STATE SMALL 

BUSINESS CREDIT 

INITIATIVE

Opportunities Exist to 

Enhance Performance 

Measurement and 

Evaluation

Report to Congressional Committees

December 2013

GAO-14-97

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-97, a report to 

congressional committees

December 2013

STATE SMALL BUSINESS CREDIT INITIATIVE

Opportunities Exist to Enhance Performance 

Measurement and Evaluation

Why GAO Did This Study

The Small Business Jobs Act of 2010 

created SSBCI within Treasury. The 

program provides direct funding to 

participants for programs that expand 

access to capital for small businesses.

The act mandates that GAO conduct 

an annual audit of the program. GAO’s 

first two reports examined Treasury’s 

implementation of SSBCI and its 

processes for monitoring compliance 

and procedures for evaluating and 

communicating program outcomes. 

This third report examines, among 

other things, the extent to which (1) 

participants have used their SSBCI

allocations and faced challenges in 

using the funds, and (2) Treasury has 

used performance measures and 

program evaluation to manage SSBCI. 

GAO reviewed Treasury’s SSBCI 

policies and procedures and 

participants’ data on fund usage and 

interviewed officials from Treasury, 

eight states, and one municipality.

GAO selected the states and 

municipality based on usage of SSBCI 

funds, the number of programs they 

implemented, and geographic 

dispersion, among other things. 

What GAO Recommends

GAO recommends that Treasury set 

targets for selected measures to track 

SSBCI’s performance and seek input 

from Congress and other federal 

agencies on what information will be 

useful in assessing SSBCI’s 

effectiveness as Treasury designs its 

program evaluation. Treasury agreed 

with both of these recommendations. 

What GAO Found

As of June 30, 2013, State Small Business Credit Initiative (SSBCI) 

participants—states, territories, and municipalities—had used $549 million of the 

$1.5 billion the Department of the Treasury (Treasury) allocated to them, nearly 

four times the amount used as of June 30, 2012. However, the rates at which 

participants have used funds continue to vary, as shown below. While initial 

challenges generally have been addressed, others remain. Participants’ 

challenges with using funds at the start of the program resulted from some 

program policies not being finalized and low demand for some program types, 

among other things. Treasury and participants have since addressed many of 

these issues, but according to agency officials and others, participants will likely 

continue to face some challenges in using SSBCI funds. For example, some 

large lenders have been reluctant to partner with SSBCI participants because the 

variation in participants’ programs makes it difficult for lenders to implement the 

program on a national basis, which has limited the program’s reach into the small 

business lending market. 

SSBCI Participants’ (States, Territories, and Municipalities) Fund Usage, as of June 30, 2013

Treasury uses performance measures to manage SSBCI. For example, Treasury 

uses performance measures to adjust staff allocations and to identify participants 

that may need additional assistance. Although Treasury has set targets for 

program administration measures (for example, how long it takes the agency to 

approve participants’ requests to modify their programs), it has not set targets for 

performance (for example, the amount of funds used over time). Federal internal 

control standards and performance management leading practices encourage 

agencies to set targets, where appropriate. Targets could help Treasury identify 

program areas needing improvement. Treasury has also recently started to 

determine how it will evaluate SSBCI’s effectiveness and plans to form a working 

group of participants to help design the format of the evaluation. GAO guidance 

on designing evaluations encourages agencies to obtain input from external 

stakeholders, including Congress, that are expected to be interested in the 

results. By seeking input from external stakeholders early in the design phase, 

Treasury can help ensure that it designs an evaluation that is useful for decision 

makers and other agencies working to promote small business credit access.

View GAO-14-97. For more information, 

contact Daniel Garcia-Diaz at (202) 512-8678 

or garciadiazd@gao.gov. 
Page i GAO-14-97 State Small Business Credit Initiative

Letter 1 

Background 3

SSBCI Participants Have Used Funds at Varying Rates and a 

Number of Challenges Have Been Addressed 7

Treasury and Stakeholders Undertake Various Outreach Activities 

to Promote Use of SSBCI 19

Treasury’s Efforts to Measure and Evaluate Performance Could Be 

Enhanced 26

Conclusions 33

Recommendations for Executive Action 33

Agency Comments and Our Evaluation 34

Appendix I: Objectives, Scope, and Methodology 37

Appendix II: SSBCI Participants’ Allocation Amount and Fund Usage, as of June 30, 2013 41

Appendix III: Comments from the Department of the Treasury 44

Appendix IV: GAO Contacts and Staff Acknowledgements 45

Tables 

Table 1: Treasury’s SSBCI Performance Measures and Targets 27

Table 2: Program Performance Measure Status, as of December 31, 

2012 31

Table 3: SSBCI Participants’ Allocation Amounts and Usage of 

Allocated SSBCI Funds, June 30, 2013 41

Figures

Figure 1: SSBCI Fund Usage, June 30, 2012, to June 30, 2013 8

Figure 2: SSBCI Participants’ Usage of Allocated SSBCI Funds, as 

of June 30, 2013 10

Figure 3: SSBCI Fund Usage and Number of SSBCI Programs by 

Program Type, as of June 30, 2013 12

Contents 
Page ii GAO-14-97 State Small Business Credit Initiative

Figure 4: Number of New and Existing SSBCI Programs by 

Program Type, as of June 30, 2013 13

Figure 5: SSBCI Allocation Amount and Percent of Allocation 

Used, as of June 30, 2013 43

Abbreviations

CAP capital access programs

CDFI community development financial institutions

Ex-Im U.S. Export-Import Bank

FDIC Federal Deposit Insurance Corporation

NAFCU National Association of Federal Credit Unions

OCC Office of the Comptroller of the Currency

OCSP other credit support programs

OIG Office of the Inspector General

SBA Small Business Administration

SSBCI State Small Business Credit Initiative

USDA U.S. Department of Agriculture

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Page 1 GAO-14-97 State Small Business Credit Initiative

441 G St. N.W.

Washington, DC 20548

December 18, 2013

Congressional Committees

Congress enacted the Small Business Jobs Act of 2010, which created 

the $1.5 billion State Small Business Credit Initiative (SSBCI) program to 

address difficulties small businesses faced in accessing credit due to 

disruptions of the credit markets in 2008 and 2009.1 The act was intended 

to address concerns that small businesses might not be able to access 

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

ongoing economic recovery. SSBCI, which is administered by the 

Department of the Treasury (Treasury), is designed to create or 

strengthen state programs that support private financing to small 

businesses and small manufacturers that, according to Treasury, are not 

obtaining the loans or investments they need to expand and to create 

jobs. SSBCI received a one-time appropriation and is designed to 

generate up to $15 billion in lending to small businesses. SSBCI 

participants—states, territories, municipalities, and the District of 

Columbia—are to use the funds for programs that leverage private 

lending to help finance small businesses and manufacturers that are 

creditworthy but have been unable to secure the loans needed to expand 

and to create jobs.2

The act mandates that we conduct an annual audit of the SSBCI 

program.3 In our first and second reports, we reviewed the 

implementation of SSBCI and made recommendations to improve the 

management oversight of the program.4

 

1

Pub. L. No. 111-240, § 3003, 124 Stat. 2504, 2570 (codified at 12 U.S.C. § 5702). 

This third report examines the 

extent to which (1) SSBCI participants have used their SSBCI allocations 

and faced challenges in using the funds, (2) Treasury and program 

stakeholders have used outreach activities to promote use of the program 

2

For the purposes of this report, we refer to the states, territories, municipalities, and the 

District of Columbia that participate in SSBCI generally as “participants.” 

3

§ 3011(b), 124 Stat. at 2581 (codified at 12 U.S.C. § 5710(b)). 

4

GAO, State Small Business Credit Initiative: Opportunities Exist to Improve Program 

Oversight, GAO-12-173 (Washington, D.C.: Dec. 7, 2011) and Small Business Lending: 

Opportunities Exist to Improve Performance Reporting of Treasury’s Programs, 

GAO-13-76 (Washington, D.C.: Dec. 5, 2012). 

 
 

Page 2 GAO-14-97 State Small Business Credit Initiative

and assessed the success of these efforts, and (3) Treasury has used 

performance measures and program evaluation to manage SSBCI.

To assess the extent to which SSBCI participants have used their SSBCI 

allocations, we analyzed program data, as of June 30, 2013, on fund 

usage, allocation amounts, disbursement requests, and program types, 

as well as whether participants developed new programs to participate in 

SSBCI or expanded existing programs with SSBCI funds. We determined 

that the data were sufficiently reliable for the purposes of describing these 

factors. To examine the extent to which SSBCI participants faced 

challenges in using SSBCI funds, we reviewed relevant reports from 

Treasury’s Office of the Inspector General (OIG), our 2011 and 2012 

reports on SSBCI, and Treasury’s policies and procedures.5

To examine the extent to which Treasury and program stakeholders, 

including SSBCI participants, federal banking regulators, and trade 

associations, have used outreach activities to promote use of the program 

and assessed the success of these efforts, we interviewed Treasury 

officials and representatives of stakeholder groups and reviewed 

materials pertinent to SSBCI outreach. Specifically, we interviewed 

officials from Treasury; the nine SSBCI participants identified above; the 

federal banking regulators: Board of Governors of the Federal Reserve 

System (Federal Reserve), Federal Deposit Insurance Corporation 

(FDIC), and Office of the Comptroller of the Currency (OCC); and 

representatives from lending and venture capital trade associations to 

learn about outreach activities they have conducted for SSBCI and to 

obtain relevant materials and documentation. We reviewed Treasury 

guidance on SSBCI outreach, including marketing best practices for three 

SSBCI program types and Treasury budget documents. We also 

reviewed SSBCI outreach materials developed by participants, banking 

regulators, and trade associations and all participants’ SSBCI websites to 

We also 

interviewed officials from Treasury; nine SSBCI participants (Arizona; 

Iowa; Maryland; Missouri; Montana; New York; City of Carrington, North 

Dakota; Vermont; and Virginia); and representatives from trade 

associations representing the lending and venture capital communities. 

Factors we used for selecting the SSBCI participants included their 

percentage of funds used, allocation amounts, number of programs 

implemented, and geographic dispersion. Appendix I contains detailed 

information on the process we used to select participants.

 

5

GAO-12-173 and GAO-13-76. 
 

Page 3 GAO-14-97 State Small Business Credit Initiative

understand how they are providing information about SSBCI to interested 

parties.6

To assess the extent to which Treasury has used performance measures 

and program evaluation to manage SSBCI, we reviewed performance 

measures and targets Treasury has set for SSBCI and a summary report 

on performance information Treasury developed from participants’ 2012 

annual reports. We also interviewed Treasury officials on their actions to 

manage the SSBCI program using performance measures. We identified 

relevant criteria in the Small Business Jobs Act of 2010, the federal 

internal control standards, and leading practices for federal agencies’ 

performance management.7

We conducted this performance audit from May 2013 to December 2013 

in accordance with generally accepted government auditing standards. 

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

sufficient, appropriate evidence to provide a reasonable basis for our 

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

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

SSBCI provides direct support to participants for use in programs 

designed to increase access to credit for small businesses. Using a 

formula contained in the Small Business Jobs Act of 2010, Treasury 

calculated the amount of SSBCI funding for which each of the 50 states, 

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

the Commonwealth of the Northern Mariana Islands, Guam, American 

 

6

We were unable to review three SSBCI participants’ websites because the website links 

listed on Treasury’s SSBCI website did not work.

7

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

(Washington, D.C.: November 1999); Internal Control Management and Evaluation Tool, 

GAO-01-1008G (Washington, D.C.: August 2001); Tax Administration: IRS Needs to 

Further Refine Its Tax Filing Season Performance Measures, GAO-03-143 (Washington, 

D.C.: Nov. 22, 2002); Managing for Results: Strengthening Regulatory Agencies’ 

Performance Management Practices, GAO/GGD-00-10 (Washington, D.C.: Oct. 28, 

1999); and Designing Evaluations: 2012 Revision (Supersedes PEMD-10.1.4), 

GAO-12-208G (Washington, D.C.: Jan. 31, 2012). Leading practices are performance 

management practices and key attributes of performance measures that we have 

identified in previous work based on information from a variety of federal and state 

organizations that would help federal agencies more effectively manage and measure 

program performance. 

Background 
 

Page 4 GAO-14-97 State Small Business Credit Initiative

Samoa, and the United States Virgin Islands, were eligible to apply. This 

formula takes into account a state’s job losses in proportion to the 

aggregate job losses of all states. In addition to states, the act granted 

permission to municipalities to apply directly for funding under SSBCI in 

the event that their state did not apply for funding. Municipalities in 

Alaska, North Dakota, and Wyoming used this option.8

The act allowed Treasury to provide SSBCI funding for two program 

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

programs (OCSP). For both CAPs and OCSPs, the act requires that 

lenders have a meaningful amount of their own capital at risk. Loan 

terms, such as interest and collateral, are typically negotiated between 

the lender and the borrower, although in some cases loan terms are 

subject to SSBCI participant approval and, in many cases, the SSBCI 

participant and lender will discuss and negotiate loan terms and 

guarantee options prior to reaching agreement to approve the loan and 

issue a guarantee.

Participants are 

expected to use their SSBCI funds to leverage private financing and 

investment that is at least 10 times the amount of their SSBCI allocation 

(a leverage ratio of 10-to-1) by December 31, 2016. Forty-seven states; 

the District of Columbia; the Commonwealth of Puerto Rico; the 

Commonwealth of the Northern Mariana Islands; Guam; American 

Samoa; the United States Virgin Islands; Anchorage, Alaska; Carrington, 

North Dakota; Mandan, North Dakota; and Laramie, Wyoming, currently 

participate in the program.

A CAP is a loan portfolio insurance program wherein the borrower and 

lender, such as a small business owner and a bank, contribute to a 

reserve fund held by the lender. Under a CAP, when a participating 

lender originates a loan, the lender and borrower combine to contribute 

an amount equal to a percentage of the loan to a loan reserve fund, which 

is held by the lender. Under SSBCI, the contribution must be from 2 

percent to 7 percent of the amount borrowed. Typically, the contribution 

ranges from 3 percent to 4 percent. The SSBCI participant then matches 

 

8

The act allowed multiple municipalities in a state to collectively submit a joint application 

for funds. SSBCI policy requires that municipalities submitting joint applications had to 

designate a “lead applicant” to serve as the point of contact and to ensure that all parties 

to the application comply with program requirements. Carrington, North Dakota, is the lead 

applicant for 36 North Dakota communities that participate in SSBCI. Mandan, North 

Dakota, is the lead applicant for 38 municipalities in North Dakota, and Laramie, 

Wyoming, is the lead applicant for 17 Wyoming municipalities. 
 

Page 5 GAO-14-97 State Small Business Credit Initiative

the combined contribution and sends that amount to the lender, which 

deposits the funds into the lender-held reserve fund. Under SSBCI, 

approved CAPs are eligible to receive federal contributions to the reserve 

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

the total amount of the contributions paid by the borrower and the lender 

on a loan-by-loan basis.

In addition, the following OCSPs are examples of types of programs 

eligible to receive funding under the act:

• Collateral support programs. A collateral support program is designed 

to enable financing that might otherwise be unavailable due to a 

collateral shortfall. It provides pledged cash collateral to lenders to 

enhance the collateral coverage of individual loans. The SSBCI 

participant and lender negotiate the amount of cash collateral to be 

pledged by the participant.

• Loan participation programs. SSBCI participants may structure a loan 

participation program in two ways: (1) through purchase transactions, 

also known as purchase participations, in which the SSBCI participant 

purchases a portion of a loan originated by a lender, or (2) by 

participating in a loan as a co-lender, where a lender originates a 

senior loan and the SSBCI participant originates a second loan to the 

same borrower that is usually subordinate to the lender’s senior loan 

should a default occur. SSBCI loan participation programs encourage 

lending to small businesses because the lender is able to reduce its 

potential loss by sharing its exposure to loan losses with the SSBCI 

participant.

• Loan guarantee programs. These programs enable small businesses 

to obtain a term loan or line of credit by providing the lender with the 

necessary security in the form of a partial guarantee. In most cases, 

the SSBCI participant sets aside funds in a dedicated reserve or 

account to collateralize the guarantee of a specified percentage of 

each approved loan. The guarantee percentage is determined by the 

participants and lenders but, under SSBCI, may not exceed 80 

percent of loan losses.

• Venture capital programs. These programs provide investment capital 

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

of two forms: (1) a SSBCI participant-run venture capital fund (which 

may include other private investors) that invests directly in 

businesses, or (2) a fund of funds, which is a fund that invests in other 

venture capital funds that in turn invest in individual businesses.
 

Page 6 GAO-14-97 State Small Business Credit Initiative

• Direct loan programs. Although Treasury does not consider these 

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

some participants may identify programs that they plan to support with 

SSBCI funds as direct loan programs. The programs that some 

SSBCI participants label as direct loan programs are viewed by 

Treasury as co-lending programs categorized as loan participation 

programs, which have lending structures that are allowable under the 

statute.

OCSPs approved to receive SSBCI funds are required to target small 

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

support towards loans with an average principal amount of $5 million or 

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

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

After their applications were approved, SSBCI participants entered into 

Allocation Agreements with Treasury before they received their funds. 

SSBCI Allocation Agreements are signed by Treasury and participants, 

and they outline how participants are to comply with program 

requirements. The act requires that each participant receive its SSBCI 

funds in three disbursements or tranches of approximately one-third of its 

approved allocation. As part of its request to receive the second and third 

disbursements, a participant must certify that it has expended, 

transferred, or obligated 80 percent or more of the previous 

disbursement. When participants request subsequent disbursements, 

Treasury reviews the request and certification for completeness. Treasury 

may also review a sample of the participant’s transactions for compliance 

with SSBCI requirements. All SSBCI Allocation Agreements will expire on 

March 31, 2017. Treasury may terminate any portion of a participant’s 

allocation that Treasury has not yet transferred to the participant within 2 

years of the date on which its SSBCI Allocation Agreement was signed. 

Treasury may also reduce or terminate a participant’s allocation at any 

time during the term of the Allocation Agreement upon an event of default 

under the agreement. Under the act, participants are required to submit 

quarterly and annual reports on their use of SSBCI funds.

Changes to participants’ Allocation Agreements generally must be 

approved by Treasury through a program modification. For example, 

participants must submit a program modification to Treasury for approval 

in order to use SSBCI funds for a new program that was not originally 

approved by Treasury, to materially change the scope or purpose of an 

approved program, or to reapportion and transfer allocated SSBCI funds 

among approved programs when the cumulative amounts transferred 

exceed 10 percent of the participant’s total SSBCI allocation. Treasury 
 

Page 7 GAO-14-97 State Small Business Credit Initiative

has procedures for participants to apply for modifications and for its 

processing of modification approval requests. In general, the procedures 

require participants to submit, among other things, justification of the 

need for the modification and the impact of the change on program 

performance, including the 10-to-1 private leverage expectation. As of 

June 30, 2013, Treasury had approved 32 modifications of SSBCI 

participants’ programs.

The act requires Treasury’s OIG to conduct audits of participants’ use of 

their SSBCI allocations. As of November 8, 2013, Treasury’s OIG has 

conducted 12 audits of SSBCI participants’ use of SSBCI funds.9

Between June 30, 2012, and June 30, 2013, SSBCI participants nearly 

quadrupled their overall use of SSBCI funds, but individual participants 

continue to use their funds at varying rates and for different types of 

programs. SSBCI participants faced challenges using their SSBCI funds 

in the early stages of the program. For example, because Treasury 

initially implemented the program without issuing final policies and 

procedures, some SSBCI participants experienced delays in receiving 

subsequent disbursements of funds. While initial challenges have mostly 

been addressed, participants continue to face ongoing challenges with 

using SSBCI funds, including reluctance from large banks to participate in 

the program.

 

9

Treasury’s OIG website contains the full list of reports it has conducted of SSBCI 

participants’ use of funds. See www.treasury.gov/about/organizationalstructure/ig/Pages/Office-of-Small-Business-Lending-Fund-Program-Oversight.aspx. 

SSBCI Participants 

Have Used Funds at 

Varying Rates and a 

Number of Challenges 

Have Been Addressed
 

Page 8 GAO-14-97 State Small Business Credit Initiative

As of June 30, 2013, SSBCI participants had used a total of about $549 

million in SSBCI funds, which represents about 38 percent of the $1.5 

billion allocated for the program.10

Figure 1: SSBCI Fund Usage, June 30, 2012, to June 30, 2013

As shown in figure 1, usage of SSBCI 

funds by participants has nearly quadrupled since June 30, 2012, when 

participants had used about $150 million.

Note: The amount of funds used does not include funds used by participants for administrative 

expenses.

In 2012, we found that participants had used their SSBCI funds at 

different rates.11

 

10Throughout this report we use “funds used” to represent the amount of SSBCI funds 

participants have used to support small business lending and investments. This definition 

is similar to Treasury’s definition of “funds expended, obligated, or transferred,” except our 

definition of “funds used” does not include funds used by participants for administrative 

expenses. Treasury used the following definitions: (1) SSBCI “funds expended” are funds 

used to support loans or investments or for administrative expenses; (2) SSBCI “funds 

obligated” are funds legally committed to support loans or investments, including 

obligations to intermediaries; and (3) SSBCI “funds transferred” are funds transferred to a 

contracting entity as reimbursement of expenses incurred or to fund a loan or investment. 

As of June 30, 2013, SSBCI participants were continuing 

to use their SSBCI allocations at varying rates, as shown in figure 2. Fiftyfive of the 57 participants had used some portion of their allocation as of 

June 30, 2013. Idaho had used the highest percentage of its allocated 

funds, approximately 94 percent of the $13 million it was allocated. Two 

territories—American Samoa and Northern Mariana Islands—had not 

used any of their allocation, which, according to Treasury officials, is 

because both territories have limited small business credit and investment 

markets. As of June 30, 2013, 18 participants had used more than 50 

11GAO-13-76. 

SSBCI Fund Usage Has 

Increased but Continues to 

Vary Widely across 

Participants
 

Page 9 GAO-14-97 State Small Business Credit Initiative

percent of their allocations, 14 participants had used more than 25 to 50 

percent of their allocation, 19 participants had used more than 10 to 25 

percent of their allocation, and 6 participants had used 10 percent or less 

of their allocation. As previously discussed, participants can request 

subsequent SSBCI disbursements when they have used at least 80 

percent of their current tranche of SSBCI funds. As of June 30, 2013, 

Treasury had disbursed almost $811 million in SSBCI funding to 

participants. Eight participants had received their third and final 

disbursement of funds, 19 participants had received their second 

disbursement, and 30 participants were still working to use their first 

disbursement of SSBCI funding. 
Figure 2: SSBCI Participants’ Usage of Allocated SSBCI Funds, as of June 30, 2013 Interactive graphic

Page 10 GAO-14-97 State Small Business Credit Initiative

Print instructions To print a text version of this graphic, go to appendix II.

Roll your mouse over each participant to see the percentage of the SSBCI allocation the participant has 

used, the participant's allocation amount, and the total amount of funds the participant has used, as of 

June 30, 2013. See appendix II for additional details.

Directions: Interactive graphic

Percentage of SSBCI allocation used

Participant ND-M

FL

NJ

WI

NE

IL

VT

RI

HI

MA

OR

KS

DE

OK

NH

SD

NY

AL

IN

LA

IA

TX

TN

WA

MI

MO

ID

WV

SC

MT

AR

NC

VI

CT

WY

AS

NMI

AZ

GA

NM

UT

MN

MS

NV

ME

MD

PA

DC

CA

AK

KY

PR

OH

CO

GM

VA

ND-C

94 94 91

86 82

77

62 64

71 67

62 62 62 59 58 56 55 54

47

41 41

46 46

34 34 33 33 31 31 30 29

12 16 14

26 2525 23 22 22

12 12 12 12

0

9

1 5 1 0

20 19 18 21 18 18 16

0

20

40

60

80

100

Ala.

Ariz. Ark.

Calif. Colo.

Conn.

Del.

Fla.

Ga.

Idaho

Ill. Ind.

Iowa

Kans.

Ky.

La.

Maine

Md.

D.C.

Mass.

Mich.

Minn.

Miss.

Mo.

Mont.

Nebr.

Nev.

N.H.

N.J.

N.Mex.

N.Y.

N.C.

N.Dak.

Ohio

Okla.

Ore.

Pa.

R.I. 

S.C.

S.Dak.

Tenn. 

Tex.

Utah

Vt.

Va.

Wash.

W.Va.

Wis.

Wyo.

Alaska

Hawaii

Sources: GAO analysis of Treasury data; Map Resources (map).

> 50%

>25% - ≤50%

>10% - ≤25%

0% - ≤10%

PR

Guam

Northern

Mariana

U.S. Virgin Islands American Islands

Samoa

Percentage of SSBCI

allocation used
 

Page 11 GAO-14-97 State Small Business Credit Initiative

Note: The four Municipalities participatng in SSBCI are Anchorage, Alaska (AK), Carrington, North

Dakota (ND-C), Mandan, North Dakota (ND-M), and Laramie, Wyoming (WY). The five U.S. territories

participating in SSBCI are American Samoa (AS), Guam, (GM), the Northern Mariana Islands (NMI),

Puerto Rico (PR), and U.S. Virgin Islands (VI).The amount of funds used does not include funds used 

by participants for administrative expenses.

SSBCI participants have used their allocations to fund a variety of 

different program types. SSBCI allows participants to use their allocations 

to support program types that best meet their individual circumstances 

and demands. This flexibility has resulted in participants implementing 

numerous types of programs to use their SSBCI allocations (see fig. 3). 

Similar to what we reported in 2012, loan participation and venture capital 

programs had used the most funds, as of June 30, 2013.12

 

12

However, 

between June 30, 2012, and June 30, 2013, venture capital programs 

surpassed loan participation programs to become the program type with 

the highest percentage of funds used. As of June 30, 2013, venture 

capital programs accounted for approximately 37 percent of SSBCI funds 

used. Loan participation programs accounted for the next highest 

percentage of funds used (36 percent), followed by loan guarantee 

programs and collateral support programs (each about 13 percent). The 

remaining program type—CAP—represented only approximately 1 

percent of the funds used. Figure 3 also shows that venture capital 

programs and loan participation programs were the most common 

program types implemented, representing more than half of all SSBCI 

programs. Three of the six participants with whom we spoke during this 

review said that demand for their venture capital programs was higher 

than their lending programs. Further, figure 3 demonstrates that while 

CAPs accounted for 17 percent of the programs implemented, their fund 

usage represented only 1 percent of the funds used by SSBCI 

participants. Multiple participants we interviewed during our 2012 and 

2013 reviews noted that the demand for their CAPs was low, which 

resulted in them reallocating funds to SSBCI programs with higher 

demand.

GAO-13-76. 
 

Page 12 GAO-14-97 State Small Business Credit Initiative

Figure 3: SSBCI Fund Usage and Number of SSBCI Programs by Program Type, as 

of June 30, 2013

Note: The amount of funds used does not include funds used by participants for administrative 

expenses. The percentage of SSBCI programs by program type sums to more than 100 percent due 

to rounding.

The number of programs participants chose to divide their SSBCI 

allocations among also varied. As of June 30, 2013, SSBCI participants 

were using their SSBCI allocations to fund a total of 150 different 

programs. Fifteen participants used only one program type, whereas 
 

Page 13 GAO-14-97 State Small Business Credit Initiative

others used up to five different program types. Most of the participants 

(34) used their SSBCI allocations to fund two or three programs.

SSBCI also provides participants flexibility to use their allocations to fund 

existing state programs or to implement new programs. Of the 150 SSBCI 

programs, over half (82) were new programs created specifically to utilize 

SSBCI funds. Figure 4 illustrates the number of new and existing SSBCI 

programs by type, as of June 30, 2013.

Figure 4: Number of New and Existing SSBCI Programs by Program Type, as of 

June 30, 2013

SSBCI participants faced challenges with using program funds early in 

the program because Treasury had not finalized all of the program’s 

policies and procedures. However, Treasury has generally taken action to 

address these challenges, and most of the nine SSBCI participants with 

whom we spoke said that Treasury has been responsive to questions 

they have received since the program began. Participants also faced 

early challenges related to low demand for some program types and to 

the implementation of new programs. Some participants noted that the 

types of challenges they encountered while SSBCI was first being 

implemented were issues they would expect to occur with the 

implementation of any new program. In addition, some participants with 

whom we spoke explained that some challenges remain, such as 

reluctance from large banks to participate in the program.

Early Challenges Have 

Mostly Been Addressed, 

but Participants Face 

Ongoing Challenges with 

Using Funds
 

Page 14 GAO-14-97 State Small Business Credit Initiative

As we reported in 2011, Treasury was tasked with quickly starting up an 

SSBCI program office and developing policies, procedures, and guidance 

to implement this new program after the Small Business Jobs Act of 2010 

was enacted on September 27, 2010.13 As a result, the program was 

rolled out without all of the policies and procedures having been finalized 

and with Treasury officials answering participants’ questions verbally or 

through email as they arose. Some participants experienced delays in 

obtaining and using their SSBCI funds as a result. For example, we found 

in our 2011 report that the delay in the development of Treasury’s 

disbursement procedures potentially delayed participants from receiving 

their subsequent SSBCI disbursements.14 Officials from Missouri 

confirmed this finding and stated that they requested their second 

disbursement of funds within the first 9 months of the program and that 

they felt that the disbursement of funds was slower than anticipated 

because Treasury, among other things, was in the process of developing 

the procedures at the time. Treasury addressed this issue by finalizing its 

disbursement procedures in November 2011 and updating its Frequently 

Asked Questions document to describe the procedures participants must 

follow to request and receive approval for subsequent disbursements.

In addition, as we found in 2012, when Treasury initially implemented 

SSBCI, it had not finalized its policy on how it would use its discretionary 

authority to terminate allocated funds to participants that had not met the 

requirements to receive their full allocation within 2 years of having been 

accepted into the program.15

 

13

As a result, some participants with whom we 

spoke at that time had concerns about their ability to use SSBCI funds 

within that time frame and what actions Treasury might take to suspend 

their disbursements. Similarly, during the course of this review, officials 

from three SSBCI participants noted that because Treasury had not 

finalized this policy prior to the start of the program, they were uncertain 

about the amount of time they had to use their SSBCI allocations, and 

two of them modified their programs as a result. For example, officials 

from Maryland told us that they were initially concerned about their ability 

to use funds allocated to the state’s loan guarantee program in the 

specified time frame and, therefore, submitted a program modification to 

reallocate a portion of the funds to its venture capital program, which they 

believed would allow them to use the program funds more quickly.

GAO-12-173. 

14GAO-12-173. 

15GAO-13-76. 

Treasury’s Program Guidance, 

Policies, and Procedures 
 

Page 15 GAO-14-97 State Small Business Credit Initiative

In 2012, we recommended that Treasury develop a written policy 

explaining how it would use its authority to terminate disbursements.16 In 

response to our recommendation and to address uncertainties about the 

length of time SSBCI participants have to use their allocations, Treasury 

developed a written policy on how it will use its discretionary authority to 

terminate funds for participants that do not meet the requirement to use 

the funds within the 2-year period. In July 2013, Treasury published this 

policy in its Frequently Asked Questions document. The policy states that 

Treasury will deem a participant to have made sufficient progress in 

implementing its SSBCI program and will allow it to retain its full allocation 

for the duration of the program if the participant submits its second 

disbursement request by June 30, 2015, and qualifies to receive that 

disbursement.17

Further, because policies were being developed as the program was 

rolled out, some participants made decisions early in the program based 

on informal guidance they received from Treasury, which later turned out 

not to be in compliance with SSBCI policies. For example, officials from 

Montana told us that sometimes there were differences between the 

guidance they were given verbally or through email from Treasury and 

guidance that Treasury later formally released. One such instance 

affected some loans they had made, which followed guidance they 

received from Treasury, but the OIG later found during its audit to be 

impermissible under SSBCI policies. In its audit of Montana’s use of 

funds, the OIG noted that, in addition to Montana, several other 

participants had inquired of Treasury about the permissibility of loans 

similar to the ones made by Montana as early as January 2011. However, 

Treasury did not publish guidance on these types of loans until April 

2012, after some participants had already approved some of these loans. 

Treasury and Montana SSBCI officials noted that the need to resolve the 

OIG audit issue was one reason why Montana’s subsequent 

 

16GAO-13-76. 

17The policy further explains that for participants that do not qualify for their second 

disbursement by June 30, 2015, Treasury expects to conduct an analysis of the 

participant’s progress in implementing its SSBCI program to determine whether Treasury 

should exercise its authority to terminate the availability of the remaining allocation. 
 

Page 16 GAO-14-97 State Small Business Credit Initiative

disbursement of SSBCI funds was delayed.18

Although some initial confusion on the part of participants occurred as 

policies were being developed, multiple participants told us that Treasury 

has been responsive and helpful when they had questions. In addition, 

multiple participants with whom we spoke in 2012 and during this review 

told us that they found the technical assistance Treasury provided 

through conference calls, webinars, and conferences very useful in 

helping them to understand SSBCI policies or compliance requirements. 

Finally, many participants told us that they would expect these types of 

challenges with the implementation of any new program and that 

Treasury’s ability to operate the program has improved over time.

Montana officials stated that 

the delay resulted in the cancellation of some SSBCI transactions, 

including one $450,000 loan. Treasury officials explained that they have 

now developed procedures for resolving similar issues and that, going 

forward, they expect that these types of issues will be handled more 

quickly.

Ten of the 18 SSBCI participants we interviewed in 2012 and during this 

review told us that some of the SSBCI programs they had implemented 

experienced low demand for funds from small businesses and lenders, 

which resulted in difficulties in using funds in the early stages of the 

program. Officials from 8 of these participants explained that to address 

this issue, they modified their programs and reallocated funds from the 

programs with low demand to programs with higher demand. Five 

participants said that interest from financial institutions in their CAPs and 

loan participation programs was low for various reasons and, therefore, 

they requested approval from Treasury to reallocate funds from these 

programs to other SSBCI programs with higher demand. For example, 

officials from Virginia told us that they found that financial institutions 

preferred to use other government small business lending programs 

rather than the SSBCI CAP because, among other things, the other 

programs provided better risk coverage. Two additional participants told 

us that demand for equity was higher than demand for their lending 

programs, which caused them to reallocate funds from their lending 

programs to their venture capital programs. Treasury officials explained 

 

18Treasury officials also attribute the delay in Montana receiving its disbursement to: (1) 

the final determination that Montana had defaulted under its Allocation Agreement, (2) 

Montana’s disbursement request overlapping the OIG audit, and (3) Treasury having not 

yet developed policies for audit resolution procedures and participants receiving partial 

disbursements.

Program Demand 
 

Page 17 GAO-14-97 State Small Business Credit Initiative

that participants that reacted to low demand early in the program and 

submitted modifications have been more successful at using SSBCI funds 

than participants that did not react to signs of low program demand.

Treasury officials, some SSBCI participants, and representatives from 

trade associations stated that participants that implemented new 

programs to utilize SSBCI funds faced more challenges in using funds 

initially than participants that used SSBCI funds to fund existing 

programs. As described earlier, over half of the 150 programs were newly 

created to utilize SSBCI funds. Treasury officials said that participants 

that implemented new programs generally required more time to get their 

SSBCI programs operational than participants that expanded existing 

programs. Treasury officials added that participants that reactivated 

existing programs that had been inactive or operating at low levels of 

activity prior to SSBCI being rolled out also faced challenges in using 

SSBCI funds initially because it took time to get the programs back in 

operation. In addition, we reported in 2012 that some participants that 

implemented new SSBCI programs said that it could take more time to 

use SSBCI funds because they had to conduct extensive outreach to 

lenders to make them aware of the programs and encourage them to 

commit to small business lending.19

SSBCI participants, Treasury officials, and representatives from trade 

associations stated that SSBCI participants will likely continue to face 

some challenges in using SSBCI funds. One ongoing challenge identified 

by multiple SSBCI participants has been difficulty in gaining participation 

by large national banks. Treasury officials stated that large national banks 

are sources of a significant amount of small business lending and that 

This position was reiterated to us 

during this review by two SSBCI participants that had implemented new 

SSBCI programs. The participants explained that they did not have 

existing networks of lenders and economic development organizations 

that they could immediately contact to promote their programs and that it 

took time to develop these networks. For example, Arizona program 

officials stated that when SSBCI was initially rolled out, they did not have 

an existing network of potential participants. They said that after 

dedicating significant time to outreach to lenders, community 

development financial institutions (CDFI), local Chambers of Commerce, 

and others, they developed a network of interested participants and have 

seen increased demand for the program.

 

19GAO-13-76. 

New Program Development 

Ongoing Challenges 
 

Page 18 GAO-14-97 State Small Business Credit Initiative

weak participation by large national banks has had a sizable impact on 

CAPs supported by SSBCI. Because of the way CAPs operate, lenders 

need to generate a high loan volume, which large lenders are generally 

able to do more easily than smaller lenders. Treasury officials and 

representatives from a trade association attribute the reluctance of large 

national banks to participate in SSBCI to the variation in SSBCI 

participants’ programs. They explained that national banks typically 

design programs that can be implemented consistently throughout the 

country and that they are reluctant to tailor different processes to each 

SSBCI participant’s program.

A second ongoing challenge identified by several SSBCI participants with 

whom we spoke is that some lenders and investors have questioned the 

act’s requirement for obtaining certifications from lenders and borrowers 

that they have not been convicted of a sex offense against a minor.20

A third ongoing challenge identified by Treasury officials and several 

SSBCI participants is that some lenders have concerns about being 

subject to additional regulatory scrutiny for using SSBCI programs to 

underwrite loans. For example, Maryland officials stated that some 

lenders they met with were unwilling to participate in Maryland’s loan 

guarantee program because they did not want to underwrite loans that 

contained a federal guarantee because they were concerned that 

regulators would subject them to heightened regulatory scrutiny. To help 

address these concerns, Treasury officials said they briefed officials from 

the federal banking regulators—FDIC, Federal Reserve, and OCC—on 

SSBCI and provided the regulators with periodic program updates. In 

addition, Treasury held a regulatory panel at its October 2012 SSBCI 

national conference during which officials from the federal banking 

regulators addressed lenders’ concerns about additional scrutiny related 

to participating in SSBCI. Further, FDIC and OCC published guidance 

assuring their regulated entities that solely participating in SSBCI does 

not subject them to increased regulatory scrutiny. OCC officials added 

One 

SSBCI participant with whom we spoke noted some banks have 

determined that, for legal reasons, they are not able to sign the 

certification, while other banks do not understand the need for the 

certification requirement. Two SSBCI participants told us that there were 

banks that refused to participate in their SSBCI programs because of the 

sex offender certification requirement.

 

20Pub. L. No. 111-240, § 3011(c)(2), 124 Stat. 2504, 2581 (codified at 12 U.S.C. § 

5710(c)(2)). 
 

Page 19 GAO-14-97 State Small Business Credit Initiative

that Treasury’s efforts to include the federal banking regulators in 

implementing the program were key in helping to encourage lenders to 

participate. Finally, we reported in 2011 that multiple SSBCI participants 

indicated that reaching a 10-to-1 leverage ratio of private financing and 

investment to program funds could prove challenging, especially for 

participants creating new programs.21

Treasury, SSBCI participants, federal banking regulators, and trade 

associations all conduct numerous outreach activities to promote the use 

of SSBCI. These activities include presenting information on SSBCI at 

conferences and lender roundtables, conducting face-to-face meetings 

with lenders and investors, and distributing information through brochures 

and websites. Challenges with promoting SSBCI have been identified by 

Treasury and SSBCI stakeholders, including the variation among SSBCI 

participants’ programs and the amount of time and resources involved in 

conducting outreach. To address these challenges, Treasury is working 

with SSBCI participants to identify best practices for marketing SSBCI.

A few participants in this review 

also noted similar concerns with meeting the requirement. 

Treasury conducts numerous outreach activities to promote the use of 

SSBCI, many of which are conducted in conjunction with program 

stakeholders, including federal banking regulators, trade associations, 

and SSBCI participants. Outreach conducted in collaboration with 

external stakeholders is consistent with federal internal control standards, 

which state that adequate means of communicating with, and obtaining 

information from, external stakeholders that may have a significant impact 

on the agency achieving its goals should exist.22

 

21

To help promote use of 

the participants’ SSBCI lending programs, Treasury officials stated that 

they work with federal banking regulators on a regular basis. For 

example, Treasury officials have participated in lender roundtables 

sponsored by federal banking regulators and written articles for their 

newsletters that describe SSBCI and, in some cases, contain case study 

examples of some SSBCI participants’ programs. Treasury officials also 

said that they have developed a national awareness campaign in which 

they work with relevant trade associations—representing both the lending 

and venture capital communities—to promote use of SSBCI. Treasury 

GAO-12-173. 

22See GAO/AIMD-00-21.3.1 and GAO-01-1008G. 

Treasury and 

Stakeholders 

Undertake Various 

Outreach Activities to 

Promote Use of 

SSBCI 

Treasury Collaborates with 

Stakeholders to Promote 

Use of SSBCI
 

Page 20 GAO-14-97 State Small Business Credit Initiative

officials explained that this outreach consists of presenting information on 

SSBCI at trade associations’ conferences and writing articles for their 

member newsletters. Treasury officials also participate in SSBCI 

participants’ outreach activities. For example, representatives from 

Montana’s SSBCI program told us that the Treasury SSBCI program 

director participated in meetings with CDFIs that they held when the 

program was first started. Finally, Treasury maintains a webpage 

dedicated to SSBCI. The site contains program policy and procedure 

documents, guidance materials on specific program types, and links to 

each participant’s SSBCI program website, among other items.

In 2012, Treasury piloted a program in which it hired consultants to assist 

three SSBCI participants—Mississippi, Ohio, and South Carolina—with 

program outreach. The goal of the pilot was to increase financial 

institutions’ awareness and use of the states’ SSBCI lending programs. In 

each state, consultants developed action plans detailing the assistance 

they would provide to the state to help promote the use of SSBCI by 

lenders. The consultants also conducted in-person meetings or telephone 

calls directly to lending institutions to discuss SSBCI, designed program 

marketing materials, and reviewed the states’ websites, among other 

things. In addition, in South Carolina, the consultant assisted in the 

development of a webinar presentation, which was offered to all South 

Carolina banks and was later posted to the state’s website. Treasury 

officials said that while the consultants’ work could provide a useful 

outside perspective and help to identify improvements needed in 

participants’ programs, the process of finding and contracting with an 

appropriate consultant is time consuming and its effectiveness depends 

on whether participants are able to take advantage of the consultants’ 

recommendations. Treasury officials explained that they would like to 

continue to provide consultant assistance to participants and have 

requested additional funds for their 2014 budget to do so. They explained 

that, with congressional approval for additional funding, they would 

expand the amount of time the consultants work with the states. For 

example, the outreach consultant pilot program provided for 100 hours of 

consultant assistance to each state, and officials said they would like to 

expand this type of assistance to selected participants for 6 to12 months. 

Treasury officials explained that it is difficult to quantify the success of 

their outreach efforts and that they mostly rely on the feedback they 

receive from SSBCI participants to gauge the success of their outreach 

efforts. Treasury officials also explained that they conduct satisfaction 

surveys after each conference to ask what attendees thought of the 

conference. Our review of Treasury’s analysis of the conference survey 

results showed that the majority of those that responded to the surveys 
 

Page 21 GAO-14-97 State Small Business Credit Initiative

found the conferences very good or excellent. Treasury officials said that 

they also track some indicators in addition to conference survey results. 

For example, they track the number of attendees at the SSBCI 

conferences, the number of participants that join webinars or conference 

calls, and, when feasible, the number of hits received by articles posted 

on the SSBCI webpage.

Treasury plans to continue to provide assistance to SSBCI participants on 

program outreach in order to increase the effectiveness and rate of 

deployment of SSBCI funds. Treasury’s 2014 SSBCI Congressional 

Justification for its budget notes that Treasury will expand individualized 

technical assistance to participants by training and supporting SSBCI 

participants on outreach to financial institutions. Treasury officials 

explained that they plan to do this in several ways, including conducting 

state-specific outreach to state banking associations and state banking 

regulators. They also plan to conduct roundtables consisting of local 

bankers, some of whom have used SSBCI and can share their 

experiences with bankers who have not used the program. As described 

previously, they would also like to provide longer-term consultant 

assistance to states. Finally, Treasury officials would like to develop a 

“tool box” of SSBCI marketing materials, such as templates for websites, 

presentations, work plans, and forums. The 2014 Congressional 

Justification also noted that Treasury is planning to add additional 

relationship managers to support state outreach to the lending industry. 

SSBCI relationship managers are responsible for working with an 

assigned group of participants to help them successfully allocate funds to 

lenders and subsequently borrowers. Treasury officials explained that 

SSBCI currently has three relationship managers, each of whom handles 

a portfolio of between 15 and 20 participants, which officials view as a 

heavy workload. Treasury officials noted that all outreach efforts 

discussed in Treasury’s 2014 Congressional Justification, including its 

ability to expand assistance to participants on program outreach and to 

hire additional relationship managers, are contingent upon congressional 

approval of Treasury’s proposed budget for the agency. 

In addition to Treasury’s outreach efforts, SSBCI participants, federal 

banking regulators, and a number of trade associations also 

independently conduct outreach to promote the use of the program. 

Treasury’s program guidance states that one of the roles of SSBCI 

participants is to conduct program outreach. The guidance varies 

depending on the type of program. For example, guidance on venture 

capital programs is general and states only that SSBCI participants are 

responsible for marketing the program in their region or community. 

SSBCI Stakeholders Also 

Conduct Outreach 

Activities
 

Page 22 GAO-14-97 State Small Business Credit Initiative

Guidance on loan guarantee programs is more explicit and instructs that 

participants are responsible for conducting outreach to inform lenders and 

trade associations of the program, including activities such as distributing 

press releases and speaking at industry or small business conferences.

All of the SSBCI participants with whom we spoke conduct outreach on 

an ongoing basis to promote use of their programs. Many of the outreach 

activities they conduct are similar to those used by Treasury.

• Collaboration with other organizations. Eight of the nine SSBCI 

participants with whom we spoke told us that they collaborate with 

other organizations to help them promote SSBCI. Many work with 

state banking associations, local economic development groups, 

small business development centers, and local or regional Chambers 

of Commerce to reach potentially interested parties. For example, 

officials from Virginia’s SSBCI program explained that they collaborate 

with the Virginia Bankers Association, Virginia Association of 

Community Banks, small business development centers, regional 

Chambers of Commerce, and Virginia Economic Development 

Partnership by educating these groups about SSBCI and soliciting 

their assistance in promoting the program to their members.

• Presentations on SSBCI. SSBCI participants also told us that they 

hold lender roundtables; present information on SSBCI to groups of 

potentially interested parties, including CDFIs, economic developers, 

and manufacturing associations; and hold conference calls and 

webinars for potential program users.

• Face-to-face meetings. Five of the nine participants with whom we 

spoke discussed having face-to-face meetings with lenders or 

economic developers to promote use of the program. In fact, some 

participants stated that they found this type of outreach, although time 

consuming, to be the most effective in encouraging use of the 

program.

• Distribution of information. SSBCI participants also distribute 

marketing materials, such as program brochures and electronic 

newsfeeds; issue press releases; publish print advertisements and 

testimonials on the experiences of program users; send emails with 

program information; and use social media to promote SSBCI.

• Website. Each SSBCI participant also maintains a website where 

SSBCI program information can be found. Our review of all SSBCI 

participants’ websites found that the majority included detailed 
 

Page 23 GAO-14-97 State Small Business Credit Initiative

descriptions of their SSBCI programs, links to related materials, 

information on how to apply for the program, and contacts for 

additional information.23

In addition to Treasury and SSBCI participants, federal banking regulators 

also conduct outreach activities to promote the use of SSBCI. Outreach 

conducted by the federal banking regulators has been done on both a 

national and regional basis. However, regulators’ regional offices focus 

more specifically on states in their regions and tend to be in a better 

position to focus on the differences between SSBCI participants’ 

programs. Specific outreach activities they have conducted include 

participating in or sponsoring lender roundtables, conferences, and 

forums in which SSBCI is discussed. These events are often held in 

conjunction with the promotion of other small business credit programs 

and include representatives from each of the federal banking regulators, 

as well as state economic development agencies. For example, an official 

from OCC’s Southern District office stated that her office held a series of 

outreach events throughout the district. Each event included a regulatory 

panel of officials from OCC, FDIC, and the Federal Reserve Bank of 

Atlanta in which they discussed SSBCI with lenders and CDFIs. In 

addition, some federal banking regulators have used their newsletters to 

provide information about SSBCI. For example, regulators have written 

articles about how states are using SSBCI to increase the amount of 

credit available for small businesses, and they have also published 

articles that Treasury has written on SSBCI. Further, as discussed 

previously, both FDIC and OCC published a list of Frequently Asked 

Questions to address their regulated entities’ concerns regarding the 

regulatory implications of participating in SSBCI.

In addition, some websites included other 

useful promotional information, such as a list of participating financial 

institutions and testimonials on the program’s benefits.

Finally, trade associations for lenders, CDFIs, and venture capitalists 

have also helped to promote the use of SSBCI to their members. Similar 

to the types of outreach activities conducted by Treasury, SSBCI 

participants, and federal banking regulators, trade associations have 

provided information on SSBCI at their conferences and, as noted earlier, 

included articles in member newsletters and magazines. In addition, 

some trade associations, including the American Bankers Association, 

 

23We were unable to review three SSBCI participants’ websites because the website links 

listed on Treasury’s SSBCI website did not work. 
 

Page 24 GAO-14-97 State Small Business Credit Initiative

Opportunity Finance Network, and Council of Development Finance 

Agencies, hosted conference calls and webinars for their members to 

promote the use of SSBCI. Representatives from the Opportunity Finance 

Network—a national network of CDFIs—explained that because some 

CDFIs were not familiar with SSBCI and some agencies that implement 

SSBCI at the state level were not familiar with the function of CDFIs, they 

used conference calls and webinars to connect their members with the 

appropriate SSBCI stakeholders.

Treasury and other stakeholders have identified various challenges with 

promoting SSBCI, including variation among SSBCI participants’ 

programs, limited time and resources, and limited experience with 

marketing small business programs.

• Variation among SSBCI participants’ programs. Treasury, Federal 

Reserve, and OCC officials, as well as representatives from the 

National Association of Federal Credit Unions (NAFCU), all said that 

the variation among SSBCI participants’ programs creates marketing 

challenges because different program types have different users. For 

example, if a SSBCI participant operates only a venture capital 

program, lenders, such as credit unions in that state or territory, would 

not be eligible to participate in SSBCI. Treasury officials added that 

the variation makes it hard for them to build awareness of SSBCI at a 

national level, and representatives from NAFCU stated that the 

variation in participants’ programs made it difficult to educate their 

member credit unions about how they could promote SSBCI to their 

customers.

• Time and resources. Five of the nine SSBCI participants with whom 

we spoke stated that reaching out to and educating interested parties 

on SSBCI has been a challenge because of the time commitment and 

a lack of resources. For example, officials from the municipality of 

Carrington, North Dakota—whose SSBCI program consists of a 

consortium of 36 municipalities—explained that outreach is 

challenging because of the amount of time involved in developing 

relationships, setting up meetings, and educating lenders and CDFIs 

about their program. As noted earlier, some participants who 

implemented new programs did not have established networks of 

lenders and said that establishing such networks was time 

consuming. Further, the Carrington, North Dakota, officials noted that 

small community banks and rural economic development groups can 

have high turnover rates, which requires them to conduct continual 

outreach to re-educate staff on the program. Officials from both 

Treasury and Stakeholders 

Identified Challenges to 

Promoting SSBCI, as Well 

as Promising Practices for 

Conducting Outreach
 

Page 25 GAO-14-97 State Small Business Credit Initiative

Carrington and Montana also added that the large geographic 

footprint covered by their SSBCI programs makes it difficult to reach 

all lenders in the communities. Montana officials added that this is 

why they collaborated with other organizations in the state, such as 

CDFIs, to help promote SSBCI.

• SSBCI participants’ experience. SSBCI participants’ experience with 

marketing small business programs may also vary, resulting in 

challenges in promoting use of the program. At its October 2012 

national SSBCI conference, Treasury identified participants’ lack of 

experience in program marketing as a challenge for participants’ 

deploying funds in SSBCI lending programs.

Other challenges that participants mentioned with conducting outreach for 

SSBCI include that it can be difficult to distinguish SSBCI from other 

federal and state programs that assist small businesses and, as noted 

earlier, that some lenders have concerns about being subject to additional 

regulatory scrutiny for using SSBCI programs to underwrite loans.

Treasury has stated that promoting best practices in marketing is one of 

SSBCI’s priorities. To achieve this goal and to help address some of the 

challenges mentioned above, Treasury developed working groups 

consisting of officials from participating states, territories, and 

municipalities for the different SSBCI program types. These groups have 

been working to identify best practices for how to operate each program 

type, including best practices on marketing the program. As of September 

2013, working groups for loan guarantee programs, loan participation 

programs, and collateral support programs had issued best practice 

guidance for these program types. Best practices identified in the 

guidance for all three program types include using consistent marketing; 

developing and maintaining websites that are current, easy to find, and 

contain all pertinent information; identifying and reaching out to the small 

group of key small business lenders; publishing testimonials from lenders 

that have successfully used SSBCI; and asking the state banking 

regulators for the opportunity to brief the state examiners so that the 

examiners can inform lenders about SSBCI. The guidance also includes 

additional best practices unique to each program type. Treasury officials 

said that they are working with the group for venture capital programs as 

well to develop similar best practice guidance for SSBCI participants who 

operate that type of program. The federal banking regulators also offered 

some examples of best practices they have identified to promote their 

programs. One of these was using technology and mobile resources to 

conduct outreach, such as using webinars to reach a larger audience. 

OCC officials stated that they have found that collaborating with state 
 

Page 26 GAO-14-97 State Small Business Credit Initiative

banking associations to help design the outreach efforts is effective, as is 

having lenders that participate in the program share their experiences 

with other lenders. Similarly, FDIC officials noted that it is important to 

leverage relationships with the appropriate networks of organizations and 

to conduct follow-up on activities in which relationships are established.

Prior to the development of the loan participation, collateral support, and 

loan guarantee programs best practice guidance, Treasury had not 

provided SSBCI participants with any specific written guidance on 

program outreach. Instead, Treasury officials told us they mostly relied on 

peer-to-peer learning among SSBCI participants. Treasury officials 

explained that its SSBCI conferences provide a good forum for 

participants to exchange ideas on how to market their programs. In 

addition, each of Treasury’s three SSBCI conferences has included a 

session on different aspects of conducting program outreach. The March 

2012 SSBCI conference included a session on how to market SSBCI to 

underserved communities, the October 2012 conference session focused 

on how to market SSBCI to lenders, and the June 2013 conference 

session was on how to market SSBCI with partner organizations.

Treasury uses performance measures to manage SSBCI in a number of 

ways, such as to allocate program resources and to identify participants 

that might need additional assistance. However, Treasury has not 

developed targets for all of its performance measures. Federal internal 

control standards and leading performance management practices 

identified in prior GAO work state that, where appropriate, management 

should set performance targets and measure results against these 

targets, and this practice can help management to identify performance 

gaps. In addition, Treasury has started to determine how it will evaluate 

the performance of SSBCI at the end of the program in 2017. Our 

guidance on designing program evaluations suggests that gathering input 

from external stakeholders during the design of an evaluation can help 

better ensure that the evaluation is useful for decision makers and other 

interested parties.

Treasury’s Efforts to 

Measure and Evaluate 

Performance Could 

Be Enhanced
 

Page 27 GAO-14-97 State Small Business Credit Initiative

In 2012 we reported that Treasury had established performance 

measures for both the timeliness of program administration and the 

monitoring of program performance, which are listed in table 1.24

Table 1: Treasury’s SSBCI Performance Measures and Targets 

Program administration

Measure: Number of requests for modification to Allocation Agreements approved or disapproved

Target: 90 percent of requests approved or rejected within 90 days of receiving a final submission

Measure: Number of requests for subsequent disbursements under existing Allocation Agreements 

approved or rejected

Target: 90 percent of requests approved or rejected within 90 days of receiving a formal submission

Measure: Number of quarterly reports received

Target: 90 percent of quarterly reports received within 5 days of the deadline

Program performance

Measure: Amount of SSBCI funds used over time, as reported on SSBCI quarterly reports

Target: None

Measure: Volume and dollar amount of loans or investments supported by SSBCI funds, as reported 

in SSBCI annual reports

Target: None

Measure: Amount, in dollars, of private-sector leverage in SSBCI annual reports

Target: None

Measure: Estimated number of jobs created or retained in SSBCI annual reports

Target: None

Source: Treasury.

Treasury officials explained that they have used these performance 

measures in a variety of ways to manage SSBCI. First, Treasury officials 

stated that they use the measure on the amount of SSBCI funds 

participants have used to adjust staff allocations, which has helped them 

to improve efficiency in program operations. For example, by tracking 

quarterly report data on participants’ use of SSBCI funds, officials realized 

that a large number of participants would be submitting requests for 

subsequent disbursements of funds. To manage this increase in 

disbursements, Treasury increased the number of compliance team staff 

from two to four in order to better handle the processing of the requests.

 

24GAO-13-76. 

Treasury Uses 

Performance Measures to 

Manage SSBCI but Has Not 

Set Targets for All 

Measures
 

Page 28 GAO-14-97 State Small Business Credit Initiative

Second, Treasury officials also stated that they use information on 

participants’ fund usage to identify participants that have been slow to 

request subsequent disbursements of funds, and that they contact these 

participants to see if they need additional technical assistance from 

Treasury. Treasury officials explained that the relationship managers 

monitor participants’ fund usage each quarter and develop action plans 

for participants with the lowest fund usage to help them address 

challenges they are facing in using SSBCI funds. Third, Treasury officials 

told us that they use performance measures on the timeliness of program 

administration to help manage staff performance. They explained that 

they compare the amount of time it takes Treasury staff to respond to 

program modifications and disbursement requests to the goals they have 

set. They maintain a spreadsheet to track the status of pending 

modifications and disbursements and distribute it during weekly staff 

meetings for staff to see if they are on track to meet the performance 

goals. Officials added that they have started to use these measures in 

staff performance reviews to hold staff accountable. 

As shown in table 1, Treasury has created targets for its measures 

related to the timeliness of program administration but not for its 

measures used to monitor the performance of SSBCI. In our 2012 review 

of SSBCI, as well as in this review, Treasury officials said that they have 

not developed targets for their measures that monitor program 

performance and that SSBCI’s performance cannot be summarized using 

a single number or performance indicator because SSBCI now consists of 

150 different programs.25

 

25

Further, they explained that specific numeric 

indicators, such as the number of loans resulting from participants’ 

programs, may or may not indicate the performance of SSBCI. They 

added that outcomes can also be highly dependent on factors outside of 

the program’s control, such as the demand for credit in a given locality 

and the quality of the small business borrowers’ requests for such funds. 

In addition, because many participants did not receive their first SSBCI 

allocation until late 2011, they did not submit annual reports—which 

contain data on SSBCI funds used to support small business loans or 

investments—for that year. As a result, Treasury had little data to assess 

program performance and set baselines for the targets for program 

performance measures. In early 2013, Treasury received participants’ 

2012 annual reports, which represent the first complete set of annual 

reports Treasury has received since the inception of the program.

GAO-13-76. 
 

Page 29 GAO-14-97 State Small Business Credit Initiative

Federal internal control standards state that management should review 

performance reports and measure results against targets.26 Leading 

practices in federal agency performance management previously 

identified by GAO also state that, where appropriate, performance 

measures should have quantifiable, numerical targets, and that agencies 

can use baselines to set realistic but challenging targets.27 Numerical 

targets facilitate future assessments of whether overall goals and 

objectives were achieved because comparisons can be easily made

between projected performance and actual results. In addition, numerical 

targets can also create motivation for improving program performance. 

Further, Treasury has established targets for performance measures for 

other programs, including its CDFI Fund programs—programs similar to 

SSBCI that are administered by locally based organizations and help to 

promote access to capital and local economic growth.28 Our previous 

work has recognized the challenges and provided strategies for agencies 

in measuring performance and setting performance targets when factors 

outside of an agency’s control impact the results of a program.29

 

26

For 

example, one strategy is to set goals at the lowest, most disaggregated 

level for distinct target populations for which the agency has different 

expectations. In the case of SSBCI, this could mean setting different 

performance targets for different program types. Despite these 

challenges, developing targets for selected SSBCI measures that monitor 

program performance could help Treasury identify performance gaps and 

highlight program areas that need additional attention.

GAO/AIMD-00-21.3.1 and GAO-01-1008G. 

27GAO-03-143 and GAO/GGD-00-10. 

28The Riegle Community Development and Regulatory Improvement Act of 1994, Pub. L. 

No. 103-325, 108 Stat. 2160, created the Community Development Financial Institutions 

(CDFI) Fund to help promote access to capital and credit in underserved urban and rural 

communities across the country. Sec. 104(a), 108 Stat. at 2166 (codified at 12 U.S.C. § 

4703). In fiscal year 2011, Treasury began to establish targets for a CFDI Fund 

performance measure on the number of affordable housing units created by CDFI Fund 

programs. Treasury used fiscal year 2011 to collect baseline performance data on the 

measure and subsequently set a target for fiscal year 2012. 

29For example, see GAO, The Government Performance and Results Act: 1997 

Governmentwide Implementation Will Be Uneven, GAO/GGD-97-109 (Washington, D.C.: 

June 2, 1997); Managing for Results: Measuring Program Results That Are Under Limited 

Federal Control, GAO/GGD-99-16 (Washington, D.C.: Dec. 11, 1998); Results-Oriented 

Government: GPRA Has Established a Solid Foundation for Achieving Greater Results, 

GAO-04-38 (Washington, D.C.: Mar. 10, 2004); and Managing For Results: Executive 

Branch Should More Fully Implement the GPRA Modernization Act to Address Pressing 

Governance Challenges, GAO-13-518 (Washington, D.C.: June 26, 2013).
 

Page 30 GAO-14-97 State Small Business Credit Initiative

Treasury officials stated that they share the performance information they 

collect on SSBCI with Treasury management, other agencies, and SSBCI 

participants. For example, officials told us that they share SSBCI 

performance information regularly with SSBCI program management, 

including the director and deputy director, and with Treasury departmental 

management to provide information on the progress of the program. In 

addition, Treasury shares SSBCI performance information with other 

agencies working on the Entrepreneurship and Small Business CrossAgency Priority goal.30 This Cross-Agency Priority goal seeks to increase 

federal services, including promoting access to capital, to entrepreneurs 

and small businesses. Within the Cross-Agency Priority goal, a working 

group consisting of Treasury, U.S. Export-Import Bank (Ex-Im), Small 

Business Administration (SBA), and U.S. Department of Agriculture 

(USDA) was developed specifically for the goal’s objective related to 

increasing access to capital for entrepreneurs and small businesses. 

SSBCI is one of the programs that will help to contribute to this objective. 

The fiscal year 2013 third-quarter status update for this Cross-Agency 

Priority goal included information on the amount of new private sector 

lending or investment that SSBCI supported and the percentage of 

participants who had used SSBCI funds to support loans or investments.

Treasury has also shared some performance information with SSBCI 

participants and recently released summary performance information from 

participants’ 2012 annual reports to the public. Officials from Treasury and 

some participants with whom we spoke told us that Treasury has also been 

sharing some SSBCI performance information with participants at its 

SSBCI national conferences. For example, at its June 2013 conference, 

Treasury shared preliminary performance information from the 2012 annual 

reports on the number of loans and investments made with SSBCI funds 

and the amount of SSBCI funds loaned or invested. In 2012 we 

recommended that in order to provide information on the progress of 

SSBCI to Congress and the SSBCI participants, Treasury should make 

information publicly available on its performance indicators for SSBCI.31

 

30As required by the GPRA Modernization Act of 2010, the Office of Management and 

Budget coordinates with agencies to establish federal government priority goals—CrossAgency Priority goals—that include outcome-oriented goals covering a limited number of 

policy areas. Pub. L. No. 111-352, § 5, 124 Stat. 3866, 3873 (codified at 31 U.S.C. § 

1120(a)(1)(A)). 

In 

September 2013, Treasury released a summary report of performance 

31GAO-13-76. 

Treasury Recently 

Released SSBCI 

Performance Information
 

Page 31 GAO-14-97 State Small Business Credit Initiative

information collected in participants’ 2012 annual reports.32 The report 

contains information on each of Treasury’s program performance 

measures, as of December 31, 2012 (see table 2). The report also 

summarizes participants’ data in numerous ways, such as by program type, 

distribution of loans or investments by size and industry, loans or 

investments made in low- and moderate-income communities, and lender 

and investor participation by size of lender. Treasury officials added that 

they expect to continue to release quarterly report data and issue annual 

reports to the public going forward.

Table 2: Program Performance Measure Status, as of December 31, 2012

Performance measure Status

Amount of SSBCI funds used $271 million a

Volume and dollar amount of loans or investments supported by 

SSBCI funds

Number of loans or investments: 4,676

Amount loaned or invested: approximately $1.9 billion

Amount, in dollars, of private-sector leverage $6.58 to $1.00

Estimated number of jobs created or retained 53,422

Source: Treasury, State Small Business Credit Initiative: A Summary of States’ 2012 Annual Reports.

a

The amount of SSBCI funds used includes funds used by participants for administrative expenses.

As previously discussed, because of the variety of SSBCI programs 

implemented by participants, as well as the influence of factors beyond 

Treasury’s control, Treasury officials said that SSBCI’s performance 

cannot be evaluated using a single number or performance indicator. 

Further, performance measures may not always give a complete 

understanding of a program’s effectiveness. To address these issues, 

Treasury has started to determine how it will evaluate the performance of 

SSBCI at the end of the program in 2017. As part of Treasury’s SSBCI 

oversight and performance strategy, all Allocation Agreements require 

participants to conduct a final assessment on their programs’ 

performance at the end of the program in 2017. Treasury officials 

explained that they are in the early stages of thinking about how they will 

use this information to help them evaluate SSBCI’s performance and to 

determine if the program model for SSBCI was successful. Officials 

 

32Department of the Treasury, State Small Business Credit Initiative: A Summary of 

States’ 2012 Annual Reports (Washington, D.C.: Sept. 25, 2013). Treasury simultaneously 

released a summary report of participants’ June 30, 2013, quarterly data, which included 

information on disbursements and funds expended, obligated, or transferred, as of June 

30, 2013.

Treasury Should Seek 

Input as It Begins to 

Determine How to 

Evaluate SSBCI’s 

Effectiveness
 

Page 32 GAO-14-97 State Small Business Credit Initiative

explained that they are planning on convening a working group of 

program participants to help Treasury design the format for participants’ 

final assessments. They added that they are planning on inviting experts 

in program measurement to the meeting to help determine the design of 

the evaluation. Officials added that they have reviewed evaluations of 

other Treasury programs, as well as evaluations conducted by other 

agencies and SSBCI participants, to help them in their planning process. 

Treasury officials explained that they expect to convene the working 

group of participants by the end of 2013, but that they expect that the 

design of the evaluation will not be finalized until late in 2014.

The Small Business Jobs Act of 2010 was signed by the President on 

September 27, 2010. As described in this report, as well as our 2011 and 

2012 reports, Treasury has spent the last few years starting up the SSBCI 

program office; developing policies, procedures, and guidance; assisting 

participants with the implementation of their programs; and developing 

measures to monitor program administration and performance. Also as 

previously discussed, 2013 is the first year in which Treasury had a 

complete set of participants’ annual reports. As a result, Treasury now 

has more complete information to analyze the program. As Treasury 

begins to design its evaluation, it should consider requirements in the act, 

including the Secretary of the Treasury consulting with SBA and the 

appropriate federal banking agencies on the administration of the 

program.33 In addition, because the SSBCI program is included as one of 

the programs that will help to meet a Cross-Agency Priority goal, 

obtaining input from the agencies involved in the working group on 

increasing access to capital for entrepreneurs and small businesses (ExIm, SBA, and USDA) could help to ensure that the evaluation is useful in 

measuring progress toward that goal. Further, our guidance on designing 

program evaluations encourages agencies to obtain input from external 

stakeholders, such as Congress, that are expected to be interested in the 

evaluation results.34 By seeking input from Congress on the types of 

information in which it is interested, Treasury can help ensure that it 

designs an evaluation that is useful for decision makers.

 

33Pub. L. No. 111-240, § 3009(a)(1), 124 Stat. 2504, 2580 (codified at 12 U.S.C. 

§5708(a)(1)). 

34GAO-12-208G. 
 

Page 33 GAO-14-97 State Small Business Credit Initiative

In SSBCI’s third year, participants’ fund usage has started to accelerate, 

with participants nearly quadrupling the amount of funds they used

between June 30, 2012, and June 30, 2013. Treasury implemented 

measures in 2012 to help monitor the administration and performance of 

SSBCI. However, while it developed targets for the measures related to 

administration, it did not develop targets for the measures related to 

program performance. Treasury officials stated that it did not develop 

these targets because, among other things, factors outside of the 

program’s control can have a significant impact on SSBCI’s outcomes. 

Federal internal control standards and leading performance management 

practices state that agencies should set performance targets, where 

appropriate. Targets for selected performance measures could help 

Treasury better manage SSBCI by identifying performance gaps and 

highlighting program areas that may need additional attention. While we 

recognize that it could be challenging to set performance targets when 

the program is influenced by external factors, SSBCI is not the only 

federal program facing this challenge, and our previous work has 

identified strategies for setting targets in similar situations. Moreover, 

Treasury has set targets for performance measures of other programs 

that, like SSBCI, include multiple programs that are administered locally 

and help to promote access to capital. In addition, now that Treasury has 

received participants’ 2012 annual reports, it has baseline data to analyze 

and use to help set targets for selected measures on program 

performance.

Treasury has also begun to consider how it will evaluate the effectiveness 

of the program at the program’s conclusion in 2017. Our guidance on 

designing performance evaluations encourages agencies to obtain input 

from external stakeholders, including Congress, who are expected to be 

interested in the evaluation results. In addition, the Small Business Jobs 

Act of 2010 requires the Secretary of the Treasury to consult with SBA 

and the appropriate federal banking agencies on the administration of 

SSBCI. Because Treasury’s SSBCI evaluation could be useful in 

informing future policymakers about programs that are intended to 

increase capital to small businesses in distressed credit markets, 

gathering input from external stakeholders on what information would be 

most valuable to them is essential.

We recommend that the Secretary of the Treasury take the following actions:

To enhance the use of performance measures to manage SSBCI and 

assess progress, Treasury should establish targets for selected 

performance measures related to monitoring program performance.

Conclusions 

Recommendations for 

Executive Action
 

Page 34 GAO-14-97 State Small Business Credit Initiative

To better ensure that Treasury’s SSBCI program evaluation provides 

information useful for future decision making and effective management 

and oversight, Treasury should seek input from program stakeholders—

including other agencies involved in promoting small businesses and 

Congress—as it designs its SSBCI program evaluation. 

We provided a draft of this report to Treasury, FDIC, Federal Reserve, 

and OCC for their review and comment. Treasury provided written 

comments, which are reprinted in appendix III. FDIC, Federal Reserve, 

and OCC did not provide written comments on the draft report. In its 

written comments, Treasury agreed with our recommendations and stated 

that it has begun to take steps to implement both of them. Specifically, 

Treasury said it has begun establishing targets for program performance 

measures and gathering input from program stakeholders in designing 

SSBCI’s program evaluation. Treasury noted that the report reflected the 

progress SSBCI participants have made in using their SSBCI funds and 

that program stakeholders have undertaken numerous outreach activities 

to promote SSBCI. Treasury also stated that it is confident that as SSBCI 

progresses it will continue to promote access to credit for small 

businesses, allowing them to expand and create new jobs. Treasury also 

provided a technical comment on the draft report, which we’ve 

incorporated in the final report. 

We are sending copies of this report to appropriate congressional 

committees and Treasury, FDIC, Federal Reserve, and OCC. In addition, 

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

http://www.gao.gov. 

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

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

Offices of Congressional Relations and Public Affairs may be found on 

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

this report are listed in appendix IV.

Daniel Garcia-Diaz

Director, Financial Markets and Community Investment

Agency Comments 

and Our Evaluation
 

Page 35 GAO-14-97 State Small Business Credit Initiative

List of Committees

The Honorable Debbie Stabenow

Chairwoman

The Honorable Thad Cochran

Ranking Member

Committee on Agriculture, Nutrition and Forestry

United States Senate

The Honorable Barbara Mikulski

Chairwoman

The Honorable Richard Shelby

Vice Chairman

Committee on Appropriations

United States Senate

The Honorable Tim Johnson

Chairman

The Honorable Mike Crapo

Ranking Member

Committee on Banking, Housing, and Urban Affairs

United States Senate

The Honorable Patty Murray

Chairwoman

The Honorable Jeff Sessions

Ranking Member

Committee on the Budget

United States Senate

The Honorable Max Baucus

Chairman

The Honorable Orrin G. Hatch

Ranking Member

Committee on Finance

United States Senate

The Honorable Mary L. Landrieu

Chairwoman

The Honorable James E. Risch

Ranking Member

Committee on Small Business and Entrepreneurship

United States Senate
 

Page 36 GAO-14-97 State Small Business Credit Initiative

The Honorable Frank D. Lucas

Chairman

The Honorable Collin C. Peterson

Ranking Member

Committee on Agriculture

House of Representatives

The Honorable Harold Rogers

Chairman

The Honorable Nita M. Lowey

Ranking Member

Committee on Appropriations

House of Representatives

The Honorable Paul Ryan

Chairman

The Honorable Chris Van Hollen

Ranking Member

Committee on the Budget

House of Representatives

The Honorable Jeb Hensarling

Chairman

The Honorable Maxine Waters

Ranking Member

Committee on Financial Services

House of Representatives

The Honorable Sam Graves

Chairman

The Honorable Nydia Velázquez

Ranking Member

Committee on Small Business

House of Representatives

The Honorable Dave Camp

Chairman

The Honorable Sander Levin

Ranking Member

Committee on Ways and Means

House of Representatives
Appendix I: Objectives, Scope, and 

Methodology

Page 37 GAO-14-97 State Small Business Credit Initiative

Our objectives were to examine the extent to which (1) State Small 

Business Credit Initiative (SSBCI) participants have used their SSBCI 

allocations and faced challenges in using the funds, (2) the Department of 

the Treasury (Treasury) and program stakeholders have used outreach 

activities to promote use of the program and assessed the success of 

these efforts, and (3) Treasury has used performance measures and 

program evaluation to manage SSBCI.

To assess the extent to which SSBCI participants have used their SSBCI 

allocations, we analyzed Treasury program data on participants’ 

allocation amounts, disbursement requests, and program types, and 

whether participants developed new programs to participate in SSBCI or 

expanded existing programs with SSBCI funds. In addition, we analyzed 

participants’ June 30, 2013, SSBCI quarterly report data—the most recent 

quarter available—on the total amount of funds used and fund usage by 

program type. To show the trend in participants’ total fund usage from 

June 30, 2012, to June 30, 2013, we also analyzed data from participants’ 

June 30, 2012, and March 31, 2013, quarterly reports. To assess the 

reliability of SSBCI data on participants’ fund usage, allocation amount, 

and program type, and whether participants developed new programs or 

expanded existing ones, we performed electronic testing for obvious 

errors in accuracy and completeness and compared Treasury’s data on 

program type to participants’ quarterly data. Where there were questions 

or discrepancies we identified related to the data, we clarified them 

through discussions with Treasury officials. We also interviewed 

knowledgeable Treasury officials on how they assess the reliability of 

participants’ quarterly data and the information they maintain on SSBCI. 

We determined that the data were sufficiently reliable for the purposes of 

describing these factors.

To examine the extent to which SSBCI participants faced challenges in 

using SSBCI funds, we reviewed reports from Treasury’s Office of the 

Inspector General (OIG) on participants’ usage of SSBCI funds; our 2011 

and 2012 reports on SSBCI; and Treasury’s policies and procedures, 

including its policies on disbursing subsequent tranches of SSBCI funds 

and terminating the availability of participants’ SSBCI allocations.1

 

1

GAO, State Small Business Credit Initiative: Opportunities Exist to Improve Program 

Oversight, 

In 

addition, we interviewed officials from Treasury and nine SSBCI 

GAO-12-173 (Washington, D.C.: Dec. 7, 2011) and Small Business Lending: 

Opportunities Exist to Improve Performance Reporting of Treasury’s Programs, 

GAO-13-76 (Washington, D.C.: Dec. 5, 2012). 

Appendix I: Objectives, Scope, and 

Methodology 
Appendix I: Objectives, Scope, and 

Methodology

Page 38 GAO-14-97 State Small Business Credit Initiative

participants: Arizona; Iowa; Maryland; Missouri; Montana; New York; City 

of Carrington, North Dakota; Vermont; and Virginia. We selected these 

nine participants from the total of 57 participants—which included 47 

states; Washington, D.C.; four municipalities; and five U.S. territories—

using participants’ March 31, 2013, quarterly report data. We based our 

selection on the following criteria: (1) the percentage of SSBCI funds 

participants had used as of March 31, 2013; (2) the amount of SSBCI 

funds allocated to participants; (3) the number of programs participants 

implemented and whether the programs were new or existing; and (4) 

geographic dispersion. We selected this nonrandom sample of 

participants because we assumed that the types of challenges related to 

using SSBCI funds would vary for participants characterized by a mix of 

fund usage histories, allocation amounts, and numbers of new and 

existing programs across all regions. To reduce administrative burden, we 

excluded from our selection (1) the seven participants that the OIG told us 

it was in the process of auditing or was planning to audit at the time we 

selected the participants, and (2) the nine participants we interviewed in 

our 2012 SSBCI review.2 When we selected participants to interview, the 

March 31, 2013, quarterly data were the most recent available. Because 

Treasury had not completed its review of the data at that time, we used 

preliminary quarterly report data for our selection. We also reviewed 

testimonial evidence we obtained during our 2011 and 2012 SSBCI 

reports related to challenges SSBCI participants faced in using SSBCI 

funds.3

To examine the extent to which Treasury and program stakeholders, 

including SSBCI participants, federal banking regulators, and trade 

associations, have used outreach activities to promote use of the program 

Finally, we interviewed representatives from a number of trade 

associations representing the lending and venture capital communities: 

the Conference of State Bank Supervisors, Community Development 

Venture Capital Alliance, Council of Development Finance Agencies, 

Independent Community Bankers Association, National Association of 

Federal Credit Unions, Opportunity Finance Network, and State Science 

& Technology Institute. We selected these trade associations based on 

information from Treasury officials on the organizations with whom they 

had worked.

 

2

In 2012, we interviewed representatives from the following SSBCI participants: Colorado, 

Florida, Georgia, Illinois, Massachusetts, Michigan, New Jersey, Oregon, and Texas.

3

In 2011, we interviewed representatives from the following SSBCI participants: California, 

Hawaii, Indiana, Kansas, Maryland, Missouri, North Carolina, and Vermont. 
Appendix I: Objectives, Scope, and 

Methodology

Page 39 GAO-14-97 State Small Business Credit Initiative

and assessed the success of these efforts, we interviewed Treasury 

officials and representatives of stakeholder groups and reviewed 

materials pertinent to SSBCI outreach. Specifically, we interviewed 

Treasury officials, representatives from the nine SSBCI participants and 

seven trade associations identified above, and officials from the federal 

banking regulators—Board of Governors of the Federal Reserve System 

(Federal Reserve), Federal Deposit Insurance Corporation (FDIC), and 

Office of the Comptroller of the Currency (OCC)—to learn about outreach 

activities they have conducted for SSBCI and to obtain relevant materials 

and documentation. We reviewed Treasury guidance on SSBCI outreach, 

including marketing best practices for SSBCI loan participation, loan 

guarantee, and collateral support programs, as well as Treasury budget 

documents. We also reviewed materials related to Treasury’s pilot 

program to hire outreach consultants for the SSBCI programs in 

Mississippi, Ohio, and South Carolina. These materials included the 

solicitation for subject-matter experts for lender outreach support, 

technical assistance plans, and final reports developed by the consultants 

for the three states. We reviewed outreach materials SSBCI participants, 

federal banking regulators, and trade associations had developed related 

to SSBCI. We also reviewed all 57 SSBCI participants’ websites to 

understand how SSBCI participants are providing information about 

SSBCI to interested parties.4

To assess the extent to which Treasury has used performance measures 

and program evaluation to manage SSBCI, we reviewed performance 

measures and targets Treasury has set for SSBCI. We also reviewed a 

tool Treasury uses to track its progress on some performance measures 

We examined the websites to determine if 

they contained detailed program descriptions; information on the amount 

of SSBCI funds allocated to the participants; links to additional, related 

materials; information or materials on how to apply for the program; and 

contact information for additional information, among other things. We 

interviewed officials from Treasury, the federal banking regulators, and 

the nine SSBCI participants identified above on the methods they used to 

assess the success of their outreach efforts. We also reviewed Treasury’s 

conference summary memorandums, which include conference 

attendees’ responses to the satisfaction surveys that Treasury 

administers after each conference, as well as other general observations 

on the conferences.

 

4

We were unable to review three SSBCI participants’ websites because the website links 

listed on Treasury’s SSBCI website did not work.
Appendix I: Objectives, Scope, and 

Methodology

Page 40 GAO-14-97 State Small Business Credit Initiative

and interviewed officials on actions they have taken to manage the 

program by using performance measures. We identified relevant criteria 

on setting targets for performance measures in the federal internal control 

standards and leading practices for federal agencies’ performance 

management.5 In addition, we reviewed performance information 

Treasury has shared with SSBCI participants at its conferences and a 

summary report of performance information that Treasury developed in 

September 2013, and we interviewed officials on their plans to publicly 

release SSBCI performance information. We also reviewed the second 

and third quarter fiscal year 2013 status update documents developed for 

the Cross-Agency Priority goal on Entrepreneurship and Small Business 

to identify SSBCI performance data Treasury has shared with other 

federal agencies. Finally, we reviewed the Small Business Jobs Act of 

2010 to identify requirements for Treasury to evaluate SSBCI.6 We also 

interviewed Treasury officials on their plans to evaluate SSBCI, including 

how they intend to use participants’ 2017 assessments of their programs, 

as required by their Allocation Agreements. We used criteria from our 

guidance on designing program evaluations to evaluate Treasury’s plans 

for its evaluation of SSBCI.7

We conducted this performance audit from May 2013 to December 2013 

in accordance with generally accepted government auditing standards. 

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

sufficient, appropriate evidence to provide a reasonable basis for our 

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

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

 

5

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

21.3.1(Washington, D.C.: November 1999); Internal Control Management and Evaluation 

Tool, GAO-01-1008G (Washington, D.C.: August 2001); Tax Administration: IRS Needs to 

Further Refine Its Tax Filing Season Performance Measures, GAO-03-143 (Washington, 

D.C.: Nov. 22, 2002); and Managing for Results: Strengthening Regulatory Agencies’ 

Performance Management Practices, GAO/GGD-00-10 (Washington, D.C.: Oct. 28, 

1999). Leading practices are performance management practices and key attributes of 

performance measures that we have identified in previous work based on information from 

a variety of federal and state organizations that would help federal agencies more 

effectively manage and measure program performance. 

6

Pub. L. No. 111-240, 124 Stat. 2504 (codified at scattered sections of 12, 15, and 42 

U.S.C.). 

7

GAO, Designing Evaluations: 2012 Revision (Supersedes PEMD-10.1.4), GAO-12-208G

(Washington, D.C.: Jan. 31, 2012).
Appendix II: SSBCI Participants’ Allocation 

Amount and Fund Usage, as of June 30, 2013

Page 41 GAO-14-97 State Small Business Credit Initiative

We reviewed Treasury’s program data and SSBCI participants’ quarterly 

report data as of June 30, 2013, and found that SSBCI participants had 

used their SSBCI allocations at varying rates.

Table 3: SSBCI Participants’ Allocation Amounts and Usage of Allocated SSBCI 

Funds, June 30, 2013

SSBCI participant

Funds 

used Allocation amount

Percent of allocation 

used

Alabama $19,351,944 $31,301,498 61.8%

Alaska—Anchorage 2,090,000 13,168,350 15.9

American Samoa 0 10,500,000 0.0

Arizona 4,516,833 18,204,217 24.8

Arkansas 10,068,873 13,168,350 76.5

California 26,866,053 167,755,642 16.0

Colorado 1,985,775 17,233,489 11.5

Connecticut 108,025 13,301,126 0.8

Delaware 4,447,131 13,168,350 33.8

District of Columbia 2,317,500 13,168,350 17.6

Florida 32,545,048 97,662,349 33.3

Georgia 11,794,132 47,808,507 24.7

Guam 1,516,172 13,168,350 11.5

Hawaii 3,440,000 13,168,350 26.1

Idaho 12,394,744 13,136,544 94.4

Illinois 26,566,573 78,365,264 33.9

Indiana 21,125,845 34,339,074 61.5

Iowa 7,578,473 13,168,350 57.6

Kansas 5,340,258 13,168,350 40.6

Kentucky 2,198,025 15,487,998 14.2

Louisiana 7,721,522 13,168,350 58.6

Maine 2,442,117 13,168,350 18.5

Maryland 4,164,550 23,025,709 18.1

Massachusetts 10,430,111 22,032,072 47.3

Michigan 56,336,431 79,157,742 71.2

Minnesota 3,373,673 15,463,182 21.8

Mississippi 2,813,738 13,168,350 21.4

Missouri 16,798,664 26,930,294 62.4

Montana 10,938,462 12,765,037 85.7

Nebraska 5,350,000 13,168,350 40.6

Appendix II: SSBCI Participants’ Allocation 

Amount and Fund Usage, as of June 30, 2013
Appendix II: SSBCI Participants’ Allocation 

Amount and Fund Usage, as of June 30, 2013

Page 42 GAO-14-97 State Small Business Credit Initiative

SSBCI participant

Funds 

used Allocation amount

Percent of allocation 

used

Nevada 2,731,215 13,803,176 19.8

New Hampshire 10,784,753 13,168,350 81.9

New Jersey 11,173,982 33,760,698 33.1

New Mexico 3,054,318 13,168,350 23.2

New York 34,503,708 55,351,534 62.3

North Carolina 30,911,655 46,061,319 67.1

North Dakota—

Carrington

400,000 3,433,709 11.6

North Dakota—

Mandan

4,507,956 9,710,768 46.4

Northern Mariana 

Islands

0 13,168,350 0.0

Ohio 6,453,089 55,138,373 11.7

Oklahoma 4,130,000 13,168,350 31.4

Oregon 7,662,963 16,516,197 46.4

Pennsylvania 5,229,906 29,241,232 17.9

Puerto Rico 1,721,440 14,540,057 11.8

Rhode Island 3,945,832 13,168,350 30.0

South Carolina 16,308,424 17,990,415 90.7

South Dakota 8,378,768 13,168,350 63.6

Tennessee 16,180,272 29,672,070 54.5

Texas 25,874,999 46,553,879 55.6

U.S. Virgin Islands 609,325 13,168,350 4.6

Utah 2,893,125 13,168,350 22.0

Vermont 4,068,681 13,168,350 30.9

Virginia 1,561,807 17,953,191 8.7

Washington 10,624,150 19,722,515 53.9

West Virginia 12,339,500 13,168,350 93.7

Wisconsin 6,570,000 22,363,554 29.4

Wyoming—Laramie 70,000 13,168,350 0.5

Total $549,310,540 $1,459,154,481 37.6%

Source: GAO analysis of Treasury data.
Appendix II: SSBCI Participants’ Allocation 

Amount and Fund Usage, as of June 30, 2013

Page 43 GAO-14-97 State Small Business Credit Initiative

Figure 5: SSBCI Allocation Amount and Percent of Allocation Used, as of June 30, 2013

Note: The four municipalities participating in SSBCI are: Anchorage, Alaska (AK); Carrington, North 

Dakota (ND-C); Mandan, North Dakota (ND-M); and Laramie, Wyoming (WY). The five U.S. territories 

participating in SSBCI are: American Samoa (AS), Guam (GM), the Northern Mariana Islands (NMI), 

Puerto Rico (PR), and U.S. Virgin Islands (VI).
Appendix III: Comments from the Department 

of the Treasury

Page 44 GAO-14-97 State Small Business Credit Initiative

Appendix III: Comments from the 

Department of the Treasury
Appendix IV: GAO Contacts and 

Staff Acknowledgements

Page 45 GAO-14-97 State Small Business Credit Initiative

Daniel Garcia-Diaz, (202)-512-8678, garciadiazd@gao.gov. 

In addition to the individual named above, Kay Kuhlman (Assistant 

Director), Bethany Benitez, Anna Chung, Elizabeth Curda, Pamela 

Davidson, Christine Houle, Beverly Ross, Jennifer Schwartz, and Jena 

Sinkfield made key contributions to this report.

Appendix IV: GAO Contacts and Staff 

Acknowledgements 

GAO Contact

Staff 

Acknowledgments 

(250730)
Appendix IV: GAO Contacts and 

Staff Acknowledgements

Page 46 GAO-14-97 State Small Business Credit Initiative

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