 

ENTERPRISE 

DEVELOPMENT

Program Description The mission of the office of Minority Enterprise Development

(MED) is to assist small disadvantaged businesses which, because 

of their demonstrated potential for success, have been certified for 

participation in the Section 8(a) program. MED provides them

with marketing support and other assistance through the provision 

of business development, and management and technical

assistance.

MED provides business development support to program

participants through: (1) annual reviews and development of

business plans that establish targets for sustainable growth;

(2) identification of procurement opportunities and marketing

assistance; and (3) assistance in negotiating provisions and awards 

of sole source and limited competitive Federal contracts, pursuant 

to Section 8(a) of the Small Business Act. Through these tools,

MED provides a logical, systematic approach to market access

and enterprise growth to small businesses owned and controlled

by socially and economically disadvantaged individuals. Section

8(a) firms participate in this program over a maximum 9-year 

period, during which their progress is planned and monitored.

Under Section 7(j) of the Small Business Act, MED provides

specialized training, professional consultant assistance, and highlevel executive development to 8(a) program participants, other

small disadvantaged businesses, and small businesses in laborsurplus areas. 
Page 41

TECHNOLOGY

Program Description The SBA’s Small Business Innovation and Research (SBIR)

program was created in 1982 to meet the research and

development needs of the Federal Government while providing

small innovative companies with opportunities to compete for

research and development awards and to commercialize the

resulting new technology. The program was reauthorized by

Congress in 1992 and also included approval for the Small

Business Technology Transfer (STTR) program. The STTR

program encourages small businesses and research institutions to 

cooperatively propose innovative solutions to agency high tech

initiatives.

Ten Federal agencies presently participate in the SBIR program

and five Federal agencies participate in the STTR program. Since 

1982, these agencies have made more than 46,000 awards through 

the SBIR program, totaling more than $7.5 billion to small

business concerns. The STTR program, in its first 4 years of

operation, made 1,133 awards worth $126.3 million.

SIZE STANDARDS

Program Description Small business status is required for a business to be eligible for

any of the SBA assistance programs (except physical disaster

loans) and for a business to receive small business set-aside 

contracts from Federal agencies. Size standards define what

businesses are eligible for SBA assistance. They are usually stated 

in terms of number of employees or gross revenues, with small

business’s status eligibility limited to those firms at or below one

applicable size standard. The SBA’s size standards are also used 

by other Federal agencies and state and local governments for

various small business programs. There is a separate size standard 

for each industry in the economy as defined under the Standard

Industrial Classification system. For several programs, a separate 

size standard has been established, such as the Surety Bond

Guarantee Program and the Small Business Innovation and

Research Program.
Page 42

HUBZone

Program Description The HUBZone Empowerment Contracting Program (HUBZone) 

was enacted into law as part of the Small Business

Reauthorization Act of 1997. The program provides contracting

preferences in Federal procurements to qualified small businesses

that are located in a “historically underutilized business zone” or

HUBZone, and that hire employees who live in a HUBZone. 

Ultimately, these Federal contracting opportunities will help build 

viable small businesses, create jobs, attract private investment and 

empower these HUBZones. SBA has been charged with

regulating and implementing the program. On April 2, 1998, SBA 

published its proposed rules for the HUBZone Program, 63 Fed. 

Reg. 16148. After the close of the public comment period, SBA 

published its final regulations for the program, 63 Fed. 

Reg. 31896 on June 11, 1998.

SMALL BUSINESS 

ADVOCACY

Program Description Established by P.L. 94-305 of 1976, the general mission of the

Office of Advocacy (OA) is to examine the role of small business 

in the economy and its contribution to competition; evaluate

financial markets and the credit needs of small business; measure

the costs and effects of Government regulation on small business; 

develop programs/services that address market imperfections and

make public policy recommendations that promote the

development and growth of small business. The OA has three

sections:
Page 43

• The Office of Interagency Affairs monitors the regulatory

activity of all Federal regulatory agencies to ensure

compliance with the Regulatory Flexibility Act (RFA), as

amended by the Small Business Regulatory Enforcement

Fairness Act (SBREFA). The office comments on agency

analyses of regulatory impacts on small business entities and

of regulatory alternatives considered and rejected by agencies. 

The regulatory issues reviewed range from environment to

taxes to health and safety to securities to telecommunications 

to banking, etc. The office provides staff support for

Advocacy’s participation in OSHA’s and EPA’s Small

Business Advocacy Review Panels mandated by SBREFA to

review regulatory proposals having significant impacts on

small business entities. Staff maintains a continuous dialogue 

with small business trade associations and small entities

throughout the country on public policy issues. Staff also

responds to congressional requests for information and

comments from a small business perspective on legislative

proposals.

• The Office of Economic Research has sole statutory

responsibility to generate and publish studies and reports on

small business characteristics and trends in the economy. 

These studies provide information invaluable to congressional 

and administrative policy makers. The office also contracts

with independent researchers for studies on emerging issues,

bank lending trends and jog generation by small business. In 

addition, it analyzes the impact of specific regulation on small 

business, as part of the office’s responsibilities under

Regulatory Flexibility Act. Unique small business data, by

firm size, is maintained by the Bureau of Census for the office 

of Advocacy and is updated annually. The data is made

available by Advocacy to regulatory agencies to help them

evaluate the economic impact of regulations and policies on

small entities. The information the office generates would not 

otherwise be available in the marketplace or to policy makers.

• The Office of Information works in collaboration with the

other Advocacy offices to produce and publish information

that addresses the concerns of the Nation’s small businesses. 

Two primary publications are the monthly Small Business

Advocate and the annual State of Small Business: A Report of 

the President. 
Page 44

ACRONYMS

APIC – America’s Private Investment Corporation

BIC – Business Information Centers

CBD – Commerce Business Daily

CDC – Certified Development Company

CDSI – Computer Data Systems Incorporated

CFO – Chief Financial Officer

CLP – Certified Lender Program

CMR – Commercial Market Representatives

COC – Certificate of Competency

CODS – Central Office Duty Station

COSO – Committee of Sponsoring Organizations of 

the Treadway Commission

D&A – Description and Analysis

DFC – Denver Finance Center

EC – Enterprise Community

EFT – Electronic Funds Transfer

EIDL – Economic Injury Disaster Loan

EWCP – Export Working Capital Program

EZ – Empowerment Zone

FCRA – Federal Credit Reform Act

FFS – Federal Financial System

FMFIA – Federal Managers Financial Integrity Act

FTE – Full Time Equivalent

GAO – General Accounting Office

GC – Government Contracting

GL - General Ledger

GPRA – Government Performance and Results Act

HUBZone - HUBZone Empowerment Contracting 

Program

IG – Inspector General

MAP – Management’s Assessment Process

MARS - Management and Administrative Reports 

System

MED – Minority Enterprise Development

OA – Office of Advocacy

ODA – Office of Disaster Assistance

OIG – Office of the Inspector General

OIT – Office of International Trade

OMB – Office of Management and Budget

ONAA – Office of Native American Affairs

OPAC – On-line Payment and Collection

OSCS – One Stop Capital Shop

OVA – Office of Veterans Affairs

OWBO – Office of Women’s Business Ownership

PCR – Procurement Center Representative

PLP – Preferred Lender Program

QSR – Quality Service Review

RFA – Regulatory Flexibility Act

S&E – Salaries and Expenses

SBA – Small Business Administration

SBDC – Small Business Development Center

SBG – Surety Bond Guarantee

SBIC – Small Business Investment Company

SBIR – Small Business Innovation and Research

SBREFA – Small Business Regulatory Enforcement 

Fairness Act

SCORE – Service Corps of Retired Executives

SDB – Small Disadvantaged Business

SSBIC – Specialized Small Business Investment 

Company

STTR – Small Business Technology Transfer 

Program

TBIC – Tribal Business Information Center

TOPs – Treasury Offset Programs

USEAC – U.S. Export Assistance Center

WBC – Women’s Business Center Program

WNET – Women’s Network for Entrepreneurial 

Training
Page 45

FINANCIAL STATEMENTS
Page 46

INTRODUCTION These financial statements have been prepared to report the

financial position and results of operations pursuant to the CFO

Act of 1990. While the financial statements have been prepared

from the books and records of the Agency, they are different from 

the financial reports used to monitor and control budget 

execution.

The responsibility for the accuracy and propriety of the

information contained in the principal financial statements and the 

quality of internal controls rests with management.

Liabilities not covered by budgetary resources cannot be

liquidated without an enactment of an appropriation by the

Congress. This subject is further described in footnote 9.
Page 47

U.S. SMALL BUSINESS ADMINISTRATION

STATEMENT OF FINANCIAL POSITION

AS OF SEPTEMBER 30, 1998

(Rounded to Thousands)

ASSETS

Intragovernmental Assets:

Fund Balances with Treasury (Note 2) $8,196,084

Investments (Note 4) 283,185

Accounts Receivable, Net (Note 5) 349,436

Advances (Note 6) 4,380

Governmental Assets:

Accounts Receivable, Net (Note 5) 50,674

Credit Program Receivables and Related Foreclosed Property, Net 

(Note 7) 6,934,955

Cash and Other Monetary Assets (Note 3) 2,147

General Property and Equipment, Net (Note 8) 686

Advances (Note 6) 89,532

Total Entity Assets $15,911,079

Total Non-Entity Assets $0

Total Assets $15,911,079

LIABILITIES

Liabilities Covered by Budgetary Resources:

Intragovernmental Liabilities:

Accounts Payable $1,963,810

Debt (Note 9) 9,268,478

Other (Notes 10) 3,032,890

Governmental Liabilities:

Accounts Payable 38,992

Liabilities for Loan Guarantees (Note 7) 1,473,296

Other (Note 10) 65,302

Total Liabilities Covered by Budgetary Resources $15,842,768

Liabilities Not Covered by Budgetary Resources:

Intragovernmental Liabilities:

Other (Note 10) 15,372

Governmental Liabilities:

Other (Note 10) 28,527

Total Liabilities Not Covered by Budgetary Resources $43,899

Total Liabilities $15,886,667

NET POSITION

Unexpended Appropriations (Note 11) $672,050

Cumulative Results of Operations (647,638)

Total Net Position $24,412

Total Liabilities and Net Position $15,911,079

The accompanying notes are an integral part of this statement.
Page 48

U.S. SMALL BUSINESS ADMINISTRATION

CONSOLIDATED STATEMENT OF CHANGES IN NET POSITION

FOR THE PERIOD ENDED SEPTEMBER 30, 1998

(Rounded to Thousands)

Net Cost of Operations $655,996

Financing Sources:

Appropriations Used 834,059

Donations 253

Imputed Financing 16,566

Transfers-out (559,633)

Net Results of Operations ($364,751)

Prior Period Adjustments 0

Net Change in Cumulative Results of Operations ($364,751)

Increase (Decrease) in Unexpended Appropriation (123,198)

Change in Net Position ($487,949)

Net Position - Beginning of the Period 512,361

Net Position - End of Period $24,412

The accompanying notes are an integral part of this statement.
Page 49

U.S. SMALL BUSINESS ADMINISTRATION

COMBINED STATEMENT OF BUDGETARY RESOURCES (Note 13)

FOR THE PERIOD ENDED SEPTEMBER 30, 1998

(Rounded to Thousands)

BUDGETARY RESOURCES

Budget Authority:

Appropriations $1,088,968

Borrowing Authority 626,554

Net Transfers, Current Year Authority (41,413)

Unobligated Balance:

Brought Forward October 1 6,756,285

Net Transfers Prior-Year Balance, Actual (369,806)

Spending Authority from Offsetting Collections:

Earned

Collected 3,171,799

Receivable from Federal Sources 582,094

Adjustments:

Recoveries of Prior Year Obligations 272,740

Temporarily Not Available Pursuant to Public Law (33,263)

Permanently Not Available

Cancellations of Expired and No Year Accounts (41,093)

Capital Transfers and Redemption of Debt (692,911)

Total Budgetary Resources $11,319,954

The accompanying notes are an integral part of this statement.
Page 50

U.S. SMALL BUSINESS ADMINISTRATION

COMBINED STATEMENT OF BUDGETARY RESOURCES (Note 13)

FOR THE PERIOD ENDED SEPTEMBER 30, 1998

(Rounded to Thousands)

STATUS OF BUDGETARY RESOURCES

Obligations Incurred:

Category A, Direct $572,868

Category B, Direct 4,094,511

Unobligated Balances Available:

Apportioned 20,633

Unobligated Balances Not Yet Available:

Other 6,631,942

Total, Status of Budgetary Resources $11,319,954

OUTLAYS

Obligations Incurred:

Category A, Direct $572,868

Category B, Direct 4,094,511

Less: Spending Authority from Offsetting Collections and 

Adjustments:

Earned

Collected 3,171,799

Receivable from Federal Sources 582,094

Actual Recoveries of Prior Year Obligations 272,740

Obligated Balance, Net – Beginning of the Period: 1,925,902

Less: Obligated Balance, Net - End of Period:

Accounts Receivable (1,456,280)

Undelivered Orders 831,615

Accounts Payable 2,131,374

Total Outlays

Disbursements 3,968,542

Collections (2,908,603)

The accompanying notes are an integral part of this statement.
Page 51

U.S. SMALL BUSINESS ADMINISTRATION

COMBINED STATEMENT OF FINANCING

FOR THE PERIOD ENDED SEPTEMBER 30, 1998

(Rounded to Thousands)

Resources Used to Finance Activities:

Budgetary

Budgetary resources obligated for orders and services to be 

received or benefits to be provided to others $4,667,379

Less: Offsetting collections, recoveries of prior-year authority 

Earned reimbursements

Collected 3,171,799

Receivable from Federal sources 582,094

Recoveries of prior-year obligations 272,740

Net budgetary resources used to finance activities $640,746

Non-Budgetary

Property without reimbursement

Property received from others without reimbursement 133

Costs incurred by others for the entity without reimbursement 16,566

Net non-budgetary resources used to finance activities $16,699

Total resources used to finance activities $657,445

The accompanying notes are an integral part of this statement.
Page 52

U.S. SMALL BUSINESS ADMINISTRATION

COMBINED STATEMENT OF FINANCING

FOR THE PERIOD ENDED SEPTEMBER 30, 1998

(Rounded to Thousands)

Relationship of total resources to net cost of operations:

Deduct resources used to fund items not part of the net cost of 

operations

Increase in budgetary resources obligated to order goods and 

services not yet received or benefits not yet provided $65,361

Budgetary offsetting collections that do not increase exchange 

revenue or decrease expenses

Collections that decrease assets unrelated to exchange 

revenue (1,143,180)

Credit program collections that increase liabilities for loan 

guarantees or allowances for subsidy (678,816)

Other (284,473)

Adjustments other than collections made to compute net 

budgetary resources that do not affect net cost of operations

Recoveries of prior-year authority (222,296)

Resources that fund expenses recognized in prior periods 6,389

Resources that finance the acquisition of assets or liquidation 

of liabilities

General property, plant and equipment 1,319

Loans Receivable 1,065,263

Collateral Acquired (19,012)

Other resources used to fund items not part of the net cost of 

operations 50,389

Total resources used to fund items not part of the net cost 

of operations ($1,159,056)

Resources used to finance the net cost of operations $1,816,501

The accompanying notes are an integral part of this statement.
Page 53

U.S. SMALL BUSINESS ADMINISTRATION

COMBINED STATEMENT OF FINANCING

FOR THE PERIOD ENDED SEPTEMBER 30, 1998

(Rounded to Thousands)

Components of net cost of operations that do not require or 

generate resources during the reporting period

Expenses or exchange revenue related to the disposition of 

assets or liabilities, or allocation of their costs over time:

Expenses related to the use of assets ($708)

Gains or (losses) from revaluation of assets and liabilities (12,127)

Decrease in exchange revenue receivable from the public 29,181

Interest revenue from amortization of credit program 

allowance for subsidy (72,546)

Other (897,184)

Subtotal ($953,384)

Expenses that will be financed with budgetary resources 

recognized in future periods

Credit program subsidy expense from upward subsidy reestimates (535)

Other (24,178)

Subtotal ($24,713)

Other net cost components that do not require or generate 

resources during the reporting period (182,408)

Total components of net cost of operations that do not 

require or generate resources during the reporting 

period ($1,160,505)

Net cost of operations $655,996

The accompanying notes are an integral part of this statement.
Page 54

U.S. SMALL BUSINESS ADMINISTRATION

CONSOLIDATED STATEMENT OF NET COST

FOR THE PERIOD ENDED SEPTEMBER 30, 1998

(Rounded to Thousands)

PROGRAMS

Business Loans ($462,483)

Development Company 30,285

Disaster Loans 614,425

Small Business Investment Company 260,749

Surety Bond Guarantees 6,723

Minority Enterprise Development 29,172

Government Contracting 17,179

Entrepreneurial Development 119,479

Outreach, Marketing, and Training 45,058

Total Program Costs $660,587

Cost not assigned to programs 7,113

Less: Earned revenue not attributed to programs (11,704)

Net Cost of Operations (Note 12) $655,996

The accompanying notes are an integral part of this statement.
Page 55

FOOTNOTES TO PRINCIPAL STATEMENTS

September 30, 1998

NOTE 1. Significant Accounting Policies:

A. Basis of Presentation

These financial statements have been prepared to report the financial position and results of operations 

of the Small Business Administration (SBA) as required by the Chief Financial Officers Act of 1990. 

They have been prepared from the books and records of SBA in accordance with the form and content 

for entity financial statements specified by the Office of Management and Budget (OMB) in OMB

Bulletin No. 97-01, and SBA’s accounting policies which are summarized in this note. These

statements are therefore different from the financial reports, also prepared by SBA pursuant to OMB

directives, which are used to monitor and control SBA’s use of budgetary resources.

B. Reporting Entity

SBA was created by the Small Business Act of 1953. Its mission is to aid, counsel, assist, and protect, 

insofar as is possible, the interests of small business concerns to preserve free competitive enterprise,

and to help businesses and families recover from disasters.

The accompanying consolidated financial statements of SBA include the accounts of all funds under

SBA control:

Fund Title Fund Number

Salaries and Expenses (S&E) 0100

Office of Inspector General (OIG) 0200

Disaster Loans Program Account 1152

Business Loans Program Account 1154

Pollution Control Equipment Fund Liquidating Account (PCECGRF) 4147

Business Direct Loan Financing Account 4148

Business Guaranteed Loan Financing Account 4149

Disaster Direct Loan Financing Account 4150

Disaster Loan Liquidating Account (DLF) 4153

Business Loan Liquidating Account (BLIF) 4154

Surety Bond Guarantees Revolving Fund (SBGRF) 4156

Business Assistance Trust Fund (BATF) 8466

C. Budgets and Budgetary Accounting

Each SBA loan disbursement is financed by a combination of two sources: one for the long-term cost of 

the loan and another for the remaining non-subsidized portion of the loan. Congress provides 1 year, 

multi year, and no year appropriations, to cover the estimated long-term costs of SBA loans. The long 

term costs are defined as the net present value of the estimated cash outflows associated with the loans 

less the estimated cash inflows. The portion of each loan disbursement that does not represent longterm cost is financed under a permanent indefinite borrowing authority to borrow funds from the

U.S. Department of the Treasury. Congress also annually adopts an appropriation bill limitation limiting 

the dollar amount of obligations that can be made for direct loans. 
Page 56

A permanent indefinite appropriation is available to finance the costs of re-estimates that occur after the 

year in which the loan is disbursed. A modification requires that budget authority for the additional cost 

is appropriated, or is available out of existing appropriations or from other budgetary resources.

D. Basis of Accounting

Transactions are recorded on an accrual accounting basis and a budgetary basis. Under the accrual

method, revenues are recognized when earned and expenses are recognized when a liability is incurred, 

without regard to receipt or payment of cash. Budgetary accounting facilitates compliance with legal

constraints and controls over the use of Federal funds. 

E. Revenues and Other Financing Sources

The SBA receives the majority of the funding needed to support the accounts and funds through

appropriations. The Agency receives 1 year, multi-year, and no year appropriations that may be used, 

within statutory limits, for operating expenditures. Additional amounts are obtained from fees for

guarantees provided. Also, SBA receives gifts from donors and interest on fund balances with

Treasury.

Appropriations are recognized as used at the time the related program or administrative expenses are

incurred. Appropriations expended for property and equipment are recognized as used when the asset 

is consumed in operations. Revenues are recognized when earned, i.e., goods have been delivered or

services rendered.

F. Fund Balances with Treasury and Cash

The SBA does not maintain cash in commercial bank accounts. Cash receipts and disbursements are

processed by the U.S. Department of the Treasury. Fund balances with Treasury and cash are

comprised primarily of appropriated, revolving, and trust funds, which are available to pay current

liabilities and finance authorized purchase commitments. Cash balances held outside the U.S. Treasury 

are not material.

G. Loans Receivable

Loans are accounted for as credit program receivables at the time funds have been disbursed. For loans 

obligated prior to October 1, 1991, loans receivable are reduced by an allowance for estimated

uncollectible amounts. The allowance is estimated based on historical experience, present market

conditions, and an analysis of outstanding balances. For loans obligated on or after October 1, 1991, 

the loans receivable are reduced by an allowance equal to the present value of the subsidy costs (due to 

the interest rate differential between the loans and Treasury borrowing, the estimated delinquencies and 

defaults net of recoveries, the offset from fees, and other estimated cash flows) associated with these

loans.

Interest receivable is comprised of accrued interest on accounts and loans receivable and purchased

interest on loan guarantee purchases. Interest income is accrued at the contractual rate on the

outstanding principal amount and is reduced by the amount of interest income accrued to nonperforming loans (those in excess of 90 days delinquent). Purchased interest is carried at cost. A 100 

percent allowance is established for all purchased interest on non-performing loans.
Page 57

H. General Property and Equipment

The buildings in which SBA operates are provided by the General Services Administration, which

charges SBA rent that approximates the commercial rental rates for similar properties. Equipment is

capitalized at cost if the initial unit acquisition cost is $5,000 or more and service life is 2 years or more. 

Equipment with an acquisition cost of less than $5,000 or less than 2 years of life is expensed when

purchased. Equipment is depreciated using the straight-line method over useful lives which, for most

equipment, range from 3 to 5 years.

I. Implementation of New Accounting Standards

SBA has implemented the provisions of three accounting standards for fiscal year 1998.

• Statement of Federal Financial Accounting Standards (SFFAS) No. 4, “Managerial Cost Accounting 

Concepts and Standards for the Federal Government,” which requires reporting of SBA programs

on a full cost basis.

• SFFAS No. 7, “Accounting for Revenue and Other Financing Sources and Concepts for Reconciling 

Budgetary and Financial Accounting.” SBA implemented Statement of Budgetary Resources and

Statement of Financing as required by the standard.

• SFFAS No. 8, “Supplementary Stewardship Reporting.” SBA provided information on stewardship 

investment in human capital in the Required Supplementary Stewardship Information (RSSI)

statement in accordance with the standard.

J. Advances

Advances are made to cover principal and interest due for debentures in SBA’s Section 503, 

Section 504, and SBIC programs, to subcontractors for goods to be delivered as part of SBA’s 8(a)

program, and for travel expenses. 

K. Investments in U.S. Government Securities

The 7(a) secondary market program is administered by an agent of the SBA. The agent receives

collections from banks on 7(a) loans guaranteed by the SBA, and makes payments to secondary holders 

who have investments in pools of 7(a) guaranteed loans. The trust fund, used by the agent for the 7(a) 

cash flow, accumulated interest in excess of $283 million since the inception of the program in 1986. 

This accumulated interest is the property of the SBA, but future payments, required to the holders of

7(a) secondary market securities, could exceed the principal amount of the trust fund. The interest, as 

well as the principal in the trust fund, is invested in short term Treasury securities. The SBA’s policy is 

to carry the value of the interest in the 7(a) trust fund as “securities” on its financial statements, offset 

by an equal amount of “deferred credits.” This accounting treatment recognizes the nature of the

investment, and the existence of a possible future claim on interest invested in the securities.

L. Borrowings Payable to the Treasury

Borrowings payable to the Treasury result from loans from the Treasury to fund the credit reform

financing accounts. These funds are required to make periodic principal payments to Treasury based on 

the collections of loans receivable.

M. Liability for Loan Guarantees

There are two components to the Agency’s liability for guaranteed loans: liabilities for losses on

pre-1992 loans, and liabilities on post-1991 loans made under the Federal Credit Reform legislation. 

For pre-1992 guarantees, the amount is an estimate of losses on guarantees outstanding based on

historical experience. For post-1991 loans, the liability is based on the present value of future cashflows 

on the loans. 
Page 58

N. Interest Payable to Treasury

The SBA is required to make periodic interest payments to Treasury based on its debt to Treasury. The 

credit reform financing accounts have interest payable to Treasury. For fiscal year 1998, the amount due 

to Treasury was $23,491,054 for BLIF and $575,329,252 for DLF. The SBA is also required to make 

periodic interest payments to Treasury based on interest collections on loans in our liquidating funds. 

For fiscal year 1998, the amount due to Treasury was $61,490,097 for BLIF and $59,218,670 for DLF.

O. Contingencies

The SBA is a party in various administrative proceedings, legal actions, environmental suits, and claims 

brought by or against it. In the opinion of SBA management and legal counsel, the ultimate resolution 

of these proceedings, actions, suits and claims will not materially affect the financial position or results 

of SBA operations.

P. Annual, Sick, and Other Leave

Annual leave is accrued as it is earned and the accrual is reduced as leave is taken. Each year, the

balance in the accrued annual leave is adjusted to reflect current pay rates. To the extent current or prior 

year appropriations are not available to fund annual leave earned but not taken, funding will be obtained 

from future financing sources.

Sick leave and other types of nonvested leave are expensed as taken. 

Q. Federal Employees’ Compensation Act Liability

The future workers’ compensation estimates are generated from an application of actuarial procedures 

developed to estimate the liability for Federal Employees’ Compensation Act (FECA) benefits. The

actuarial liability estimates for FECA benefits include the expected liability for death, disability, medical, 

and miscellaneous costs for approved compensation cases. The liability is determined using the paid

losses extrapolation method calculated over the next 23 year period. This method utilizes historical

benefit payment patterns related to a specific incurred period to predict the ultimate payments related to 

that period. These annual benefit payments have been discounted to present value. 

R. Retirement Plan

The majority of SBA’s employees participate in the Civil Service Retirement System (CSRS), to which 

SBA makes matching contributions equal to 7 percent of pay. On January 1, 1987, the Federal

Employees Retirement System (FERS) went into effect pursuant to Public Law 99-335. Most

employees hired after December 31, 1983, are automatically covered by FERS and Social Security. 

Employees hired prior to January 1, 1984, elected to either join FERS and Social Security or remain in 

CSRS. A primary feature of FERS is that it offers a savings plan to SBA employees which

automatically contributes 1 percent of pay and matches any employee contribution up to an additional 4 

percent of pay.

For most employees hired since December 31, 1983, SBA also contributes the employer’s matching

share for Social Security. The SBA does not report CSRS or FERS assets, accumulated plan benefits, 

or unfunded liabilities, if any, applicable to its employees. Reporting such amounts is the responsibility 

of the Office of Personnel Management and the FERS.

S. Combined Statements

SBA’s Statement of Budgetary Resources and Statement of Financing were prepared as combined

statements. As such, intra-entity transactions have not been eliminated. 
Page 59

NOTE 2. Fund Balances with Treasury:

Fund Balances:

Entity Assets Non-Entity Assets Total

(1) Trust Funds $1,040,821,157 $0 $1,040,821,157

(2) Revolving Funds 14,044,901 0 14,044,901

(3) Appropriated Funds 7,141,218,060 0 7,141,218,060

Total $8,196,084,118 $0 $8,196,084,118

NOTE 3. Cash:

The cash balance held outside the U.S. Treasury was $2,146,832. This balance was composed primarily of 

cash on hand.

NOTE 4. Investments:

Investments are comprised of marketable Federal securities held by an agent of the U. S. Small Business

Administration. These securities are valued on a cost basis and maintain a balance of $283,185,031 as of 

September 30, 1998. Cost basis and market value are the same.

NOTE 5. Accounts Receivable:

Entity Assets Account Balance 

Intragovernmental

Account Balance 

Governmental

Business Loan and Investment Fund $56,268,398 $47,480,909

Disaster Loan Fund 290,486,758 567,829

Pollution Control 0 0

Surety Bond Guaranty Program 0 1,943,280

Business Assistance Trust Fund 0 0

Salaries and Expenses 2,054,876 681,116

Office of Inspector General 626,088 826

Total $349,436,120 $50,673,960
Page 60

Other Information:

Accounts Receivable - Intragovernmental represents reimbursements from other agencies and funds. The

amounts shown for the Business Loan and Investment Fund and the Disaster Loan Fund are comprised

entirely of interest due from Treasury on cash held by Treasury.

Accounts Receivable – Governmental primarily represents amounts due from participating financial

institutions for guarantee fees. The balances in the Salaries and Expenses and the Office of Inspector

General funds represent receivables due from Agency employees or vendors.

Based upon historical experience, an aggressive collection policy and the ability to offset against the

participant’s share of loan collections, no allowance for unrecoverable accounts is provided. No allowance 

for unrecoverable accounts for administrative activity is necessary because employee accounts may be

recovered through an offset process and vendor receivables are generally offset against disbursements made 

to the vendor.

NOTE 6. Advances:

Entity Assets Account Balance 

Intragovernmental

Account Balance 

Governmental

Sec. 503 Debentures $4,379,612 $0

Sec. 504 Debentures 5,084,118

SBIC 77,245,098

8(a) Program Subcontractors 7,145,237

Travel Advances 57,779

Total $4,379,612 $89,532,232

NOTE 7. Loans and Loan Guarantees, Non-Federal Borrowers:

A. SBA operates the following loan and/or loan guarantee programs:

(1) Business, Direct

(2) Business, Guarantee

(3) Disaster, Direct

(4) Disaster, Guarantee

(5) Pollution Control, Guarantee

(6) Surety Bond, Guarantee

Direct loan obligations or loan guarantee commitments made prior to FY 1992, and the resulting direct 

loans or loan guarantees, are reported net of an allowance for estimated uncollectible loans or estimated 

losses. Loss allowances represent estimates of what SBA does not expect to recover on its loans

receivable obligated prior to FY 1992. These allowances are based upon historical experience, current 

market conditions and an analysis of individual assets. They are non-funded and merely attempt to

reflect the anticipated unrecoverable loans receivable. 
Page 61

Direct loan obligations or loan guarantee commitments made after FY 1991, and the resulting direct

loans or loan guarantees, are governed by the Federal Credit Reform Act. The Act provides that the

present value of the subsidy costs (i.e., interest rate differentials, interest subsidies, estimated

delinquencies and defaults, fee offsets, and other cash flows) associated with direct loans and loan

guarantees be recognized as a cost in the year the loan or loan guarantee is made.

An analysis of loans receivable, loan guarantees, liability for loan guarantees, and the nature and

amounts of the subsidy and administrative costs associated with the loans and loan guarantees is

provided in the following sections.

B. Direct Loans Obligated Prior To FY 1992:

Liquidating 

Loan 

Programs

Loans Receivable, 

Gross

Interest 

Receivable

Allowance for 

Loan Losses

Foreclosed 

Property

Value of Assets 

Related to Direct 

Loans

(1) Business $408,813,098 $11,270,632 ($143,466,644) $10,424,820 $287,041,906

(2) Disaster 1,310,806,237 20,221,766 (127,583,180) 1,714,725 1,205,159,548

Total $1,719,619,335 $31,492,398 ($271,049,824) $12,139,545 $1,492,201,454

C. Direct Loans Obligated After FY 1991:

Credit Reform 

Loan Programs

Loans Receivable, 

Gross

Interest 

Receivable

Foreclosed 

Property

Allowance for 

Subsidy Cost 

(Present Value)

Net Present Value 

of Assets Related 

to Direct Loans

(1) Business $139,267,795 $1,552,931 $466,906 ($45,741,928) $95,545,704

(2) Disaster 5,614,070,915 39,433,981 1,252,283 (1,502,379,650) 4,152,377,529

Total $5,753,338,710 $40,986,912 $1,719,189 ($1,548,121,578) $4,247,923,233

D. Defaults on Pre-1992 Guaranteed Loans:

Liquidating 

Loan 

Guarantee 

Programs

Defaulted 

Guaranteed Loans 

Receivable, Gross

Interest 

Receivable

Allowance for 

Loan Losses

Foreclosed 

Property

Defaulted 

Guaranteed Loans 

Receivable, Net

(1) Business $1,003,830,197 $51,912,871 ($482,450,039) $18,931,739 $592,224,768

(2) Pollution 45,145,511 239,402 (30,304,701) 0 15,080,212

Total $1,048,975,708 $52,152,273 ($512,754,740) $18,931,739 $607,304,980

E. Defaults on Post-1991 Guaranteed Loans:

Credit Reform 

Loan Guarantee 

Program

Defaulted 

Guaranteed Loans 

Receivable, Gross

Interest 

Receivable

Foreclosed 

Property

Allowance for 

Subsidy Cost 

(Present Value)

Net Present Value 

of Assets Related 

to Defaulted 

Guaranteed Loans 

Receivables.

Business $754,443,251 $22,050,268 $25,668,123 ($214,635,997) $587,525,645
Page 62

F. Guaranteed Loans Outstanding:

Loan Programs

Outstanding Principal, Guaranteed 

Loans Receivable, Gross Amount of Outstanding Principal 

Guaranteed

(1) Business $37,498,511,175 $30,536,136,716

(2) Pollution $57,081,175 $57,081,175

G. Liability for Loan Guarantees:

Loan Programs

Liabilities for Losses on 

Pre-1992 Guarantees 

Liquidating

Liabilities for Loan 

Guarantees for

Post-1991 Guarantees 

(Present Value)

Total Liabilities for Loan 

Guarantees

(1) Business $30,504,841 $1,435,664,348 $1,466,169,189

(2) Pollution 7,126,756 0 7,126,756

Total $37,631,597 $1,435,664,348 $1,473,295,945

H. Subsidy Expense for Post-1991 Loans:

1. Current Year’s Direct Loans

Loan Programs Interest 

Differential Defaults Fees Other Total

(1) Business $896,815 ($28,970) $2,487 ($12,172) $858,160

(2) Disaster 78,059,468 52,553,453 35,266 (7,208,849) 123,439,338

Total $78,956,283 $52,524,483 $37,753 ($7,221,021) $124,297,498

2. Direct Loan Modifications and Re-estimates

Loan Programs Modifications Re-estimates Total

(1) Business $0 ($1,404,808) ($1,404,808)

(2) Disaster 0 236,816,746 236,816,746

Total $0 $235,411,938 $235,411,938

3. Total Direct Loan Subsidy Expenses

Loan Programs

(1) Business ($546,648)

(2) Disaster 360,256,084

Total $359,709,436

I. Subsidy Expense for Post-1991 Loan Guarantees:

1. Current Year’s Loan Guarantees

Loan Program Interest 

Supplement Defaults Fees Other Total

Business $0 $543,383,895 ($310,813,672) ($39,691,029) $192,879,194
Page 63

2. Loan Guarantee Modifications and Re-estimates

Loan Program Modifications Re-estimates Total

Business ($4,450) ($520,582,453) ($520,586,903)

3. Total Loan Guarantee Subsidy Expenses

Loan Program Total

Business ($327,707,709)

J. Administrative Expense:

Direct Loans

Loan Programs Total Loan GuaranteesLoan Program Total

(1) Business $18,800,000 Business $82,037,751

(2) Disaster 158,214,907

Total $177,014,907

K. Other Information:

The liability in Part G of this note, for pre-1992 business loans, relates to outstanding gross amounts

guaranteed of $3,803,635,520. Of this amount, the Agency’s share is $3,302,215,299. For Pollution

Control Equipment Contract Guarantees, the outstanding guarantees total $57,081,175. This amount is 

both gross and Agency share. For post-1991 loans, the gross amount guaranteed for business loans is 

$33,694,875,655. The Agency’s share is $27,233,921,417.

The Foreclosed Property referred to in Parts B through E is comprised of $54,164,466 of Real Estate 

outstanding on 325 loans and $4,294,130 of Other Property outstanding on 64 loans. 

NOTE 8. General Property and Equipment, Net:

Classes of Fixed Assets

(1)

Depreciation 

Method

(2)

Service

Life

(3)

Acquisition 

Value

(4)

Accumulated 

Depreciation

(5)

Net Book

Value

A. ADP Software S/L 1-3 years $1,966,393 $1,436,464 $529,929

B. Equipment S/L 2-5 years 1,920,922 1,764,888 156,034

Total $3,887,315 $3,201,352 $685,963
Page 64

NOTE 9. Debt:

Liabilities Covered by Budgetary Resources:

Beginning Balance New Borrowings Repayments Ending Balance

A. Intragovernmental 

Debt:

(1) Borrowing from 

the Treasury $8,932,492,677 $626,554,193 ($524,005,856) $9,035,041,014

(2) Borrowing from 

Federal 

Financing Bank 274,935,650 0 (41,498,298) 233,437,352

Total 

Intragovernmental 

Debt $9,207,428,327 $626,554,193 ($565,504,154) $9,268,478,366

NOTE 10. Other Liabilities:

A. Other Liabilities Covered by Budgetary Resources:

Non-Current Liabilities Current Liabilities Total Liabilities

1. Intragovernmental

(1) Business Loan and 

Investment Fund $1,609,217,937 $0 $1,609,217,937

(2) Disaster Loan Fund 1,401,686,340 0 1,401,686,340

(3) Salaries and Expenses 0 (12,782) (12,782)

(4) Pollution Control 

Guarantee Fund 21,998,356 0 21,998,356

Total $3,032,902,633 ($12,782) $3,032,889,851

2. Governmental

(1) Business Loan & 

Investment Fund $0 ($2,417,397) ($2,417,397)

(2) Disaster Loan Fund 0 18,423,363 18,423,363

(3) Salaries and Expenses 0 13,609,201 13,609,201

(4) Office of Inspector 

General 0 407,901 407,901

(5) Surety Bond Guarantee 

Fund 36,092,302 (813,272) 35,279,030

Total $36,092,302 $29,209,796 $65,302,098

Other Information:

Amounts shown as Intragovernmental under “Non-Current Liabilities” consists primarily of the net assets of 

liquidating funds due to Treasury in the amounts of $1,321,064,015 for BLIF, $1,401,686,340 for DLF, 

and $21,998,356 for the Pollution Control Guarantee Fund. A lesser amount of the BLIF balance consists 

of amounts due FFB.

The amount shown as Governmental under “Non-Current Liabilities” consists of contingent liabilities for 

the Surety Bond Guarantee Fund.
Page 65

B. Other Liabilities not Covered by Budgetary Resources:

Non-Current Liabilities Current Liabilities Total Liabilities

1. Intragovernmental

(1) FECA – Workers 

Compensation Liability $0 $15,372,000 $15,372,000

2. Governmental

(1) Accrued Unfunded 

Annual Leave $0 $23,475,289 $23,475,289

(2) Prior Liens – Real Estate 0 5,051,419 5,051,419

Total Governmental $0 $28,526,708 $28,526,708

NOTE 11. Unexpended Appropriations:

Revolving Funds Trust Funds Appropriated 

Funds Total

A. Unexpended Appropriations:

(1) Unobligated:

a. Available $307,996,884 0 $239,097,437 $547,094,321

b. Unavailable 0 0 0 0

(2) Undelivered Orders 0 0 124,956,105 124,956,105

Total $307,996,884 $0 $364,053,542 $672,050,426

NOTE 12. Gross Cost and Earned Revenue by Budget Functional Classification:

Functional Classification Gross Cost Earned Revenue Net Cost

Commerce and Housing Credit $214,014,129 ($191,592,957) $22,421,172

Community and Regional 

Development 1,273,876,257 (640,301,089) 633,575,168

Total $1,487,890,386 ($831,894,046) $655,996,340

NOTE 13. Footnote Disclosures Related to the Statement of Budgetary Resources:

SBA had no available borrowing or contract authority at the end of the FY 1998 reporting period. 

Repayments of borrowings are made annually from collections received through SBA’s credit reform 

portfolio. Borrowing repayments are calculated using the guidance provided by OMB. SBA has access to 

permanent indefinite appropriations for the purpose of funding liquidating fund obligations and upward 

subsidy reestimates.
Page 66
Page 67

Legend:

BLIF Business Loan and Investment Fund

DLF Disaster Loan Fund

SBGRF Surety Bond Guarantees Revolving Fund

PCECGRF Pollution Control Equipment Contract Guarantees Revolving Fund

S&E Salaries and Expenses

OIG Office of Inspector General

BATF Business Assistance Trust Fund
Page 68

U.S. SMALL BUSINESS ADMINISTRATION

STATEMENT OF FINANCIAL POSITION

AS OF SEPTEMBER 30, 1998

ASSETS BLIF DLF SBGRF PCECGRF S&E OIG BATF TOTAL

Intragovernmental Assets:

Fund Balances with Treasury 

(Note 2) $2,557,277,181 $5,361,684,749 $42,359,670 $14,044,900 $218,565,168 $1,850,223 $302,227 $8,196,084,118

Investments (Note 4) 283,185,031 283,185,031

Accounts Receivable, Net 

(Note 5) 56,268,398 290,486,758 2,054,876 626,088 349,436,120

Advances (Note 6) 4,379,612 4,379,612

Governmental Assets:

Investments (Note 4)

Accounts Receivable, Net 

(Note 5) 47,480,909 567,829 1,943,280 681,116 826 50,673,960

Credit Program Receivables 

and Related Foreclosed 

Property, Net (Note 7) 1,562,338,023 5,357,537,078 15,080,212 6,934,955,313

Cash and Other Monetary 

Assets (Note 3) 2,071,399 75,433 2,146,832

General Property and 

Equipment, Net (Note 8) 659,610 26,353 685,963

Advances (Note 6) 89,474,453 57,779 89,532,232

Total Entity Assets $4,602,475,006 $11,010,276,414 $44,302,950 $29,125,112 $222,093,982 $2,477,137 $328,580 $15,911,079,181

Total Non-Entity Assets $0 $0 $0 $0 $0 $0 $0 $0

Total Assets: $4,602,475,006 $11,010,276,414 $44,302,950 $29,125,112 $222,093,982 $2,477,137 $328,580 $15,911,079,181

The accompanying notes are an integral part of this schedule. Details may not add to totals due to rounding.
Page 69

U.S. SMALL BUSINESS ADMINISTRATION

STATEMENT OF FINANCIAL POSITION

AS OF SEPTEMBER 30, 1998

LIABILITIES BLIF DLF SBGRF PCECGRF S&E OIG BATF TOTAL

Liabilities Covered by 

Budgetary Resources:

Intragovernmental Liabilities:

Accounts Payable $793,020,059 $1,169,672,505 $0 $0 $516,898 $600,026 $0 $1,963,809,488

Debt (Note 9) 617,903,843 8,650,574,523 9,268,478,366

Other (Note 10) 1,609,217,937 1,401,686,340 21,998,356 (12,782) 3,032,889,851

Governmental Liabilities:

Accounts Payable 30,896,788 334,463 2,885,627 4,810,565 64,818 109 38,992,370

Liabilities for Loan 

Guarantees (Note 7) 1,466,169,189 7,126,756 1,473,295,945

Other (Note 10) (2,417,397) 18,423,363 35,279,030 13,609,201 407,901 65,302,098

Total Liabilities Covered by 

Budgetary Resources $4,514,790,419 $11,240,691,194 $38,164,657 $29,125,112 $18,923,882 $1,072,745 $109 $15,842,768,118

Liabilities Not Covered by 

Budgetary Resources:

Intragovernmental Liabilities:

Other (note 10) 15,372,000 15,372,000

Governmental Liabilities:

Other (Note 10) 4,934,654 116,766 23,434,826 40,463 28,526,709

Total Liabilities not 

Covered by Budgetary 

Resources $4,934,654 $116,766 $0 $0 $38,806,826 $40,463 $0 $43,898,709

Total Liabilities $4,519,725,073 $11,240,807,960 $38,164,657 $29,125,112 $57,730,708 $1,113,208 $109 $15,886,666,827

The accompanying notes are an integral part of this schedule. Details may not add to totals due to rounding.
Page 70

U.S. SMALL BUSINESS ADMINISTRATION

STATEMENT OF FINANCIAL POSITION

AS OF SEPTEMBER 30, 1998

NET POSITION BLIF DLF SBGRF PCECGRF S&E OIG BATF TOTAL

Unexpended Appropriations 

(Note 11) $117,693,532 $100,615,672 $307,996,884 $0 $144,377,181 $1,367,157 $0 $672,050,426

Cumulative Results of 

Operations (34,943,598) (331,147,218) (301,858,591) 19,986,093 (3,228) 328,471 (647,638,071)

Total Net Position $82,749,934 ($230,531,546) $6,138,293 $0 $164,363,274 $1,363,929 $328,471 $24,412,355

Total Liabilities and Net 

Position $4,602,475,006 $11,010,276,414 $44,302,950 $29,125,112 $222,093,982 $2,477,137 $328,580 $15,911,079,181

The accompanying notes are an integral part of this schedule. Details may not add to totals due to rounding.
Page 71

U.S. SMALL BUSINESS ADMINISTRATION

CONSOLIDATED STATEMENT OF CHANGES IN NET POSITION

FOR THE PERIOD ENDED SEPTEMBER 30, 1998

BLIF DLF SBGRF PCECGRF S&E OIG BATF TOTAL

Net Cost of Operations ($219,264,974) $633,575,168 $3,697,627 ($4,363,072) $232,125,057 $10,066,962 $159,571 $655,996,339

Financing Sources:

Appropriations Used 299,001,622 282,807,453 9,738,640 232,409,700 10,062,763 39,451 834,059,629

Donations 253,385 253,385

Imputed Financing 16,565,985 16,565,985

Transfers-out (550,102,010) (9,531,279) (559,633,289)

Net Results of Operations ($31,835,414) ($360,298,994) $6,041,013 $4,363,072 $16,850,628 ($4,199) $133,265 ($364,750,629)

Prior Period Adjustments 0 0 0 0 0 0 0 0

Net Change in Cumulative 

Results of Operations ($31,835,414) ($360,298,994) $6,041,013 $4,363,072 $16,850,628 ($4,199) $133,265 ($364,750,629)

Increase (Decrease) in 

Unexpended Appropriation (51,439,304) (79,302,470) (6,238,640) (4,363,072) 17,593,684 711,760 (160,072) (123,198,114)

Change in Net Position ($83,274,718) ($439,601,464) ($197,627) $0 $34,444,312 $707,561 ($26,807) ($487,948,743)

Net Position - Beginning of the 

Period 166,024,652 209,069,918 6,335,920 0 129,918,962 656,368 355,278 512,361,098

Net Position - End of Period $82,749,934 ($230,531,546) $6,138,293 $0 $164,363,274 $1,363,929 $328,471 $24,412,355

The accompanying notes are an integral part of this statement for current year data. Details may not add to totals due to rounding.
Page 72

U.S. SMALL BUSINESS ADMINISTRATION

COMBINED STATEMENT OF BUDGETARY RESOURCES (Note 13) 

FOR THE PERIOD ENDED SEPTEMBER 30, 1998

RESOURCES BLIF DLF SBGRF PCECGRF S&E OIG BATF TOTAL

Budget Authority:

Appropriations $584,428,718 $234,038,887 $3,500,000 $0 $257,000,000 $10,000,000 $0 $1,088,967,605

Borrowing Authority 25,715,193 600,839,000 626,554,193

Contract Authority (38) (38)

Net Transfers, Current Year 

Authority (41,498,298) 85,350 (41,412,948)

Unobligated Balance:

Brought Forward Oct. 1 2,256,070,253 4,432,492,889 38,226,067 12,991,773 15,482,182 1,021,561 6,756,284,725

Net Transfers Prior-Year 

Balance, Actual (370,091,872) 50,000 235,712 (369,806,160)

Spending Authority from 

Offsetting Collections:

Earned

Collected 1,374,358,612 1,520,033,576 4,618,851 1,151,457 271,000,912 502,034 133,264 3,171,798,706

Receivable from Federal 

Sources 77,660,925 505,434,922 (1,001,732) 582,094,115

Adjustments:

Recoveries of Prior Year 

Obligations 36,855,765 154,351,067 80,585,399 938,367 9,194 272,739,792

Temporarily Not Available 

Pursuant to Public Law (33,262,816) (33,262,816)

Permanently Not Available

Cancellations of Expired 

and No Year Accounts (30,546,373) (10,261,358) (285,017) (41,092,748)

Capital Transfers and 

Redemption of Debt (17,791,915) (675,118,994) (692,910,909)

Total Budgetary Resources $3,861,898,192 $6,772,071,347 $46,344,918 $14,143,230 $612,940,715 $12,176,945 $378,170 $11,319,953,517

The accompanying notes are an integral part of this statement for current year data. Details may not add to totals due to rounding.
Page 73

U.S. SMALL BUSINESS ADMINISTRATION

COMBINED STATEMENT OF BUDGETARY RESOURCES (Note 13) 

FOR THE PERIOD ENDED SEPTEMBER 30, 1998

STATUS BLIF DLF SBGRF PCECGRF S&E OIG BATF TOTAL

Obligations Incurred:

Category A, Direct $0 $0 $0 $0 $561,712,953 $11,015,061 $140,180 $572,868,194

Category B, Direct 1,563,930,140 2,525,309,007 5,173,062 98,329 4,094,510,538

Unobligated Balances 

Available:

Apportioned 19,621,346 1,018,116 (6,916) 20,632,546

Other

Unobligated Balances Not 

Yet Available:

Other 2,297,968,052 4,246,762,340 41,171,856 14,044,901 31,606,416 143,768 244,906 6,631,942,239

Total, Status of Budgetary 

Resources $3,861,898,192 $6,772,071,347 $46,344,918 $14,143,230 $612,940,715 $12,176,945 $378,170 $11,319,953,517

The accompanying notes are an integral part of this statement for current year data. Details may not add to totals due to rounding.
Page 74

U.S. SMALL BUSINESS ADMINISTRATION

COMBINED STATEMENT OF BUDGETARY RESOURCES (Note 13)

FOR THE PERIOD ENDED SEPTEMBER 30, 1998

OUTLAYS BLIF DLF SBGRF PCECGRF S&E OIG BATF TOTAL

Obligations Incurred

Category A, Direct $0 $0 $0 $0 $561,712,953 $11,015,061 $140,180 $572,868,194

Category B, Direct 1,563,930,140 2,525,309,007 5,173,062 98,329 4,094,510,538

Less: Spending Authority 

from Offsetting Collections 

and Adjustments:

Earned

Collected 1,374,358,612 1,520,033,576 4,618,851 1,151,457 271,000,912 502,034 133,264 3,171,798,706

Receivable from Federal 

Sources 77,660,924 505,434,922 (1,001,732) 582,094,114

Actual Recoveries of Prior 

Year Obligations 36,855,765 154,351,067 80,585,399 938,367 9,194 272,739,792

Obligated Balance, Net –

Beginning of the Period 624,051,595 1,131,496,282 3,605,450 350 165,695,417 957,863 95,357 1,925,902,314

Less: Obligated Balance, Net -

End of Period:

Accounts Receivable (545,459,054) (909,507,982) (1,312,580) (1,456,279,616)

Undelivered Orders 446,076,934 236,847,148 148,386,406 240,509 64,116 831,615,113

Accounts Payable 327,499,833 1,787,583,242 1,187,813 14,895,194 208,002 109 2,131,374,193

Total Outlays:

Disbursements 1,845,347,333 1,882,096,892 7,590,699 98,679 222,660,740 10,586,046 162,118 3,968,542,507

Collections (1,374,358,612) (1,520,033,576) (4,618,851) (1,151,457) (7,805,969) (502,034) (133,264) (2,908,603,763)

The accompanying notes are an integral part of this statement for current year data. Details may not add to totals due to rounding.
Page 75

U.S. SMALL BUSINESS ADMINISTRATION

COMBINED STATEMENT OF FINANCING

FOR THE PERIOD ENDED SEPTEMBER 30, 1998

BLIF DLF SBGRF PCECGRF S&E OIG BATF TOTAL

Resources Used to Finance 

Activities:

Budgetary

Budgetary resources obligated 

for orders and services to be 

received or benefits to be 

provided to others $1,563,930,140 $2,525,309,007 $5,173,062 $98,329 $561,712,953 $11,015,061 $140,180 $4,667,378,732

Less: Offsetting collections, 

recoveries of prior-year 

authority

Earned reimbursements

Collected 1,374,358,612 1,520,033,576 4,618,851 1,151,457 271,000,912 502,034 133,264 3,171,798,706

Receivable from 

Federal sources 77,660,925 505,434,922 (1,001,732) 582,094,115

Recoveries of prior-year 

obligations 36,855,765 154,351,067 80,585,399 938,367 9,194 272,739,792

Net budgetary resources used 

to finance activities $75,054,838 $345,489,442 $554,211 ($1,053,128) $211,128,374 $9,574,660 ($2,278) $640,746,119

The accompanying notes are an integral part of this statement for current year data. Details may not add to totals due to rounding.
Page 76

U.S. SMALL BUSINESS ADMINISTRATION

COMBINED STATEMENT OF FINANCING

FOR THE PERIOD ENDED SEPTEMBER 30, 1998

BLIF DLF SBGRF PCECGRF S&E OIG BATF TOTAL

Non-Budgetary

Property without 

reimbursement

Property received from 

others without 

reimbursement $0 $0 $0 $0 ($38) $0 $133,264 $133,226

Costs incurred by others for 

the entity without 

reimbursement 16,565,985 16,565,985

Net non-budgetary resources 

used to finance activities $0 $0 $0 $0 $16,565,947 $0 $133,264 $16,699,211

Total resources used to 

finance activities $75,054,838 $345,489,442 $554,211 ($1,053,128) $227,694,321 $9,574,660 $130,986 $657,445,330

Relationship of total resources 

to net cost of operations:

Deduct resources used to fund 

items not part of the net cost 

of operations

Increase in budgetary resources 

obligated to order goods and 

services not yet received or 

benefits not yet provided (47,863,336) 47,665,057 65,172,871 405,602 (19,392) 65,360,802

The accompanying notes are an integral part of this statement for current year data. Details may not add to totals due to rounding.
Page 77

U.S. SMALL BUSINESS ADMINISTRATION

COMBINED STATEMENT OF FINANCING

FOR THE PERIOD ENDED SEPTEMBER 30, 1998

BLIF DLF SBGRF PCECGRF S&E OIG BATF TOTAL

Budgetary offsetting 

collections that do not 

increase exchange revenue or 

decrease expenses

Collections that decrease 

assets unrelated to 

exchange revenue ($421,437,902) ($721,742,337) $0 $0 $0 $0 $0 ($1,143,180,239)

Credit program collections 

that increase liabilities 

for loan guarantees or 

allowances for subsidy (493,629,961) (184,278,225) (907,795) (678,815,981)

Other (279,881,298) 14,470 (4,618,851) 13,162 (284,472,517)

Adjustments other than 

collections made to compute 

net budgetary resources that 

do not affect net cost of 

operations

Recoveries of prior-year 

authority (18,287,372) (127,838,109) (75,222,782) (938,367) (9,193) (222,295,823)

Resources that fund expenses 

recognized in prior periods 4,503,339 1,055,162 789,772 40,463 6,388,736

The accompanying notes are an integral part of this statement for current year data. Details may not add to totals due to rounding.
Page 78

U.S. SMALL BUSINESS ADMINISTRATION

COMBINED STATEMENT OF FINANCING 

FOR THE PERIOD ENDED SEPTEMBER 30, 1998

BLIF DLF SBGRF PCECGRF S&E OIG BATF TOTAL

Resources that finance the 

acquisition of assets or 

liquidation of liabilities

General property, plant 

and equipment $0 $0 $0 $0 $1,318,672 $0 $0 $1,318,672

Loans Receivable 469,356,383 598,946,527 (4,198,579) 1,158,725 1,065,263,056

Collateral Acquired (16,656,168) (2,355,564) (19,011,732)

Other resources used to fund 

items not part of the net cost

of operations (3,380,550) 53,769,444 50,388,894

Total resources used to fund 

items not part of the net 

cost of operations ($807,276,865) ($335,818,737) ($7,762,268) $250,930 ($7,928,305) ($492,302) ($28,585) ($1,159,056,132)

Resources used to finance the 

net cost of operations $882,331,703 $681,308,179 $8,316,479 ($1,304,058) $235,622,626 $10,066,962 $159,571 $1,816,501,462

The accompanying notes are an integral part of this statement for current year data. Details may not add to totals due to rounding.
Page 79

U.S. SMALL BUSINESS ADMINISTRATION

COMBINED STATEMENT OF FINANCING 

FOR THE PERIOD ENDED SEPTEMBER 30, 1998

BLIF DLF SBGRF PCECGRF S&E OIG BATF TOTAL

Components of net cost of 

operations that do not require 

or generate resources during 

the reporting period

Expenses or exchange revenue 

related to the disposition of 

assets or liabilities, or 

allocation of their costs over 

time:

Expenses related to the use 

of assets $0 $0 $0 $0 ($707,867) $0 $0 ($707,867)

Gains or (losses) from 

revaluation of assets and 

liabilities (11,809,809) (317,556) (12,127,365)

Decrease or (increase) in 

exchange revenue 

receivable from the 

public (225,497,583) 261,852,795 (4,618,852) 234,258 (2,789,702) 29,180,916

Interest revenue from 

amortization of credit 

program allowance for 

subsidy (81,589,743) 9,043,922 (72,545,821)

Other (526,350,292) (370,426,165) (407,793) (897,184,250)

Subtotal ($845,247,427) ($99,847,004) ($4,618,852) ($173,535) ($3,497,569) $0 $0 ($953,384,387)

The accompanying notes are an integral part of this statement for current year data. Details may not add to totals due to rounding.
Page 80

U.S. SMALL BUSINESS ADMINISTRATION

COMBINED STATEMENT OF FINANCING 

FOR THE PERIOD ENDED SEPTEMBER 30, 1998

BLIF DLF SBGRF PCECGRF S&E OIG BATF TOTAL

Expenses that will be financed 

with budgetary resources 

recognized in future periods

Credit program subsidy 

expense from upward 

subsidy re-estimates ($271,996,245) $271,461,539 $0 $0 $0 $0 $0 ($534,706)

Other (26,866,127) 2,688,410 (24,177,717)

Subtotal ($298,862,372) $274,149,949 $0 $0 $0 $0 $0 ($24,712,423)

Other net cost components 

that do not require or 

generate resources during 

the reporting period 42,513,122 (222,035,956) (2,885,479) (182,408,312)

Total components of net cost of 

operations that do not require 

or generate resources during 

the reporting period ($1,101,596,677) ($47,733,010) ($4,618,852) ($3,059,014) ($3,497,569) $0 $0 ($1,160,505,122)

Net cost of operations ($219,264,974) $633,575,168 $3,697,627 ($4,363,072) $232,125,057 $10,066,962 $159,571 $655,996,339

The accompanying notes are an integral part of this statement for current year data. Details may not add to totals due to rounding.
Page 81

U.S. SMALL BUSINESS ADMINISTRATION

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION 

FOR THE PERIOD ENDED SEPTEMBER 30, 1998

Stewardship Investments in Human Capital Cost For Fiscal Year

Service Corp of Retired Executives $8,617,876

Office of International Trade 6,178,363

Office of Women’s Business Ownership 7,978,617

Office of Veteran Affairs 1,566,532

Office of Small Business Development Centers 79,735,870

One Stop Capital Shops 2,052,481

Business Information Centers 8,023,280

Small Business Innovation and Research 56,149

Office of Native American Affairs 392,713

Other Business Initiatives 4,943,556

Total $119,545,437

A detailed description of the programs may be found in the SBA Program Description and

Analysis portion of this document.