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S. HRG. 111–1164 

THE FISCAL YEAR 2011 BUDGET REQUEST FOR 

THE SMALL BUSINESS ADMINISTRATION 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS AND 

ENTREPRENEURSHIP 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

APRIL 21, 2010 

Printed for the Committee on Small Business and Entrepreneurship 

( 

Available via the World Wide Web: http://www.fdsys.gov 
(II) 

COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP 

ONE HUNDRED ELEVENTH CONGRESS 

MARY L. LANDRIEU, Louisiana, Chair 

OLYMPIA J. SNOWE, Maine, Ranking Member 

JOHN F. KERRY, Massachusetts 

CARL LEVIN, Michigan 

TOM HARKIN, Iowa 

JOSEPH I. LIEBERMAN, Connecticut 

MARIA CANTWELL, Washington 

EVAN BAYH, Indiana 

MARK L. PRYOR, Arkansas 

BENJAMIN L. CARDIN, Maryland 

JEANNE SHAHEEN, New Hampshire 

KAY HAGAN, North Carolina 

CHRISTOPHER S. BOND, Missouri 

DAVID VITTER, Louisiana 

JOHN THUNE, South Dakota 

MICHAEL B. ENZI, Wyoming 

JOHNNY ISAKSON, Georgia 

ROGER WICKER, Mississippi 

JAMES E. RISCH, Idaho 

DONALD R. CRAVINS, JR., Democratic Staff Director 

WALLACE K. HSUEH, Republican Staff Director 
(III) 

C O N T E N T S 

OPENING STATEMENTS

Page 

Landrieu, Hon. Mary L., Chair, and a U.S. Senator from Louisiana .................. 1 

Snowe, Hon. Olympia J., Ranking Member, and a U.S. Senator from Maine .... 8 

WITNESS

Gordon Mills, Hon. Karen, Administrator, Small Business Administration ...... 15 

ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

Gordon Mills, Hon. Karen 

Testimony .......................................................................................................... 15 

Prepared statement .......................................................................................... 17 

Responses to oral questions from Chair Landrieu ......................................... 36 

Landrieu, Hon. Mary L. 

Testimony .......................................................................................................... 1 

Prepared statement .......................................................................................... 4 

Chart titled ‘‘Budget Requests vs. Enacted Funding for the SBA’’ .............. 32 

Post-hearing questions posed to Hon. Karen Gordon Mills and subsequent 

responses ....................................................................................................... 37 

Levin, Hon. Carl 

Prepared statement .......................................................................................... 11 

Snowe, Hon. Olympia J. 

Testimony .......................................................................................................... 8 

Vitter, Hon. David 

Post-hearing questions posed to Hon. Karen Gordon Mills and subsequent 

responses ....................................................................................................... 51 

(1) 

THE FISCAL YEAR 2011 BUDGET REQUEST 

FOR THE SMALL BUSINESS ADMINISTRATION 

WEDNESDAY, APRIL 21, 2010 

UNITED STATES SENATE, COMMITTEE ON SMALL BUSINESS

AND ENTREPRENEURSHIP, Washington, DC. 

The Committee met, pursuant to notice, at 2:47 p.m., in Room 

428A, Russell Senate Office Building, Hon. Mary L. Landrieu 

(chair of the committee) presiding. 

Present: Senators Landrieu, Snowe and Thune. 

OPENING STATEMENT OF HON. MARY L. LANDRIEU, CHAIR, 

AND A U.S. SENATOR FROM LOUISIANA 

Chair LANDRIEU. Good afternoon, and let me call the Small Business Committee hearing to order. We are gathered here this afternoon to hear the budget presentation from the Small Business Administration, and we are honored to have Administrator Karen 

Mills with us to present her budget to the Committee. 

Before we begin, I would like to call everyone’s attention to, although I am sure you have already noticed, our new digs. We are 

excited and really honored to have had the Rules Committee to 

have the Small Business Committee on their agenda for renovation, and this is an ongoing effort on the part of the Rules Committee in the Russell Building. We were the beneficiary of that effort, and we hope that the room is lighter and brighter. 

We have also installed some new technology, Ranking Member 

Snowe, that will allow us to conduct meetings remotely, with our 

constituents throughout the country. So the room is going to become a real resource for small businesses all over America and all 

of the stakeholders that appear here in the Capital, testifying and 

advocating on their behalf. 

We are very pleased with this new space. The staff has a little 

extra space, as well as the members and our guests. So I hope the 

small businesses in our country will appreciate this space that is 

really for them. 

I would like to begin with a short opening statement and then 

turn it over to our Ranking Member, and then we will hear directly 

from Administrator Mills. 

More than half of America’s workforce goes to work each day for 

a small business. These businesses pump almost a trillion dollars 

into our economy. They create, these employees, 13 times more patents than larger firms. Traditionally, two-thirds of our nation’s new 

jobs are created right there on these small business job sites. 
2 

Many of these hardworking business owners rely on the SBA’s 

counseling and finance programs to open their doors, to keep those 

doors open, to meet their payrolls and to compete in an increasingly competitive global marketplace. 

With this in mind, it is counterintuitive that an agency that does 

this important work would be subject to budget cuts, but that is 

what happened in the previous Administration. I am pleased to say 

that in a bipartisan effort we have tried to change the direction 

and thank President Obama for his commitment, and we thank Administrator Mills for her leadership. 

We are looking forward to making up for lost ground by investing 

in these very strong programs that help the small businesses 

across America in so many ways. The SBA and its resources to 

small business have suffered in the past, but we hope that this 

budget and future budgets will begin to make that turn around. 

President Obama has made small business a top priority, not 

just with his words but his actions. For the second year in a row, 

the President has submitted a budget increase, funding to rebuild 

the SBA and meet the demands on its small business programs, 

from loans and counseling to contracting assistance. He understands, like we do, that by adequately funding these programs we 

can mitigate the ongoing impact of the credit crisis and help save 

and create hundreds of thousands of jobs. The President has requested $994 million. This is a 27 percent 

increase over last year and a 64 percent increase over the Bush 

budget of 2009. 

I have also sent a letter asking the Budget Committee to consider, along with the Ranking Member and others, an increase 

even over that for some specific targeted programs that we want 

to support and believe merit that extra investment. First, the $164 million to support $17 billion 7(a) loans which is a big increase over the $80 million requested and appropriated last 

year. I fully support this request, because it is necessary to prevent 

an increase in base fees. Keeping the base fees low is important to 

maximize Recovery Act provisions that waive fees for borrowers 

and raise the loan guarantee on the SBA’s largest program. 

Second, the increase in SBA lenders, which has been a priority 

for me since taking over as Chair of this Committee. Consequently, 

I am fully behind the President’s goal to increase the number of active SBA lending partners for the 7(a) loan program to 3,000 by 

September 30th, 2011. 

And third, the $203 million to administer SBA’s Disaster Loan 

Program. There is plenty of carryover funding for the loans, and 

this funding will ensure that we have sufficient staff to process 

loans more quickly and get money in the hands of families and 

businesses that need it. 

We just had a recent disaster in Rhode Island. My staff is actually on the ground, from Louisiana in Rhode Island, assisting the 

Senators there as they deal with the thousands of individuals, 

homeowners and business owners who have been affected by the 

great flooding that has happened just recently in Rhode Island. 

And fourth, we have made improvements to the Disaster Loan 

Program. I will not go into those details, but I am looking forward 

to hearing about what investments that we have made, and the 
3 

outcome of the investments that we have made in improving that 

program. 

The bottom line is this is a good budget. It is a strong budget. 

But after meeting with small business owners and SBA lenders 

and counselors, I am recommending an additional $100 million for 

SBA in its Views and Estimates Letter that I submitted to the 

Budget Committee. Hopefully, all or much of that will be agreed to. 

I will now submit the rest of my statement to the record because 

we did get started a little late, and I want to make sure that we 

give Administrator Mills her full time. I will turn it over to the 

Ranking Member for her opening statement, then we will hear 

from the Administrator. Thank you. 

[The prepared statement of Chair Landrieu follows:] 
4 

"The FY2011 Budget Request for the Small Business Administration" 

April 21, 2010 

Opening Statement for the Record of ScnatOl' Mary L. Landrien (D-LA) 

Good afternoon. I would like to call the Small Business Committee hearing to order and thank 

you for joining me today to discuss the Small Business Administration's fY2011 budget request. Thank 

you especially to SBA Administrator Karen Mills for coming to testily. 

More than half America's workt£ll'ee goes to work for a small business each day. They pump 

almost a trillion dollars into the economy, create 13 times more patents per employee than large firms, 

and traditionally have created two-thirds of our nation's new jobs. Many of these hardworking small 

business owners rely on the SBA's counseling and finance programs to keep their doors opcn, meet their 

payrolls and compete in an increasingly global marketplace. 

With this in mind, it is counterintuitive that the single agency responsible for aiding thcse small 

businesses would receive so little suppor!. And yet, year after year under President Bush, the SBA saw 

cuts to its core programs -- funding for 7(a) loans eliminated and lees increased, mieroloans cut. suppol1 

for the SBIR program cut. funding for the New Markets Venture Capital program eliminated, Women's 

Business Centers, Small Business Development Centers and contracting counseling cut. and staff in the 

district office s reduced. Over eight years, the Agency's funding was shrunk by more than a quarter. The 

SBA and its resources to small businesses suffered the most cuts of all 24 agencies. 

These aren't my nlllnhers; this is a page right out of President Bush's last budget request lor FY 

200t). As you can see, the SBA saw an average cut of 27 percent during the last administration. This 

combined with the financial erisis - has severely undermined the SBA, its programs, and small 

businesses' ability to succeed. Years of cuts and a had economy have finally caught up to them. More 

than 80 percent of the jobs lost in 2009 came irom small finns, according to ADP National Employment 

Reports. 
5 

President Obama has made small business a top priority, not just with his words, but with his 

actions, For the second year, the President has submitted a budget that increases needed funding to rebuild 

the SBA and meet the demands on its small business programs, from loans and counseling to contracting 

assistance. He understands, like we do, that by adequately funding the SBA's programs we can mitigate 

the ongoing impact of the credit crisis and help save and create hundreds of thousands of jobs. President 

Obama has requested $994 million for the SBA. This is a 27 percent increase over his request last year, 

and a 64 percent increase over President Bush's FY2009 request. 

Let me quickly talk about a few of the many good things in this budget. First, the President's 

request of $164.5 million to support $17.5 billion in 7(a) loans is a big increase over the $80 million 

requested and appropriated last year. 1 fully support this request because it is necessary to prevent an 

increase in the base fees. Keeping the base tees low is impOl1ant to maximize the Recovery Act 

provisions that waive fees for the borrowers and raise the loan guaranty on SBA's largest loan program. 

Together, these efforts have proven very effective in increasing capital to small businesses. 

Second, increasing the number of SBA lenders\ has been a priority I(lr me since I took over as 

Chair of this Committee. Consequently, I am fidly behind the President's goal to increase the number of 

active SBA lending partners for the 7(a) loan program to 3,000 by September 30, 20 II. 

Third, I support the President's request for $203 million to administer (he SBA's disaster loan 

program. There is plenty of carry-over funding for the loans, but this funding will ensure that we have 

sufficient staff to process loans quickly and get money into the hands of the tiunilies alld businesses that 

need it. As Louisianans know all too \vell, when a disaster hits, the last thing anyone needs is more 

frustration and delay preventing businesses from reopening and families Irom returning to their homes. 

Fourth, there must be improvements to the Disaster Loan Program. In addition to making sure 

the disaster loan program has sufficient funding, I fi.I1ly suppoli a goal tix FY2011 to process more 

disaster loan applications taster. More specitically, to process 85 percent of the disaster loans within 14 

to 18 days. Largely due to the work of members of this Committee and the leadership of ronner SBA 

Administrator Steve Preston, SBA's disaster loan program has made great stridcs. But we can always do 

belter, and I'm glad Administrator Mills is looking for concrete, and measurable ways, to build on 

improvements to the delivery of disaster loans. 

This is a good, strong budget but after meeting \vith small business owners and SBA '$ lending 

and counseling partners and small business advocates, I recommended an additional $100 million for the 

SBA in the views and estimates letter I suomitted to the Budget Committee, elevating the SBA's budget 

to $1.094 billion. This will maximize the number of jobs we can save and create. 

I know therc is talk of freezing discretionary spending next ycar, and I share the cOlllmihnent to 

fiscal restraint, but my recommcndation is more than reasonable it is comparable 10 what was rcquested 

tt)r the SBA in 200 I - a decade ago. 

2 
6 

{fwe provided that amollnt in funding when the economy Ivas good, we should be doing at least 

that when the economy is bad and we have an unemploymcnt crisis. This additional funding would 

support programs that have remained in high demand but have been underfunded for years. It would 

increase coutraeting personnel so desperately needed to reduce contract bundling, expand and diversify 

the country's suppliers, and save money. Additionally, it would rebuild the SI3A offices in our states, 

such as in Louisiana where SI3A statI has been cut from 21 to 10 over the last decade. 

Regarding the Mieroloan program, Senator Levin and I arc suppOiting a program level of $265 

million for microloans and $22 million for tcchnical assistance grants. These tiny loans, along with the 

training they provide, make it possible ttlr people to start a full-time busincss, regain financial stability 

and dignity through work, and even patch income gaps so families can buy a (:ar, a home or pursue a 

bettcr education for their children. 

Equally important as tinance programs to our economic growth are the SBA's counseling centers 

and outreach programs. 

3 
7 

As we can see from this map, the SBA has an impressive infrastructure - over 1.350 counseling 

and outreach centcrs ,- that must he adequately funded. These centers have a proven track record 

creating or saving nearly 150,0()() jobs in 2008. Recognizing that thcse centers are reporting 

unprecedented demand, I have asked for an additional $169 million to SUppOlt Small Business 

Development Centers, SCORE, WOlllen's Business Development Centers, and Native American and 

V clerans Outreach programs. 

While there arc many areas where we agree, and even more where we are really close in 

agreement, I must speak for just a moment on one part of the Adm inistration 's proposal. Expected as part 

of its legislative packagc, the SBA is proposing to change the Small Business Act so the Agency has the 

authority to adjust fees fi)!" 7(a) loans. Raising the cost of this program on borrowcrs or lenders is the 

jurisdiction of this authorizing Committee. Stripping that authority would eliminate an important cheek 

and balance on the government's largcst source of long-term capital to small businesses in this country. It 

is controversial, and [ am interested to hear why the Administration believes it should have this authority. 

I look forward to hearing ti'om Administrator Mills the SBA's priorities for the next fiscal yeaL 

,Vith that, I now tum to Ranking Member Snovve and any other members present for opening statements. 

4 
8 

OPENING STATEMENT OF HON. OLYMPIA J. SNOWE, RANKING 

MEMBER, AND A U.S. SENATOR FROM MAINE 

Senator SNOWE. Thank you, Chair Landrieu. I appreciate very 

much your continuing and ongoing advocacy on behalf of small 

businesses, and in particular at this pivotal moment in our nation’s 

history. So I truly appreciate it, and also for leading the renovations of this room. 

And I applaud all the workers and the Architect of the Capitol 

for doing an amazing restoration, in keeping with the design and 

the historic nature of this building. So I want to commend everybody for the outstanding work that obviously was involved in making this happen. 

I also want to welcome Administrator Karen Mills and applaud 

her for her outstanding leadership at the Small Business Administration, on behalf of the small businesses, and for being such a 

vital voice during these very crucial times. 

I am anxious to hear about the state of the agency, the President’s 2011 budget request, as well as the Small Business Administration and its efforts in assisting small businesses to create jobs 

and emerge stronger than ever. 

The economy is again gaining some traction, but as Mark Zandi, 

the Chief Economist at Moody’s Analytics, told the members of the 

Senate Finance Committee last week, we are in the midst of a jobless recovery because small businesses, who have created twothirds of all the net new jobs in the past fifteen years, are not hiring. Specifically, Dr. Zandi stated that the key reason why small 

businesses are not hiring is that businesses are starved for credit. 

He went on to highlight that the SBA is the best, most direct, and 

most effective way of getting credit to these businesses quickly. 

I met with you, Administrator Mills, on February 11th, to be 

exact. You laid out the Administration’s support for a number of 

key initiatives and critical enhancements to the SBA’s lending programs, which I and the Chair have strongly supported, and in fact 

reported out of this Committee, with near unanimous support, for 

many of these initiatives. 

The central piece of our bill is an increase in SBA loan limits, 

which Dr. Zandi said during his testimony last week, is a crucial 

part of the solution to this credit crisis. Now it is almost May, and 

the Senate has yet to pass these vital provisions to address the 

small business lending crisis. Well, inaction is not an option. As Dr. 

Zandi indicated and made abundantly clear, and as the NFIB’s latest survey, which identifies that small business confidence is near 

historic lows, supports, we must pass this legislation, so that small 

businesses can hire and help reverse this disturbing jobless trend. 

In fact, I wish I had put it on a chart, but the NFIB had a Small 

Business Optimism Index in that later survey, and it really is, I 

think, indicative of the problem that has occurred among small 

businesses across this country. So, if we are depending on small 

businesses to lead us out of this recession and into a strong recovery, we have a long ways to go in engendering the kind of resources 

that are going to encourage the lending and taking the steps necessary to create additional jobs and make investments in the future. 
9 

But that, I think, is an indication of the problem that we are facing nationwide, and that is why we have a jobless recovery, and a 

jobless recovery is obviously not a true recovery. 

In addition to lending, the Chair and I have supported a number 

of bipartisan initiatives to bolster small businesses and create jobs, 

including export assistance, providing certainty in business expensing for five years rather than just the one year that was recently 

extended for, allowing businesses to write off up to $250,000, and 

a complete exclusion of capital gains attributable to small business 

stocks held for five years. 

And turning to the President’s budget request, we certainly 

should begin by highlighting that the agency plays an invaluable 

role in helping small businesses, obviously, from financing to business counseling, and from exporting advice to assistance with Federal contracting. When examining the budget, we must determine 

how best to bolster the agency in a time when we are facing tremendous budget challenges and alarmingly high deficits. 

I have applauded the President’s call for a freeze in non-defense 

discretionary spending. I appreciate that within those parameters 

the President has recognized the critical role of small businesses in 

our recovery and proposed a sizable increase for the SBA, amounting to a 15 percent increase over the amount provided in the 2010 

budget. 

At the same time I am troubled that this 15 percent is misplaced 

in some ways given the Administration’s plans to provide flat funding for the SBA’s core noncredit programs, such as the Women’s 

Business Centers, the Veterans Business Centers, the Small Business Development Centers, SCORE and the HUBZone Program. In 

the very same budget that denies these critical programs any additional funding, the President’s request includes a 16 percent increase for office operating costs which include administrative and 

overhead expenses for all the SBA’s program offices. When excluding disaster funding, the 7(a) credit subsidy, and earmarks, this 

$17 million increase in operating costs represents 89 percent of the 

overall budget increase. 

Further, I have concerns that the executive direction budget has 

increased 29 percent over fiscal year 2010, and in fact, is 229 percent higher than the fiscal year 2008 funding level. 

At a time when small businesses continue to reduce costs and 

tighten their belts just to survive, it is more crucial than ever that 

the SBA contain overhead and operating costs, and invest any additional taxpayers’ dollars in the programs that have proven time 

and again to create jobs and help entrepreneurs to succeed. 

So I hope that we can have a discussion on some of these budgetary priorities and what we can do both within the agency, because I think you are doing an outstanding job, but hopefully we 

are using every dollar to maximize to the extent possible, to bolster 

our small businesses and the resources necessary for them to survive and hopefully to thrive. Also, we must use the SBA to create 

those jobs that are so desperately needed in our nation’s economy, 

in addition to what we have already done in this Committee. I 

think we are preaching to the choir amongst us, in terms of what 

needs to be done to help small businesses as we revive this economy. 
10 

But, clearly, the message has to be heard in a way that we see 

the action taken on the floor in the whole Congress, so that it can 

be signed into law immediately. 

Thank you, Madam Chair. 

Chair LANDRIEU. Thank you. 

As I turn the microphone over to you, Administrator Mills, I 

would like to submit for the record the opening statement of Senator Carl Levin, without objection. 

[The prepared statement of Senator Levin follows:] 
11 

Statement of Senator Carl Levin 

Committee on Small Business and Entrepreneurship Hearing on 

The FY2011 Budget Request for the Small Business Administration 

April 21, 2010 

I am pleased the President's budget continues to restore funding to the SBA's programs after 8 

years of Bush Administration cuts. Administrator Mills, I appreciate the contributions you have 

made to reenergize the SBA and revive its programs. It is critical that we bolster SBA's 

resources and programs as our economy struggles to recover from the worst recession in a 

generation. The President's request for SBA is $170 million more than last year's enacted level. 

This 17 percent increase in funding underscores the important role SBA must play in helping put 

Americans back to work. 

The budget request supports last year's lending levels for the microloan program. However it 

requests less funding for the technical assistance component of the microloan program. With 

demand for SBA microloans increasing as other sources of credit have dried up, we need to 

make sure there is adequate technical assistance especially now that microlenders are spending 

more time working with existing business borrowers due to the difficult economy. I will work 

with my colleagues and appropriators to secure additional funding for micro loan technical 

assistance. 

The main issue on everyone's mind is job creation and the key to this is making sure small 

businesses have access to capital. SBA's role in encouraging banks to lend to small businesses 

has become even more important since so many banks have pulled back their lending. Congress 

was able to take important steps to make SBA loans more appealing. In the American Recovery 

and Reinvestment Act (ARRA) the government guarantee was raised to 90% and fees were 
12 

waived for SBA's two main lending programs until ARRA funding ran out. As a result the 

number of7(a) and 504 loans increased while other lending was decreasing. But we need to do 

more. 

Many larger banks and non-bank business lenders have experienced their own economic 

downturns. While these institutions have, in recent years, accounted for increasing shares of 

small business lending, given their recent capital constraints, that trend is rapidly reversing. That 

reversal significantly restricts the availability of credit to many small businesses. 

Unfortunately, the community banks that traditionally have made more than half of all small 

business loans are also struggling in the economic downtum, making them unable to pick up 

much of the excess demand. For many of these community banks, their capital positions are also 

restricted-impairing their abilities to make loans to even credit-worthy borrowers. 

Collectively, the diminished capacity to make loans has left many viable businesses struggling to 

obtain the credit they need to keep the lights on, huy the inventory they need, pay their 

employees, and keep our economy on the road to recovery. 

Further, depreciating collateral values have left a large number of small businesses unable to 

obtain critical capital--despite having customers and revenues. A business whose ability to 

repay a loan has not changed, but whose equipment has been appraised at a lower value because 

of the weakened economy, may lose the line of credit necessary to keep that business operating. 

In many cases, the banks that have long serviced these companies are simply unable to lend, not 

2 
13 

because they fear an increased risk of default but because the value of the collateral upon which 

the amount of the loan is based has gone down. 

That is why [ think we need to focus both on the availability of credit, which means ensuring that 

banks and credit unions are able to make these much-needed loans, and on the businesses' 

abilities to take advantage of that available credit, which means bolstering guarantee programs 

and providing other borrow support. Put simply, we need to focus on both the lenders and the 

borrowers. 

OUf efforts must focus on ensuring that there is capacity to make good small business loans. 

This should include supporting the community banks that make the majority of small business 

loans and hinging that support on increased small business lending. The Administration has 

proposed something along these lines, and I have cosponsored a bill here in the Senate, the Bank 

on Our Communities Act, which would provide some of this support. We should also consider 

increasing the capacity of credit unions to make small business loans. I hope that these measures 

are included in the Senate's next jobs package. 

But we must also focus on the borrowers. We must help good, viable businesses take advantage 

of the lending capacity available to them. These efforts should include expanding the SBA's 

capabilities, including providing increased loan limits and expanded guarantees and providing 

support to borrowers who have experienced collateral shortfalls. Again, I have cosponsored 

legislation that would increase the SBA's capabilities, and I hope that we ",'ill be able to include 

it in the next jobs package. 

3 
14 

With regards to additional borrower support programs, I am working to craft a proposal with the 

Administration, several members of the Senate, including Senators Brown, Stabenow, and 

Wamer, as well as several members of the House, including my brother, Congressman Sandy 

Levin and Representatives DingeU and Peters. 

Currently, our proposal would be to provide Federal assistance to states' borrower support 

programs. The states or local governments could apply to the Treasury for these funds, which 

could be awarded to existing Capital Access Programs, or could be run through other alternative 

borrowing programs at the state or local level that have proven to work. These programs are 

already working in many states, and have shown to provide a great "bang for the buck," with 

every public dollar leading to ten, twenty, or even more dollars in small business loans. These 

programs could be refined and expanded to help alleviate some of the growing need. 

In Michigan, our auto supplier diversification fund, which helps support borrowers who might 

not otherwise be able to get a loan due to collateral issues, is getting businesses the funds they 

need and is already over-subscribed. And our existing Capital Access Program is also working. 

I hope that we will be able to leam from these programs, as well as those from other states, and 

put forth a cost-effective national program to support good small business. 

Providing support to both lenders and small business borrowers will be critical to our efforts to 

reign in the unacceptably high unemployment rate. 

I look forward to working with SBA to enact additional proposals that will help small businesses 

access credit. 

4 
15 

Chair LANDRIEU. All right, Secretary. 

STATEMENT OF THE HONORABLE KAREN GORDON MILLS, 

ADMINISTRATOR, SMALL BUSINESS ADMINISTRATOR 

Ms. MILLS. Chair Landrieu and Ranking Member Snowe, it is 

really a pleasure to be here. Thank you for the opportunity to be 

here in this beautiful room and to present the President’s fiscal 

year 2011 budget for the Small Business Administration. This budget of $994 million reflects a commitment to growing 

businesses and creating jobs and to fiscal responsibility. Access to 

capital remains a top priority. Already, our raised guarantee and 

reduced fees, combined with an improved lending environment, 

have brought back nearly 1,200 lenders to the SBA. These lenders 

have helped put $25 billion in the hands of small business owners. 

And I want to thank you for extending the Recovery Act loan en- hancements through the end of May. This will support about $2.8 

billion in new small business lending under our 7(a) and 504 programs. 

And, as you know, the Administration has proposed to extend the 

Recovery Act provisions through the end of the fiscal year. I hope 

that we can achieve that. 

This 2011 budget supports more than $28 billion in lending 

through the 7(a), 504, Small Business Investment Company and 

Microloan programs. It also incorporates increasing the loan sizes 

in 7(a) and 504 to $5 million. We have also set a goal of increasing 

by 15 percent our active lending partners by the end of fiscal 2011, 

to be sure that more people can get access to these loans. 

The second priority after access to capital is small business contracting. We are committed to working across the agencies to meet 

the government’s goal of awarding at least 23 percent of prime contracts to small businesses. Our work will also help Federal agencies meet the procurement goals set for veterans, women, disadvantaged businesses and business in HUBZones. We have requested $2 

million to help meet these goals while removing ineligible firms 

and rooting out waste, fraud and abuse. We also look forward to 

implementing the women’s contracting rule. 

Our third priority is counseling. As the Ranking Member mentioned, we have a terrific bone structure, a great network of 14,000 

SBA-affiliated counselors, and they are critical to meeting small 

business needs. This budget includes $134 million to support our 

900 Small Business Development Centers, 110 Women’s Business 

Centers and 350 chapters of SCORE, our mentoring program. 

We also requested $3 million for Emerging Leaders, an intensive 

classroom-based entrepreneurship education program. This builds 

on a pilot that has helped entrepreneurs in distressed areas create 

jobs, increase revenues, find financing and get contracts. In 2010, 

the pilot is reaching out to Native American-owned firms in 12 additional cities. 

This budget supports a Disaster Loan Program that is in a constant state of readiness. It will help us keep short turnaround 

times on loans while supporting a loan volume of $1.1 billion for 

homeowners and businesses. 

The 2011 budget also advances another critical priority—to support high-growth small businesses that drive American innovation 
16 

and global competitiveness. It requests $2 million to better manage 

and oversee the Small Business Innovation Research, SBIR, Program, as well as implement performance metrics for the program. 

It is a great program. From 2002 to 2006, 25 percent of R&D Magazine’s Top 100 Annual Innovation came from firms that received 

an SBIR award. 

The budget requests $11 million for Regional Innovation Clusters. Clusters help small businesses in a certain area in industry 

join forces and gain more access to university research, workforce 

training, international markets and more. The SBA has already 

served as a lead agency for a robotics cluster in Michigan’s hardhit auto suppliers. We are also a collaborating agency in a nationwide competition for an energy efficient cluster. Our extensive bone 

structure of counselors and partners will play a critical role on the 

ground in supporting Federal clustering efforts. 

In addition to the external goals, we will continue our internal 

focus by building the SBA into a more high performing organization, by investing in people, technology and oversight. 

For people, we are increasing our efforts in management training, mentoring and succession planning. The budget reflects a 

slight increase to 2,209 regular full-time employees. 

In technology, we are modernizing our loan management system 

and upgrading our web presence to better serve our customers. 

And in oversight, we requested $2 million for more lender oversight and onsite reviews and $1 million for stronger program assessments. 

In closing, we know that small businesses have created approximately 65 percent of net new private sector jobs over the last 15 

years. This budget will help us give even more small firms the tools 

that they need to create jobs, to lead us into recovery and to lay 

a strong foundation for the economy of America. 

Thank you. I am pleased to take your questions. 

[The prepared statement of Ms. Mills follows:] 
17 

U.S. SMALL BUSINESS ADMINISTRATION 

WASIIlNGTON. D.C. 20416 

Testimony of Karen G. Mills 

Administrator 

Before the 

Committee on Small Business & Entrepreneurship 

United States Senate 

Fiscal Year 2011 Budget Hearing 

April 21, 2010 

Chair Landrieu, Ranking Member Snowe and members of 

the Committee, thank you for the opportunity to discuss the 

President's FYIl Budget for the SBA. This budget of $994 

million reflects a commitment to growing businesses and 

creating jobs, and to fiscal responsibility. 

Access to capital remains a top priority. Already, our 

raised guaranty and reduced fees combined with an improving 

lending environment have brought back nearly 1,200 lending 

partners. These lenders have helped put $25 billion in the hands 

of small business owners. I want to thank you for extending our 

Recovery Act loan enhancements through the end of May. This 

will support about $2.8 billion in small business lending under 

our 7(a) and 504 programs. As you know, the Administration is 

proposing to extend the Recovery Act provisions through the 

end of the Fiscal Year; I hope we can achieve that. 

This 2011 budget supports more than $28 billion in lending 

through the 7(a), 504, Small Business Investment Company, and 

Page 1 
18 

Microloan programs. It also incorporates increasing the loan 

sizes in 7(a) and 504 to $5 million. Also, we've set a goal of 

increasing by 15% our active lending partners by the end of 

FYll to make sure even more people can get these loans. 

A second priority is small business contracting. We're 

committed to working across the agencies to meet the 

government's goal of awarding 23 percent of prime contracts to 

small businesses. Our work will also help Federal agencies 

meet the procurement goals set for veterans, women, 

disadvantaged businesses, and businesses located in HUBzones. 

We've requested $2 million to help meet these goals, while 

removing ineligible firms and rooting out waste, fraud, and 

abuse. We also look forward to implementing the women's 

contracting rule. 

A third priority is counseling. Our 14,000 SBA-affiliated 

counselors are critical to meeting small-business needs. This 

budget includes $134 million to support our 900 Small Business 

Development Centers, 100 Women's Business Centers and 350 

chapters of SCORE, our mentoring program. 

We also request $3 million for Emerging Leaders, an 

intensive classroom-based entrepreneurship education program. 

This builds on a pilot that has helped entrepreneurs in distressed 

areas create jobs, increase revenues, find financing, and get 

contracts. In 2010, the pilot is reaching out to Native-Americanowned firms in 12 additional cities. 

Page 2 
19 

This budget supports a disaster loan program that is in 

a constant state of readiness. The budget will help us keep 

low turnaround times on loans while supporting a loan volume 

of $1.1 billion for homeowners and businesses. 

This 2011 budget also advances another critical priority -

to support high-growth small businesses that drive 

American innovation and global competitiveness. 

• It requests $2 million to develop better management and 

oversight for the Small Business Innovation Research 

program as well as implementing performance metrics for 

the program. From 2002 to 2006, about 25% of R&D 

Magazine's top 100 annual innovations came from firms 

that received an SBIR award. 

• This budget also requests $11 million for regional 

innovation clusters. Clusters help small businesses in a 

certain area and industry to join forces and gain more 

access to university research, workforce training, 

international markets and more. 

• The SBA has already served as lead agency for a robotics 

cluster for Michigan's hard-hit auto suppliers. We're also a 

collaborating agency in a nationwide competition for an 

energy-efficiency cluster. Our extensive bone structure of 

counselors and partners will playa critical role "on the 

ground" in supporting federal clustering eff0l1s. 

Page 3 
20 

In addition to external goals, we'll continue our internal 

focus on building SBA into a more high-performing 

organization by investing in people, technology, and oversight. 

For our people, we're increasing our efforts in management 

training, mentoring, and succession planning. This budget also 

reflects a slight increase to 2,209 regular full-time employees. 

In technology, we're modernizing our loan management 

system and upgrading our web presence to better serve our 

customers. 

And in oversight, we request $2 million for more lender 

oversight and on-site reviews, and $1 million for stronger 

program assessments. 

In closing, we know that small businesses have created 

approximately 65% of net new private sector jobs over the past 

15 years. This budget will help us give even more small firms 

the tools to create jobs, to lead us to recovery, and to lay a strong 

economic foundation for America. 

Thank you and I'm pleased to take your questions. 

### 

Page 4 
21 

Chair LANDRIEU. Thank you very much. Let me begin by just 

asking you, Administrator Mills, of all of the programs that you are 

overseeing, in terms of lending programs through the SBA, what 

is the most effective lending program that you see in terms of absolutely empowering small businesses to get the capital they need to 

either save jobs, and more importantly really to add jobs? What 

program is it? 

What areas of the country have you been noticing have potentially been leading the way in job creation, or what areas or clusters, that we might consider either giving you more support for or 

extending time of that particular program, or supporting it in some 

other way, either through the budget or through other legislation? 

Ms. MILLS. Since the start of the Recovery Act, we have been 

able to put $25 billion into the hands of small businesses at the 

cost of about $550 million, which is a pretty good bang for the buck 

for the taxpayer. This comprises 2 core programs, 7(a) and 504, and 

they serve quite different activities. As you know, 7(a) is a more 

broad scale business; 504 is more for a real estate and equipment 

loans. So they tend to work together and in concert. 

We also have been very effective with our Microloan Program, 

and that serves an entirely different community, tending to be 

more concentrated in underserved markets and groups. This has 

been especially important because microloans have actually gone 

up over 2007, 2008, 2009. The loan volumes are increasing. 

And we are finding that it is very important to have all of these 

tools in the tool kit because some geographies and some communities are recovering at different rates than others, and some of 

them are going to still need some additional help. 

Chair LANDRIEU. As you know, we have had several hearings on 

these programs, and what I am hearing consistently is while the 

programs are effective the business owners need those limits to be 

raised, and we have a bill pending to do over the long term. In fact, 

we had a hearing just last week in here, that the cap on the express loans, many of the business owners, minority business owners that testified thought a $35,000 limit is much too low, given the 

pressure out there today. 

Do you have a comment about what you are hearing? Is that 

your experience because we are hearing that consistently from a 

variety of different sources? 

Ms. MILLS. We are in complete agreement. We are hearing the 

same thing. The increase in the loan limits is absolutely critical. 

It will help us fill some of the gaps that still exist in access to capital. 

And these increases in loan limits come in a number of the programs. We are asking for an increase to $5 million in the 504 and 

7(a) program. We know that there is a number of gaps in the market where other lenders and credit providers who used to provide 

those kinds of loans to franchisees, for instance, and to factory 

owners who own their warehouse, they are no longer in the market. In addition, the increase in microloans will be very important. 

The most powerful program continuation that we are requesting, 

though, is the 90 percent guarantee and the fee reduction for the 

base 7(a) and 504 programs, which has really moved the market 
22 

and brought 1,200 lending partners back to SBA lending, allowing 

us to go back. We are now at above our 2007, 2008 lending volume. 

Chair LANDRIEU. The President has put improving the SBIR program as one of his high priority performance goals. Why did the 

Administration not request funding for the program that increases 

awareness and participation in the SBIR program, and could you 

comment about that and give your views if you do not mind? 

Ms. MILLS. Well, the SBIR program is a very powerful program. It is about $2.5 billion, and it has reach across all the agencies. 

Our commitment is to manage that program more effectively and 

to work with all the agencies, on all the outreach that you just described, in order to make sure that that program is operating and 

known to all the small businesses. 

In addition, this budget does request $2 million for oversight of 

that program, particularly in the metrics area where we are going 

to improve our data collection system, and I think we will be able 

to communicate well and evaluate well what is working in that 

SBIR program, with that new information. 

Chair LANDRIEU. All right. There is some information that the 

Administration may propose legislatively to allow the 7(a) loan program to be self-financing, in other words, to allow the agency at 

some point to implement fees to have the program self-supporting. 

You know there was a tremendous amount of pushback from Congress when President Bush and the Administration raised these 

fees administratively, and there could be some pushback on this 

proposal. Are you going to make this proposal, and if so, why do 

you think it is so necessary? 

Ms. MILLS. We are at this time looking for subsidy in this budget 

for 2011 because we are capped on our 7(a) fees. So we do not actually have the ability to raise those 7(a) fees. 

We need to look at the 2012 budget, and we have not made any 

specific requests, but we recognize the budget constraints. And the 

question is can we have flexibility because what we do not want 

to do is reduce our program level. We think that the program level 

needs to be kept robust because these programs are very much in 

demand. 

Chair LANDRIEU. All right. And one last question, then I will 

turn it over to Senator Snowe, and then we potentially will have 

time for a second round. 

This is really about the veterans. I hear a great deal of this as 

veterans are returning from Iraq and Afghanistan, many on their 

second and third deployments. They are coming back to a very uncertain time here stateside in terms of jobs and opportunity. Could 

you talk about what your program does, or what our program does, 

to enhance opportunities for veterans to either start their businesses or opportunities for training for them as they return from 

the battlefields of Afghanistan or Iraq or other places in the world 

where they are stationed? 

Ms. MILLS. Veterans are a prime focus area for the SBA, and we 

serve veterans in all of what we call our 3Cs. Our 3Cs are capital, 

contracting and counseling. So we have special programs for veterans in our capital, Patriot Express. We have special programs for 

veterans in our contracting, for service-disabled veterans and for 

veterans in some of the agencies. We have special set-asides. And 
23 

in counseling, we have not only our special Veterans Center but 

this year we have an extraordinary program with Syracuse University where we are building out specific entrepreneurship training 

for veterans and service-disabled veterans, women veterans and 

families of veterans, which are a focus area for us. 

We are also, not visible in the budget but actually quite powerfully, in very close collaboration with the Veterans Administration 

on a whole number of coordinated projects including they are training all of our staff in everything that is available to veterans at the 

VA. So when somebody walks into one of our operations, we can 

offer them not only what we know but what the VA has, Veterans 

Administration, and the VA knows about all our programs, so that 

veterans can navigate their way to all the benefits that they can 

use to prosper. 

Ms. MILLS. Senator Snowe. 

Senator SNOWE. Thank you. 

Administrator Mills, on the budget priorities, as I mentioned in 

my opening statement, I notice that there is a major increase in 

the executive direction budget which is a substantial increase compared to previous budgets. It would generally be about 2 percent. 

This year’s request represents a 29 percent increase from the previous year, from $16 million to $33 million. 

I understand some of the allocations, like for the Office of Advocacy, Ombudsman and Veterans Business Development, are probably in line with what has been provided typically in previous 

budgets, although I have never understood why these do not have 

line items in the budget itself so that it is there. It is obvious on 

the Office of Advocacy that we would be providing funding, or Ombudsman, Veterans Business Development, but there is $9 million 

designated as Other that has not been allocated in any regard. 

That seems to be a significant amount of money that has not been 

targeted or earmarked and obviously a considerable discretion at a 

time where other accounts, as I mentioned with the Women’s Business Centers, the veterans program, SCORE, Small Business Development Centers, HUBZones, technical assistance programs and 

so on, all received no funding increases for this fiscal year. 

Ms. MILLS. The entire amount of the increase in executive direction is actually in what we call our LMAS, our loan management 

system, and we would be happy to provide you with the detail. 

We strongly agree that this is not the time to increase management overhead for managing the same operation, and we have 

taken the same direction of tightening our belt. There are very few 

people increases here. So we have our standard amounts of increases for the existing personnel. 

But the loan management system, which has been in an implementation phase for some years, goes into a much more accelerated 

execution phase in this budget year, and we are overseeing it. We 

just did a recent review on it. It is a mission-critical system. It replaces our mainframe that today runs on COBALT and replaces it 

with a brand new enterprise-wide system, and that account for 

those increases. We will get you the breakout. 

Senator SNOWE. So that would account for most of the $9 million 

that we were discussing? 

Ms. MILLS. Yes. 
24 

Senator SNOWE. Because that is really more than double than 

the previous year, and given the fact that we need so much invested in these other programs. At a time when we are trying to 

provide counseling and support to small business owners, to survive this climate and hopefully be able to create jobs, we want to 

make sure that we are providing every dollar to these valuable programs. 

So I would appreciate that breakdown because what we had was 

in terms of compensation, benefits, overhead, rent, operating costs, 

chief information officer and so on. I think there are some significant increases. So maybe this is inaccurate, and I would like to see 

if we could have the breakdown. 

Ms. MILLS. Right. We do not significantly increase our management overhead. And that, we will give to you the breakout of the 

computer information system investment, which lives in our data 

sheets in the chief financial officer’s line item. 

Senator SNOWE. Okay. On the implementation of the Women’s 

Procurement Program—you referred to it in your testimony—I congratulate you for bringing this crucial initiative closer to the finish 

line than it has been for a decade. Hard to believe that it has been 

that long that it has been pending. So I congratulate you for bringing it closer to implementation. 

But there has been no funding for this program. So how, in fact, 

would this be implemented in the final analysis, and when can we 

make this program available to women-owned businesses? 

Ms. MILLS. As you stated, we are very pleased, and I really want 

to commend my team, in particular, the general counsel who 

worked tirelessly from the starting date that we came on board, to 

bring this rule forward. It was actually passed in the year, I believe 

the year 2000. It is very important, and this is a fast growing and 

still underserved segment that we want to support. 

The rule went out for comment last month, and it will likely, 

given the timing of the process, be a 2012 implementation, 2012 

budget implementation. We are doing all the planning and preparation for moving forward, and in fact we rate ourselves on women 

business goals in any case. But we will use the facilities that we 

have now to move forward, to plan, to think through the oversight 

that we are going to need to execute this critical program. 

Senator SNOWE. With respect to the overall situation with the 

economy and small businesses’ role in creating jobs, what can we 

expect for an initiative here in Congress, in conjunction with the 

President, on the issue of small business? 

I know the President has made this his top priority, as you have 

and as we have, but somehow there seems to be a discrepancy in 

priorities with respect to considering any major initiative for small 

businesses in the legislative agenda this year. I mean it is almost 

going to be six months that will have lapsed before we even potentially could consider any initiative here on the floor of the Senate. 

At least that is what it appears to look like at this point. Hopefully, 

that could change. We will urge it to change, but really we cannot 

alter the employment environment without making sure that we 

are giving all the resources to small businesses. 

Ms. MILLS. We completely agree with you on the priority that 

needs to come on small businesses if we are going to create the 
25 

growth in employment that we need to get the country back on 

track. The President has put forth a Small Business Jobs Plan. The 

first, most important component is to extend the successful Recovery Act loan programs, so that we have access to capital. 

There are a number of other pieces to the Small Business Jobs 

Plan in terms of access to capital that, in fact, you and this Committee have put forth—increasing the loan sizes, increasing the 

loan size on the SBA express product, so that we can provide lines 

of credit. Many businesses have had their lines of credit cut or reduced, and we have a product that we think will address those 

issues. 

And in fact we have gone down every gap in the credit market 

and put forth a proposal in the President’s Small Business Jobs 

Plan to fill that gap. Commercial real estate—we have proposed 

using our 504 program to do refinancing of existing owner-occupied 

real estate. That is the dentist that own the dentist office and the 

manufacturer that owns the warehouse. We propose that we use 

our 504 program, which right now can only be used for expansions, 

to refinance their mortgages, their commercial mortgages that are 

going to come due in the next 2010, 2011, 2012 period. 

So we agree that this is an important priority. We think that 

there really has been tremendous collaborative thought, I think, between this Committee and the President’s jobs plan, and we very 

much hope that these legislative initiatives will be passed as soon 

as possible. 

Senator SNOWE. Thank you. 

Chair LANDRIEU. I just have a couple of additional questions if 

you do not mind. The Women’s Business Center’s program has 

been extremely successful, as you know. You are familiar with the 

ones, I am sure. As is Senator Snowe in Maine, I am particularly 

involved with the ones in Louisiana and have been for years, even 

before I was a member of the Senate, and have witnessed the good 

work that they have done in the areas that they serve. 

Despite all the improvements that we have made and the increased funding that we have requested for these centers—and I 

have a request in over and above President Obama’s budget into 

the Budget Committee—we are understanding that because state 

budgets are being constricted due to the turndown in the economy, 

that many of these centers, Administrator, are not able to come up 

with the state match which is required to keep them open. It would 

be really ironic, at a time when our businesses need the most help 

from our Women’s Business Centers, our Minority Business Centers, our university-based centers, that these would find their doors 

shuttered in our states and our communities. 

So I have introduced S. 3165, the Small Business Community 

Partner Relief Act. I have several of my colleagues supporting this 

with me. What are your views about this, and is it something that 

you would support or recommend the temporary waiving of a state 

match requirement? 

Ms. MILLS. We believe that these Women’s Business Centers are 

one of the most important parts of our bone structure, and in fact 

I am happy to announce that last month we actually opened one 

here in Washington, D.C., that the mayor has helped us bring in 
26 

a really important area in need of economic development and impetus. 

We have heard the same thing about the matching, the lack of 

matching funds, and it is of great concern, and we would be happy 

to have further conversation about what can be done about it. We 

agree that it would be a great shame for these resources not to be 

able to be used. They have our money available to them, and we 

want very much to have that money operationalized. 

Chair LANDRIEU. And then following up, the Small Business Investment Companies Program, that has been operating for a while. 

We passed some significant reforms that have helped breathe new 

life into this program. Our Committee has been told that more 

than 50 funds are currently seeking a license, that many more are 

preparing their license applications. Given this stepped-up interest 

and potential growth, is the SBA going to provide any more staff 

to support this program, and if so, when, and if you could elaborate 

on what staff you have now assigned to reviewing these license applications? 

Ms. MILLS. Yes. We agree, and we believe that the SBIC program 

is one of the most important foundational programs for helping 

high growth companies that we need to stimulate, to grow and create jobs. 

We have set an objective to substantially increase the number of 

through-put in the SBIC program and reduce the time. And I will 

not give you this promise, but when we talk about it around the 

agency, we say twice the through-put, half the time—so twice the 

funds approved, half the time. So that is our mental picture. 

We allocated already extra staff, and we have a tremendous new 

leader, Sean Greene, who is running that program and has reengineered the process. In fact, he created a program called Fast Track 

which is if you are an existing fund, you already have had a successful fund and you make a next application, that we promise to 

get your application through in two months. And we just successfully did that. 

To give you a sense of the leadership there, the two months include the snowstorm. There was some discussion that perhaps 

there should be a 10-day extension of the 2 months because of the 

snow issues, and the team got together and said no, we made a 

promise, and we are going to make it. And they did. 

So I really have to commend them. They really stepped up because they want to set the example that there is a new focus on 

this program. 

Chair LANDRIEU. I commend you for that. But could you, if not 

at this moment, be more specific about the number of staff, at least 

submit that to the Committee for our record? 

Ms. MILLS. I would be happy to get you the numbers. 

Chair LANDRIEU. Okay. We would really appreciate that. 

Let me, on this microloan, I wanted to just make sure we had 

on the record, the President’s budget recommends reducing funding 

for the program, from its appropriate level of $25 million to $13.8 

million, a cut of $12 million. Yet, the budget details the SBA plan 

to bring on 30 new intermediaries into the program in 2010. Can 

you explain how the SBA plans to increase the number of inter-
27 

mediate micro lenders while at the same time reducing funding for 

the program by approximately 50 percent in the coming year? 

I am particularly interested in understanding how the SBA plans 

to sustain its support for the current field of 160 intermediary 

micro lenders while bringing new ones on board. We are a little 

confused about this recommendation that you have made. 

Ms. MILLS. To clarify and to explain the missing piece, the 2009, 

2010, 2011 numbers do not include the Recovery Act. So, in the Recovery Act, we had $50 million of incremental fund microloan capability and $24 million in technical assistance. We have used that 

money to increase the number of intermediaries. We now have 178 

intermediaries. We have added 20. 

When you look at the number steady-state, including the Recovery Act numbers, there is actual a level effect because the additional $24 million in technical assistance is going out in a phase 

that will continue into fiscal 2011. So, in fact, it levels off the funding for technical assistance, and that is why you perceive that the 

amount is dropping, but in fact there is a carryover from the Recovery Act that does not appear in the budget book. 

Chair LANDRIEU. Thank you for that clarification. 

Senator Thune. 

Senator THUNE. Thank you, Madam Chair, for holding the hearing today on the President’s budget, and I want to thank Administrator Mills for being here and for making herself available for 

questions. 

This is a difficult economic climate for small businesses, and a 

lot of small businesses are having to make hard decisions with regard to their budgets, as are a lot of families around this country. 

It is important that we do the same thing here in Washington, 

D.C. We had some unprecedented levels of spending that have occurred here, and I think in an environment like we are in right 

now, an economic environment, we have an even greater responsibility than in the past to examine these budgets and to scrutinize 

them, and to make sure that we are ensuring Federal assistance 

is targeted and produces limited waste. 

And that responsibility is particularly important for us on this 

Committee when we review the SBA’s budget, as their mission is 

to assist our economic engine in our economy, and that is our small 

businesses. I, having looked at the budget, was pleased with several provisions and especially the increased loan sizes for the 7(a) 

and 504 programs. 

I have concerns, some of which I think may have already been 

covered with regard to some of the spending in the budget and how 

it is directed. But in any event, I think as this process moves forward it is going to be important that we do our best to get this 

right and make sure that the economic engine, our job creators in 

our economy, our small businesses are in the best position possible 

to help our economy recover and to create jobs. 

Let me just ask a couple things in that vein. I think you had 

mentioned, Madam Administrator, that the third priority for this 

budget is counseling. If that is true, can you explain why all of 

SBA’s core and noncredit programs, including many of those counseling programs would be flat-funded in this proposal? 
28 

Ms. MILLS. Essentially, in this proposal, we have understood that 

there is fiscal discipline necessary, and we are looking for ways to 

do more with the same. In all of our activities, I think the net activities are essentially we want to maintain the efforts that we 

have out there—the 900 Small Business Development Centers, the 

110 Women’s Business Centers, the 350 chapters of SCORE. 

The way we are looking to improve our service to small businesses is to invest in things like our information on our web, to 

simplify and clarify our programs and our communication, so that 

we can, and to break down silos between the Small Business Development Centers, SCORE, the Women’s Business Centers, so that 

there is more coordination and collaboration. So we are focused on 

getting more bang for the buck out of what we call our bone structure. We have an extraordinary bone structure on the ground, and 

we are going to use this funding to continue it and to help in collaboration. 

Senator THUNE. And I think, and this, maybe again, I suspect 

has probably been covered already, but the thing that is probably 

most concerning about this is the 89 percent increase in funding 

going to SBA operating costs. You may have perhaps responded to 

those questions already, but could you explain to me in detail what 

the executive direction budget is for? That evidently has 30 percent 

increase in funding over the fiscal year 2010 level and double the 

fiscal year 2009 levels—what that is and why the big increase 

there? 

Ms. MILLS. Yes, and Senator Snowe has asked us to provide the 

detail on that, and we are happy to. 

Actually, the entirety of the increase is related to what we call 

LMAS, which is our mainframe loan system, and our mainframe 

loan system runs on COBALT. For a number of years, we have 

been in the process of developing the replacement system. This is 

the year for the big expenditure on that system, and it has been 

in the funding plan for quite a period of time. 

That lives, that project lives in our chief financial officer’s office 

because we manage it not just as an IT project but as a core project 

for our entire system. So this is not a budget that increases the 

overhead spending in the core SBA central activities. 

Senator THUNE. Okay. Could you give me a little more information too about the 2010 pilot that you mentioned that is reaching 

out to Native American-owned firms in 12 cities, including maybe 

what cities those are taking place in? 

Ms. MILLS. Yes, we can give you the number, the cities, but we 

have some very terrific data on what we call Emerging Leaders. 

We have been running a program called E–200 in inner cities for 

a period of time. It is an intensive classroom-based experience. It 

is an entrepreneurship education program. 

And we actually track what happens to businesses that go 

through that program. It turns out that businesses, I think it is 53 

percent of the businesses increased their sales and the overall sales 

increase was over 50 percent. And we track other metrics, like how 

many people they hire. So it is one of the most powerful programs 

that we have. 

This year, you may know we have very strong Native American 

activities. I actually went out and spoke to RES which is the gath-
29 

ering of 2,000 Native American economic development people that 

happened in Las Vegas. We decided that this program might be 

very, very well tailored to cities with high concentration of Native 

Americans and that we would try to drive an additional 12 cities 

this year, with a focus on Native American activities. That is in 

process, and we are looking forward, I think, to the first graduation 

shortly. 

Senator THUNE. Okay, good. Thank you. 

My time is up. Thank you, Madam Chair. 

Chair LANDRIEU. Senator Snowe. 

Senator SNOWE. Yes. Administrator Mills, a couple years ago, 

legislation in the Senate was brought by then-President Bush regarding a Veterans Interagency Task Force, and I know we have 

been communicating by letter and between staffs as well, about 

now creating this task force. A lot of the certification issues have 

been resolved, I understand. 

Since it has been two years and since we are going to see a drawdown in Iraq, obviously, we are going to have more and more veterans coming home. This is critically important to make sure all of 

the agencies are working in concert on so many of the issues that 

are important to veterans and assisting them and service-disabled 

veterans. So when can we expect this task force to formed, or has 

it, or is it in the process? 

Ms. MILLS. Yes, Senator Snowe, we have not forgotten this. This 

is something that is in active development, and I guess I would say 

you will be hearing about this in very short order. 

Senator SNOWE. Okay. I appreciate that. 

Ms. MILLS. It is extremely important, very, very much on the 

Secretary’s mind in Veterans Affairs, and we have a very strong 

collaboration going forward. This affects many, many agencies, and 

so we are pleased to take a leadership role in moving it forward. 

Senator SNOWE. You were referring to your clusters initiative, 

which is an outstanding approach I think in bolstering regional innovation efforts, and you said that SBA’s extensive bone structure 

with counselors and partners will play a critical role on the ground, 

supporting these efforts. Of course, you do have that bone structure 

through the SBDCs and Women’s Business Centers as well as the 

SCORE chapters. But do you include those and incorporate that in 

your clusters initiative because the clusters initiative is I think you 

requested $11 million? It was $10 million last year. 

Does that divert from the basic core programs and what SBDCs 

could do, for example? 

Ms. MILLS. Let me give you an example of how the cluster money 

would provide incremental funding and activity in our SBDCs. We 

believe that the SBDCs are one, not the only way, but one way that 

we interact with clusters that will form. 

In the 2010 budget, one of the clusters that is being funded is 

an interagency activity called an ERIC, an Energy Regional Innovation Cluster. The Department of Energy has put forth $120 million for a competitive bid. Any region can apply for a regional center on building, green building efficiency. 

And we believe that many small businesses have expertise and 

should be included in a cluster around this regional innovation 

hub. So we have the opportunity, along with seven other agencies, 
30 

to make this an interagency cluster request for proposal. Every 

agency in that proposal has put forth money. The money that we 

have put forth will be available for the winning region to spend in 

its SBDC. So the Small Business Development Center will be our 

vehicle for delivering value to the cluster for small businesses, 

bring them into the cluster process and have them interact with 

the other activities. 

Senator SNOWE. And so that is underway now? I mean that is 

in the process? 

Ms. MILLS. That is the 2010 budget. We have other aspects that 

are happening in the 2010 budget in clusters, and the 2011 will 

also rely on what we call our bone structure, which is our SBDCs 

and our Women’s Business Centers on the ground, because that is 

where we really deliver programs, and that is where we can affect 

a community of small business that is trying to cluster together. 

Senator SNOWE. Are you hiring contractors to implement this 

cluster initiative? I mean is that how it is going to work effectively? 

Ms. MILLS. In the direction that we got, it was required that we 

have to put these to contract, so that they will go through a contractor. 

Senator SNOWE. So it is not something that the SBDCs and 

Women’s Business Centers could do themselves? 

Ms. MILLS. Well, yes. 

Senator SNOWE. Without involving contractors? 

Ms. MILLS. Yes, in some of the cases, I believe that we are able 

to use SBDCs and Women’s Business Centers as the recipients of 

cluster funding. So we would be able to do that. 

Senator SNOWE. I see. Okay. Thank you. 

Chair LANDRIEU. I just have two more questions, and I hate to 

keep harping on this Microloan Program, but it has come up any 

number of times. We just provided in the Stimulus Act $30 million 

for microloans, $24 million for technical assistance grants and $6 

million to leverage $50 million of intermediaries. These funds were 

supposed to go out quickly, have a fast impact, et cetera. Do you 

all have an update about how much of the $50 million in loan capital has been disbursed to date? Do we have a report on that? 

Ms. MILLS. Yes. We can provide you with the numbers. It is well 

on track. 

Chair LANDRIEU. Do you know what it is? Is it a certain percentage of the 50, half or more of the $50 million that has been disbursed? 

Ms. MILLS. Let’s see. If I do not have it here, I can give it to you, 

but it is well on track, the next set. What we did is we went 

through all of the 2009 money first and then all the 2010 and then 

in the Recovery Act. So we are in our sequence, but we are well 

engaged in getting that money out to intermediaries. We have already added the 20 new intermediaries, and we are about to put 

out all of the $24 million in the technical assistance. 

So we can get you the exact numbers. 

There is a process where it gets obligated. Then there is a process where it actually goes out the door. The actual going out the 

door, that is going to go quarter by quarter by quarter, and some 

of that will go into 2011, which was what was intended. 
31 

Chair LANDRIEU. Okay. Well, if you could give us those details 

because if there is something our Committee can do to expedite 

that process or enhance it in any way, we would like to try to do 

that because it is very, very important. 

Ms. MILLS. We can do that. 

Chair LANDRIEU. And again, we are going to pursue raising the 

caps on microloans. I know we have proposed in our legislation up 

to $50,000, but I may be convinced that it needs to even be higher. 

As I close, unless, Senator Snowe, you have anything else, I just 

wanted to refer people’s attention to this graph that we are operating under in terms of level of funding for the SBA overall. I am 

desperately trying, as a leader of this Committee, in this effort 

with my colleague, to get this budget for this agency back up to 

where it was 10 years ago, when we were not in the middle of a 

recession. We were actually creating millions of jobs in this country. 

[The information follows:] 
$240M 

___ Request from the 

Administration 

___ Enacted Funding 

level 

$OM 

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 
33 

Now I am not saying the SBA budget and its level has a direct 

impact, but I think that if this agency is well resourced, well led, 

with effective and targeted programming, we can be a big help in 

supporting the millions of small businesses out there that are going 

to be the entities that create the jobs that end this recession. 

And I think again, as Senator Snowe said, we are preaching to 

the choir because we in this room are here because we believe that. 

I am going to do even more than I have done to try to get the attention of the leaders of both parties to focus on getting the time 

we need, and the proper legislation and support that we can to give 

the small businesses in America, whether it is tax relief, targeted 

and fiscally responsible, or whether it is program support—and to 

give our governors and our departments of economic development 

in all 50 states and in many of our large, medium and small cities, 

that are struggling to identify the businesses in their jurisdictions 

that have the potential to grow, for us to be the very best partner 

we can. 

There is an urgency about this. I would like to see this mood. It 

is not a mood ball, but it is a mood graph. But I would like to see 

it turn to a more positive outlook, and a lot of that can be driven 

in large measure by the work of this Committee. We are not completely responsible, but we want to provide help, and I think we 

have in many ways. 

So that is what I will say to close this hearing. Is there anything, 

Senator Snowe, that you want to add to that? 

Senator SNOWE. Well, I just want to reiterate what you have already indicated, and I know that you share the concerns, Administrator Mills, but it is disturbing that we have not been able to facilitate a small business jobs bill at a time when it is critical and 

the circumstances are dire. 

There is no question about it. It is all about jobs, jobs, jobs. It 

is not materializing, and it is severe. It is more severe when you 

compare all the previous recessions. I think that is certainly what 

Mark Zandi, the economist, indicated before the Finance Committee. 

If you look at the severity in the long-term unemployed and the 

underemployment that is so extensive, up to 17 percent, and the 

job creation is not happening. There is no certainty. There is no 

confidence. That is really, I think, a telling indicator of what is the 

characteristics of the economic situations on Main Streets across 

this country, in every community. 

So we have to do everything we can, to use the resources to turn 

this around and help to rejuvenate the job creation. It can only 

happen through small businesses. 

There is no sense of urgency which is really surprising, frankly, 

here. That should have been on the top of the agenda. We should 

have gotten it done. We should have accomplished it. 

It is lagging, and it is only going to get worse because we know 

that unemployment is a lagging indicator to any event. You see 

what is happening in the small business sector. Clearly it is just 

not going to turn around very quickly, so we have to get these resources into the system, and it is not happening. 
34 

I think we will do everything that we can. We hope that you will 

as well at the executive level, to transmit those concerns. A day 

should not go by that we should not be figuring this out. 

And how to pay for it? I think we can figure out the ways. I 

think that there are obvious ways in which we can pay and provide 

for offsets to this legislation. 

I was tasked by the Leader to do that. I said, well, I will come 

up with them. They keep using them for other reasons, but I will 

keep coming up with them. 

Chair LANDRIEU. I just want to add, I know that the President 

has been, and will continue to be, extremely supportive. There were 

some other priorities. The country has to deal with a real deficit 

in health care for the American people, a drag on our budget, inability to balance our budget without that attention. We have had 

to stabilize Wall Street to stave off a collapse of our financial system. But I think now, Administrator Mills, is the time where we 

have to put on a full-court press, all engines open on this small 

business job creation piece. 

I am very proud of this Committee, having passed out five major 

pieces of legislation in a very bipartisan manner. I would like to 

be working with you, as we talked before this meeting, intently 

next week to see if there are any additional things that we could 

potentially add and get a package to the Floor of the Senate as 

soon as we can, in this work period, to give a strong, positive signal 

to the small businesses out there struggling to stay afloat, keep 

their doors open and hire the jobs necessary to end this recession. 

Thank you very much, and meeting adjourned. 

[Whereupon, at 3:51 p.m., the Committee was adjourned.] 
(35) 

APPENDIX MATERIAL SUBMITTED 
36 

U.S. SMALL BUSINESS ADMINISTRATION 

WASHINGTON. D.C. 20416 

SBA Responses to Oral Questions for the Record 

u.s. Senate Committee on Small Business & Entrepreneurship 

Fiscal Year 2011 Budget Hearing (held April 21, 2010) 

Submitted on behalf of 

Administrator Karen G. Mills 

May 5,2010 

QUESTION FROM CHAIR LANDRIEU (paraphrased): Please elaborate on what staff you have 

now assigned to reviewing these [Small Business Investment Company (SBIC)] license applications. 

SBA RESPONSE: SBA currently has jive analysts that review/process potential SBIC applications. 

This is exclusive of supervisory and administrative personnel. Additionalzv, SBA has hired one 

additional analyst who will begin work next month. SBA has posted a vacancy announcement for 

another analyst position that it hopes to jill in the near term. 

QUESTION FROM CHAIR LANDRlEU (paraphrased): Do you have an update of how much of 

the $50 million in [microloan] loan capital has been dispersed to date? 

SBA RESPONSE: As of April 29, 2010, $38,730,333 in microloanfunding has been obligated, 

leaving $11,269,667 in available loanfimding. 

* * * * 
37 

Post-Hearing Qnestions for the Record 

"The FY2011 Budget Request for the Small Busiuess Administration" 

April 21, 2010 

Questions for tbe Record from Senator Mary L. Landrieu to the Honorable Karen G. Mills 

1. I have beard from my local chambers of commerce (SWLA Chamber and GNQ, 

Inc.) that following Hurricanes Gustav and Ike of 2008, the SBA was extremely 

prepared and responded quickly following the storms. Tbose improvements are due 

in large measure to the work of tbis Committee, as well as tbe leadersbip of former 

SBA Administrator Steve Preston. 

a. Do yon believe tbat tbe reforms to date, as well as tbe disaster funding 

included in tbis Budget request, will allow SBA to effectively respond to 

disasters which may occur during Fiscal Year 2011? 

Yes, the SBA believes we have suffieient funding to respond to an average disaster year 

during FY20 II . 

2. It is my understanding tbat as of January 31", the SBA bad $131 million in disaster 

loan administrative expenses enough to last tbrough FY2010 if tbere are no 

catastrophic disasters. The Agency also had $846 million in disaster loan authority, 

sufficient to make approximately $7.8 billion in disaster loans. 

a. What are tbe current levels of disaster administrative expenses and disaster 

loan authority? 

As of April 30, 2010, the agency had $91.6 million in disaster administrative 

expenses and $840 million in disaster loan subsidy that would support $7.8 billion 

in program authority. 

b. The Budget request includes $203 million for disaster loan administrative 

expenses bnt no funding for disaster loan authority. Does SBA require 

additional appropriations for disaster loan anthority at this time? [Yes or 

No] 

At this time, the agency does not require additional appropriations for disaster 

loan authority. 

c. I am interested in the SBA's ability to respond to multiple disasters 

occurring during this fiscal year. Based upon the to-year average of 

previous disasters (excluding disasters such as KatrinalRitalWilma or the 

September 11th attacks), if a disaster occnrred today and the SBA bad to 

utilize up to $100 million of disaster loan anthority to assist business owners, 

would the Agency still have sufficient funding on hand to respond to noncatastrophic disasters which may occur through the end of the fiscal year? 

[Yes or No] 
38 

Yes. If the Agency had to utilize $100 million in disaster loan authority 

(subsidy), the agency would have an available subsidy level of approximately 

$740 million that could support $6.9 billion in lending. 

3. A top priority for this Committee has been to reverse the downward spiral of 

fnnding allocated to the Small Business Administration. Under President Bush, as 

highlighted in the charts presented during my opening statement, the Agency's 

funding was cut 27 percent. As the incoming Chair - and a member of the 

Appropriations Committee - I am committed to continue working with the 

Administration to reverse this trend. 

It is my understanding that as part of these funding cuts, SBA staff was reduced 26 

percent from 2001 to 2008. To ensure that we can re-energize this Agency, I would 

like to know what we are working from in terms of full-time employees. For 

example, where the Agency was, where it is now, and where it is heading under this 

Budget request. 

a. What was the Agency staffing level iu January 2001? 

As of September 30,2000, the number ofFTE's at SBA totaled 4,262, composed 

of 3,010 regular positions, 1,137 disaster positions, and 115 positions for the 

Inspector General. 

b. What was the Agency staffing level in 2008? 

As of September 30, 2008, the number of FTE's at SBA totaled 3,636, composed 

of 2,094 regular positions, 1,436 disaster positions, and 106 positions for the 

Inspector General. 

c. What is the Agency staffing level today in 2010? 

As of April 30, 20 I 0 -- not including 80 ARRA positions -- the number of 

positions at SBA totaled 2,129 regular positions, 2,870 disaster positions, and 109 

positions for the Inspector General. 

d. How many full-time employees does President Obama's Budget request 

support? 

The President's FY 2011 Budget request supports a total of 3,502 FTE's for SBA, 

composed of 2,209 regular positions, 1, 17l disaster positions, and 122 positions 

for the Inspector General. 

i. Earlier this month, I sent a letter to you inquiring about the vacant 

Alternative Work Site (Regional Manager) position in ShreveportBossier, LA. This position has been vacant since 2005. I am 

concerned that the New Orleans office does its best to cover this area 

but it is 300 miles away. Do you have any updates on agency efforts to 

fill this position? 

We intend to have the best team going forward to serve the small business 

community of Southern as well as Northern Louisiana and we will make every 

effort to assure continuous operations and service. We are constantly evaluating 

our resource needs and how to better serve the nation's small businesses. After a 

vacancy occurs in a district, we move quickly to make sure the needed resources 

2 
39 

are there and available to move the mission of the SBA forward. We are 

continuing to look into your request in order to maximize our use of available 

resources. 

4. In my home state of Louisiana, we have two key U.S. military assets - Fort Polk and 

Barksdale Air Force Base. For these and other reasons, I have long been a 

champion for our military, and especially onr returning veterans/reservists. Early 

on in my Senate career, I had the honor of serving as the first female Democrat to 

chair the Armed Services Subcommittee on Emerging Threats (during the 10ih 

Congress). Veteran and military issues are something close to my heart, especially 

when it comes to helping our veterans that own small businesses. 

Since, 2001, more than 2 million service members have deployed in Operation Iraqi 

Freedom and Operation Enduring Freedom. Upon return, 18 percent of veterans 

are unemployed one to three years later, and of those who are employed, 25 percent 

earn less than $21,480. Returning veterans have sacrificed on our behalf and 

deserve the Federal government's assistance in returning to civilian life -

particularly in finding gainful employment. 

This Committee has recommended that additional funding go to the SBA Office of 

Veterans Business Development to handle the increased demand for services by 

returning veterans and also to fund the three (3) veteran centers created by the 

National Veterans Business Development Corporation (TVC). The Congressional 

Appropriators have agreed with this sentiment and have provided extra funding for 

the office in both FY2009 and FY2010. 

In FY2009, the Office assisted more almost 123,000 veterans, a 64% increase over 

the SBA's goal for FY2009. 

a. In your opinion, did the $1.2 million requested for the Office in FY2009 

provide the Agency with adequate resources to meet this increase in 

demand? 

a. Yes 

i. To what do you attribute this surge in interest/demand for the 

program? 

ii. Do you anticipate that this increase in demand will continue during 

FY2011? 

a(i.) and a(ii.) 

The Office of Veterans Business Development (OVBD) acted aggressively in conducting 

outreach to the veteran and reservist community. In FY 2009, we expanded the number 

of VBOCs to 8, by entering into agreements with the 3 Centers previously funded by The 

Veterans Corporation. We also expanded the funded portion of the District Office 

Veterans Outreach Initiative to 23 SBA district offices in FY 2009. We continued our 

3 
40 

cooperative efforts with the Department of Defense and the Department of Labor and 

increased our collaboration with the Department of Veterans Affairs. We noted that the 

largest segment of VBOC service users were 25 to 34 year old veterans and reservists; we 

believe this is a reflection of our aggressive outreach and collaboration. We also believe 

that the Patriot Express Pilot Loan initiative continued to provide a financing option to 

veterans, and also generated additional interest in business counseling, training and 

SDVOSB procurement. In FY 2010, we are increasing all of these initiatives even more, 

by expanding the number of VBOCs to 16, and by growing the number of district offices 

conducting OVBD funded outreach and collaboration to veterans and reservists and 

veteran-serving organizations. 

We anticipate continued and growing interest in all SBA programs and services from 

veterans, reservists and their families in FY 20 II. 

5. For more than 20 years, the Women's Business Ceuter (WBC) Program has 

successfully provided business counseling and assistance to women, with an 

emphasis on those who are socially or economically disadvantaged. The program 

has grown from just a few centers to one hundred and ten (110) today. In 

Louisiana, we have two (2) Women's Business Centers - one in New Orleans and 

one in Lafayette. 

In the past year, this program has undergone a number of significant and positive 

changes. In addition to hiring a new Assistant Administrator to head the Office of 

Women's Business Ownership (which administers the program), the SBA has taken 

significant steps to improve the performance and oversight of the program, mainly 

through improvements to the financial anditing and review process. 

Despite all of the improvements that have been made to the program in the last 

year, many centers have been adversely affected by the recession. Due to cuts in 

funding by local governments and universities that often partner with WBCs, many 

centers are struggling to raise the non-federal matching funds required to receive 

funding from the SBA. In the last year alone, as many as 9 centers closed or 

requested reduced funding from the SBA due to their inability to raise non-federal 

matching funds. 

a. Do you thiuk temporarily waiving the non-federal match requirement will 

allow more centers to keep their doors open? [Yes/No] 

If the match is waived. there is a concern that the centers would have a portion of their 

operating funds cut for an indefinite period which may be more harmful than helpful. It 

may also be difficult to reinstate the match in the future. and the loss of local buy-in and 

participation would be troublesome. 

However, if the agency is afforded such administrative flexibility, we would add 

safeguards to the process by establishing procedures to allow the centers to apply for a 

temporary match waiver on a case-by case basis. Match waivers or reductions will only 

4 
41 

be granted to WBCs that are credible and viable and can show that such action will not 

negatively affect the delivery of services or the viability of the center. 

6. Could you elaborate on the changes the SBA has made to the Women's Business 

Center program, as well as how the Agency plans to use the resources devoted to the 

office to continue making improvements in FY2011? 

• Administrator Mills has allocated additional resources to continue a schedule of 

financial reviews so that each center is reviewed approximately every third year. 

• OWBO is collaborating with the Office of Field Operations to clarify and 

strengthen the role of the district offices in support of the WBC program. 

• OWBO is implementing high level performance management measures to 

improve its effectiveness and efficiency in customer service, internal operations 

and portfolio management to meet the needs of the women business owners. 

• OWBO is increasing its visibility and strengthening its staff proficiency in federal 

procurement processes, lending products and outreach to underserved markets. 

7. Currently, only two (2) states, Idaho and Kentucky, and two (2) U.S. territories are 

without centers. 

a. What are your thoughts on how to address the needs of women-owned small 

businesses in these areas, especially in light of the difficulties many centers 

have experienced iu raising matching funds? 

The funding level for the WBC program in FY 2010 or FY2011 does not allow 

for the opening of new WBCs unless we reduce the amount of funding for all the 

existing centers. OWBO's managed growth plan is to fund existing centers to the 

highest possible level (to a statutory maximum of $150,000). If an existing center 

closes its doors due to inability to provide non-federal match, that amount of 

funding will go to a program announcement in those two states and two 

territories. 

In the meantime, we hope that women business owners in need of counseling and 

training will reach out to their local SBA field office, SBDC and/or SCORE 

chapter. 

8. One of the most important programs operated by the SBA is the Small Business 

Development Center (SBDC) program. These centers, funded through SBA and 

operated in cooperation with local universities, create thousands of jobs on a yearly 

basis. In FY2009 alone, these centers created or saved approximately 150,000 jobs. 

Further, this program provides results in a cost-effective manner - for every 

Federal dollar spent, $2.20 is returned to the Treasury in the form of increased tax 

dollars. 

a. What improvements or changes does the SBA plan to make to the SBDC 

program in FY2011? 

5 
42 

In FY2011 SBA will explore ways to have the SBDCs increase their support of the 

National Broadband Plan, raise awareness of the importance of a disaster 

readiness/business continuity plan and enhance counselor competency in the areas of 

advanced technologies and international trade assistance. 

9. Since it was created in 1964, the Service Corp of Retired Executives (also known as 

SCORE), has provided counseling to more than 8.5 million small business owners. 

In FY2009 alone, SCORE assisted more than 523,000 small business owners, leading 

to the creation thousands of new jobs at a minimal cost to the taxpayer. 

Prior to the FYll budget request, SCORE had been flat funded at $5 million or less 

for eight years. Due to inflation, the purchasing power of that funding has declined 

while costs have continued to rise. This has made it difficult for SCORE to improve 

its services and accommodate increased demand due to the recession. 

a. How does the SBA plan to use the additional $2 million in funding included 

in the FY2011 Budget request? Please be specific, naming new projects or 

initiatives. 

The additional funds will be used to enhance SCORE's online delivery system which 

could include content creation for online workshops, podcasts, and additional distribution 

outlets as well as increased marketing tools and funding for evaluation of SCORE's 

business advising. 

10. In FY09, SCORE experienced a 9% increase in the number of clients served. 

a. Do you anticipate that the increase in demand for the services offered by 

SCORE will continue into FYll? [YeslNoJ 

No 

b. If yes, please explain how the requested level of funding will allow SCORE to 

adequately meet the increased demand for their services? 

SCORE has been very active in supporting small businesses during this time of economic 

recovery. The $7m level from FYIO represents a substantial increase from many 

preceding fiscal year funding levels. SCORE's business plan leverages capacity through 

improved delivery models and this coupled with the leveraging of SCORE online 

resources, its private sector alliances and specialized training such as the Broadband 

Initiative is expected to be responsive to the needs of the small business sector. 

11. During President Obama's State of the Union Address on January 27, 2010, he 

announced the National Export Initiative (NEI) and pledged his commitment to 

doubling U.S. exports within the next five years, primarily by engaging small 

businesses. The SBA is well-positioned to play a prominent role in this effort, 

6 
43 

particularly through the export financing and technical assistance programs led by 

its Office ofInternational Trade. 

a. With this in mind, how will the Agency utilize the resources devoted to the 

Office of International Trade to support the NEI and achieve the President's 

goal of doubling U.S. exports within five years? 

In response to the NEI, SBA has developed a four-pronged approach to assist small 

businesses in becoming exporters. The four main areas of focus for assistance to 

exporters are identification of potential exporters, training and counseling, identification 

of business opportunities, and trade finance support. 

SBA's Office of International Trade (OlT) has mobilized its entire staff both at 

Headquarters and in the field to identity small businesses that have the potential to export 

their goods and services. We are taking a more proactive approach to how we work with 

small businesses in the areas of counseling and training to demonstrate the merits and 

nuances of conducting global trade. In partnership with the Department of Commerce, 

International Trade Administration, and the U.S. Commercial Service, we help small 

businesses identify business opportunities overseas. We are also working closely with 

our participating lenders to ensure that small businesses have the ability to finance their 

trade transactions. 

Administrator Mills, through OIT, is leading the Trade Promotion Coordinating 

Committee (TPCC) Small Business Working Group. The working group was established 

by Secretary Locke to ensure that small businesses have the resources necessary to 

become exporters. The working group has representatives from several U.S. Government 

agencies, including SBA, DOC/ITA, Ex-1m Bank, OPIC, USDA, DOD, Labor, 

Department of State, USTR and the TPCC Secretariat. All members are working 

collaboratively to ensure that the services of these agencies are made available to small 

business exporters. 

12. The FYll budget request includes $5.6 million for the Office ofInternational Trade. 

While the increase in funding is welcome, it represents a mere 3% increase from the 

Administration's FYIO request. Other federal agencies involved in assisting small 

business with export promotion -- such as the Department of Commerce and the 

U.S. Export-Import Banks -- received significant increases in funding for their 

export assistance programs in the FYll Budget. 

a. As the primary federal agency responsible for assisting U.S. small businesses, 

can you help us understand why a similar increase in funding was not 

requested for SBA's international trade and export promotion programs, as 

compared to other federal agencies involved in export promotion? 

In support of the President's NEI pledge to double U.S. exports within the next 

five years, the SBA is leveraging its existing resource partner network to ensure 

that small businesses have the knowledge necessary to become exporters. SBA's 

resource partners include Small Business Development Centers (SBDCs), 

Women's Business Centers, SCORE Counselors and our participating lenders. 

7 
44 

SBA is preparing training materials to ensure that SBA's resource partners are 

prepared to work with potential small business exporters. The goal is to provide 

high-quality professional development instruction through either in-person 

training or webinars in FY 2010 and beyond. By extending export readiness 

recognition and a familiarity with available export facilitation resources to our 

counseling specialists and participating lenders, many more export-capable 

companies will be directed to the appropriate assistance to make their first export 

sales. This training will be modeled after the international trade training that 

SBA has provided, in partnership with the Association of SBDCs, to SBDC 

counselors during their last two annual conferences. This training will continue 

into the future and be expanded to include all resource partners. 

13. One of most effective programs operated by Office of International Trade is the 

export finance specialist program, which assigns SBA personnel to U.S. Export 

Assistance Centers operated by the Department of Commerce. In FY 2009 at a 

minimal cost to the taxpayer, 17 export finance specialists facilitated 1,500 trade 

loans generating approximately $1.6 billion dollars in export sales and creating or 

saving approximately 17,000 jobs. 

The addition of a specialist in New Orleans, Louisiana, raised the total number of 

specialists maintained by the SBA to 18. However, seven years ago, the Agency 

maintained as many as 22 specialists. 

a. Does the Administration have any plans to fill these remaining vacant 

positions? [YeslNoJ 

i. Follow up (if yes): When will these positions be filled? Which USEAC 

locations will receive priority? 

ii. Follow up (if no): Why has the Administration chosen not to fill these 

positions? 

The SBA recognizes the value that the export finance specialists bring to the 

program and the assistance that they provide to small business exporters. During 

FY09, SBA hired two additional export finance specialists to cover two highpriority markets -- New York and Louisiana. With the 18 specialists that we 

currently have on board, we are able to provide coverage throughout the U.S. 

During the last several years, we have substantially increased the travel budget for 

the export finance specialists so that they have the ability to visit their regions on 

a regular basis. 

14. As most of us know, one of the principle functions of the SBA is to ensure that the 

Federal government meets its 23 percent small business contracting goal. And the 

FY2011 budget for the SBA takes that serionsly, noting that one of the President's 

top four performance goals (page 2) is to "increase small business participation in 

federal government contracting to meet the statutory goals and reduce participation 

by ineligible firms." 

8 
45 

a. First, to meet this goal, do you intend to increase the contracting oversight 

staff at the SBA - Procurement Center Representatives (PCRs) and 

Commercial Marketing Representative (CMRs)? 

Since the beginning of the calendar year 2010, SBA has recruited or is in the 

process of recruiting for the following positions, some of which are being 

recruited to fill vacancies: 

• 7 PCRs 

• 2 CMRs 

• 1 Natural Resource Specialist 

• 1 Industrial Specialist 

• 5 developmental PCR positions 

15. Second, in your testimony, you said that "you look forward to implementing the 

women's contracting rule." 

a. The 2011 fiscal year starts in a little more than five months, so what is the 

target date for implementation? 

The comment period for the proposed rule closed on May 3, 2010. SBA received 

approximately 1,000 comments and is in the process of cataloguing and analyzing 

them in order to determine if any changes need to be made to the final rule. 

SBA's intent is to have a final rule issued by the end of the calendar year. 

16. What plans do you have to ensure that minority small businesses - whether through 

the 8(a) program or as Small and Disadvantaged Businesses -- have full access to the 

Federal marketplace? 

Supporting underserved communities - including socially and economically 

disadvantaged businesses, minority-owned, women-owned, veteran-owned, and 

HUBZone firms - is a priority for our office of Government Contracting and Business 

Development. In particular, we aim to meet the government's prime contracting goals in 

the four socia-economic categories, in addition to meeting the 23 percent small business 

prime contracting goal. 

On April 26, President Obama signed a Presidential Memorandum establishing an 

Interagency Task Force on Federal Contracting Opportunities for Small Business. This 

Task Force, which will be co-led by SBA Administrator Mills, OMB Director Orszag, 

and Commerce Secretary Locke, will develop proposals and recommendations to expand 

Federal contracting opportunities for small businesses. Moreover, the group will develop 

a transparent dashboard to measure agencies' performance in meeting their small 

business contracting goals. including the four socio-economic goals, and will devise 

strategies to improve outreach to a variety of small business groups. 

In addition, our local district offices and resource partners continue to provide training 

and technical assistance to small businesses. SBA provides advice on how to do business 

9 
46 

with the federal government and win a federal contract. District offices and PCRs are also 

increasing contracting opportunities to underserved communities by conducting 

matchmaking events, finding more subcontracting opportunities, and creating more 

partnerships through mentor protege program, teaming, and joint ventures, 

SBA is not only focused on training small businesses; we are committed to training and 

developing our staff and agency procurement officials as well. SBA is creating training 

for contract officers and is bringing the district office staff in for a week-long training on 

programs that serve underserved communities, including the Sea) and HUBZone 

programs. 

Finally, as part of a comprehensive review of our Sea) program's regulations, we will be 

working to ensure that the program remains a powerful tool for socially and economically 

disadvantaged businesses and that its benefits flow to the intended recipients. 

17. What are your plans to support Service Disabled Veterans access to the Federal 

marketplace? 

As thousands of our veterans are returning home, it is critical that they have the ability to 

start and grow a business, which includes ensuring that they have opportunities in Federal 

contracting. We have begun work on several items at SBA to ensure that we are 

overseeing and administering the Service-Disabled Veteran-Owned Small Business 

(SDVOSB) program as effectively as possible: 

• Highlighting focus of Administration on issnes: President Obama signed the 

Executive Order on the Interagency Task Force on Veterans Small Business 

Development (EO 13540) and Presidential Memorandum on the Interagency Task 

Force on Federal Contracting Opportunities for Small Businesses on April 26, 

2010. The Interagency Task Force on Veterans Business Development will focus 

on issues pertaining to service-disabled veterans, including improved aecess to 

capital, improved capacity, and achievement of the pre-established Federal 

contracting goals for SDV firms; 

• Working collaboratively with VA: This includes better data and better access to 

that data for both the SBA and the VA. Teams from both agencies have met 

several times in the last few months to discuss a wide range of important issues 

that touch both agencies, including the SDVOSB program. Administrator Mills 

has met with Secretary Shinseki and his Deputy Secretary as well; 

• Enhancing oversight to eliminate fraud, waste and abuse: We have enhanced 

our SDVOSB bid protest process by implementing stricter terms for those firms 

found ineligible. For example, we have instituted a new policy where firms that 

are found ineligible must de-certify themselves in CCR within 30 days of our 

determination or they will be referred to our 10. We have conducted III 

SDVOSB bid protest reviews YTD in FY 2010. In all ofFY 2009, we conducted 

94 SDVOSB bid protests. We will continue to explore new ways, given our 

resources, to make our surveillanee of the program more robust; and 

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47 

• Improving outreach and processes: We need to make sure the certification 

process is both efficient and effective for both veterans and taxpayers. We also 

need to provide targeted outreaeh to make the federal contracting market less 

confusing and more accessible to the SDVOSB community. In fiscal year 2010 

and succeeding fiscal years we are focusing on enhancing OVBD outreach, 

counseling and training to all veterans, especially service-disabled veterans. This 

is happening in our VBOC program (Veterans Business Outreach Program) which 

grew from 8 centers in FY09 to 16 centers in FYIO. In addition, we continue to 

grow local outreach initiatives developed and implemented by SBA district 

offices, as well as, "on-line" services. 

18. The President's bndget includes a proposal to provide the "SBA [with] the flexibility 

to adjust fees over time to make the program more self-financing." Currently, the 

maximum guaranty fees that borrowers pay, and also a maximum yearly fee that 

lenders pay, are established under the Small Business Act, by Congress. Many 

members, on both sides of the aisle, did not agree with President Bush in 2005 when 

he pushed the program to zero subsidy and it was slipped into an omnibus bill in the 

middle of the night. And there is long-standing skepticism that OMB gives the SBA 

and its programs fair assessments when calculating the relevant cost estimates. As 

such, many are uncomfortable giving the Administration this Congressional 

oversight power. 

a. Please provide us with more detail about the legislative proposal coming and 

explain why the Administration feels it needs this authority instead of 

making a case when it wants to increase fees. 

The SBA and the Office of Management and Budget are currently working on this 

proposal and should be submitting its legislative proposal very shortly. This would give 

the SBA the flexibility to increase and decrease fees in the 7(a) program, without 

requesting a legislative proposal every time that cost estimates vary. 

19. The Administration's Budget proposes to increase the borrower fee from 0.389% to 

0.749% per annum starting in 2011 for borrowers in the 504 program. At a time 

when businesses are facing tightened lending requirements, increasing their loan 

fees will create one more financial blockade they must surmount in order to utilize 

the SBA's financing programs. To offset the increase in fees charged to borrowers 

in the 504 program, aud to offset the increased borrower fee for the CDC, I have 

recommended a total of$4.6 million for the 504 program in FY2011. 

a. Administrator Mills, are the Committee's estimates correct that it would take 

about $4.2 million to prevent an increase in the borrower fee and $1.2 million to 

offset the CDC fee? [YeslNo] 

i. If no, what are the amounts? 
48 

No. To prevent the borrower fee from increasing from .389% to .749% 

would require $167.4 million in additional subsidy. 

b. Is. it true that the President did not request funding to offset these fees in the 

budget? [YeslNo] 

i. If no, please explain why and how it does not hurt small businesses and 

their access to this capital. 

The 504 program is a zero subsidy program and the administration has the 

authority under its current regulations to increase fees on the 504 program. 

Therefore, it was not necessary to request additional subsidy for the 504 

program. 

20. The President's FY 2011 budget recommends reducing funding for the SBA 

Microloan program from its FY 2010 appropriated level of $25 million to $13.8 

million - a cut of about $12 million. And yet the budget detail indicates that SBA 

plans to bring 30 new intermediaries into the program this year - in FY 2010. 

a. Can you explain how the SBA plans to increase the number of Intermediary 

Microlenders participating in the program while at the same time reducing 

funding for the program by approximately 50% in the coming year? 

To expand SBA's points of access in the Microloan Program, the Agency will 

continue to recruit new microlenders. As of May 17, 2010, nine intermediary 

lenders have entered the program fOf the first time this year. The Microenterprise 

Development Branch and the Office of Field Operations have begun 

conversations to determine new ways to market the Microloan Program through 

our District Office Network to attract new intermediaries. A training committee 

has been formed to address internal Microloan Program training to improve 

marketing capacity and to add to locally based interest in the program. SBA 

experts are also attending conferences at which the program is being marketed. 

Furthermore, the SBA has leveraged additional funding resources that have been 

available under the Recovery Act. The continued availability of Recovery Act 

funds through September 30, 2010, will allow us to use Fiscal Year 2010 funding 

(which expires on September 30, 2011) to stretch available loan dollars and grant 

funds through Fiscal Year 2011. We anticipate that this will help to ensure that 

Program intermediaries will have sufficient technical assistance and training 

funding through the end of Fiscal Year 20 II. Training has also been provided to 

Microloan Program Participants to assist them in increasing their use of the many 

technical assistance resources available through our District offices. 

21. Through ARRA, the SBA was provided with $30 million for microloans -- $24 

million for technical assistance grants and $6 million to leverage $50 million that 

SBA Mieroloan intermediaries eould lend out. ARRA funds were intended to go out 

quickly to have a fast impact on the lack of capital, preserve jobs and create jobs. 

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49 

a. Please tell me how much of the technical assistance (TA) grant funding has 

been obligated. 

As of May 17, 2010, 75 ARRA grants have been approved and grant documents have 

been issued for a total of$22,565,791. 

b. Please tell ns how much of the $50 million in loan capital to SBA 

Intermediary Microlenders has been disbursed. 

As of May 17, 2010, 71 loans have been made to Microloan Program Intermediary 

lenders for a total of $40,030,333. Of that amount, $9,372,000 has been disbursed to 

micro lenders for making microloans. 

22. I was pleased to work with my colleagues on the Appropriation's Committee last 

year to include bill language in the Consolidated Appropriations Act of 2010 that 

raised the cap on an Intermediary Microlenders annual TA grant from 25% of its 

outstanding loan from SBA to 50 % of its outstanding loan. I did this because my 

colleagues and I were hearing from Intermediary Microlenders who were telling us 

how much time they were spending with their business borrowers - providing hands 

on technical assistance and work-out advice to help existing borrowers keep their 

businesses afloat during this economic slowdown. These demands on these 

Intermediary Microlenders is growing as conventional lenders pull back from small 

business lending - leaving more and more businesses turning to the SBA 

Intermediary Microlenders as the lenders of last resort. 

a. With .that as the backdrop - can you tell me how and when the 50% cap was 

put in place and whether Intermediary Microlenders have secured their TA 

grants for FY 2010? 

Based on the statutory authority to increase the funding up to 50%, we were able 

to raise the cap on grant funding to 44%. We believe that this will ensure that all 

Microloan Program Intermediaries receive the maximum amount of funding 

possible. As of May 7, 20] 0, all ARRA grant documents had been issued to the 

intermediaries along with requests for supporting documentation. 

23. One of the changes I would like to see in the budget concerns SBA's Office of 

Advocacy. As you know, the SBA Office of Advocacy is a vital office that serves as 

the independent, "regulatory watchdog" for small businesses within the federal 

government, ensuring that federal agencies adhere to their requirements under the 

Regulatory Flexibility Act (RFA). Advocacy also produces research studies on issues 

of key concern to entrepreneurs. This original research provides critical 

information to small business stakeholders and policymakers, including Congress, 

and, more specifically, the Senate and House Small Business Committees. In order 

to preserve Advocacy's independence, to enhance its mission of representing the 

nation's small businesses within the federal government's legislative and 

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50 

a. Would you support this in the future? 

We do not support this as a separate line item within the Executive Direction. We 

know that included within the Executive Direction in the President's FY 2011 

Budget submission is operational funding of $1.8 million for the SBA's Office of 

Advocacy. This level of funding does not include the cost of compensation and 

benefits for the Office of Advocacy which would be in excess of $3.5 million. If 

the Office of Advocacy is included as a separate line item similar to that of the 

Inspector General, funding would need to be $5.3 million for FY 2011 instead of 

the $2.5 million proposed. 

24. Last year, in the FY2010 appropriations bill, I worked with Senator Durbin and 

Senator Snowe to restore funding for the Federal and State Technology (FAST) 

Partnership program, established by Senator Bond. As you may know, this 

program had not been funded since 2004, even though it had proven effective at 

increasing participation in the SBIR program in states with low participation -

Louisiana and Missonri, to name two states, with LSD and Louisiana Tech 

leveraging this program snccessfully. I was very pleased that we succeeded in 

getting $2 million to restart this important tool. 

a. Given that the President's budget has "improving" the SBJR program as one 

of his "high priority performance goals" (pg 2), why didn't the 

Administration request funding for the program that increases awareness of 

and participation in the SBIR program? 

SBA's statutory authority for the FAST program sunset on October 1, 2005 under 

Public Law 106-554. 

b. Where is the SBA in obligating the FAST funding for FY2010, now that we 

are more than halfway through the fiscal year? 

The period for submitted applications for the funding closed on May 10, 2010. 

SBA is in the process of evaluating the applications and will make awards in the 

next several months. 

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51 

U.S. Senator David Vitter 

U.S. Senate Committee on Small Business and Entrepreneurship 

Questions for the Record 

April 21, 2010 

To Administrator Karen Mills: 

Administrator Mills, I am concerned about Louisiana businesses affected by Hurricanes 

Katrina, Rita, and Gustav, many who received SBA disaster loans. That economic hurt has 

been compounded by the recession. To help these businesses, I am interested in the SBA's 

efforts to help modifY these SBA loans and bring down the interest rate to lower payments. 

• How many SBA loans have been modified? Also, how many SBA disaster loans have 

been modified to lower the interest rate? 

Following the Hurricanes Katrina, Rita and Gustav, affecting Louisiana businesses and 

home owners, the SBA Disaster Loan Servicing Centers in Birmingham and El Paso 

assisted borrowers with: 

o 29,891 deferments on loans with outstanding balances of $1,943,704,096; 

o Reduced interest rates on 1,214 loans with outstanding balances of $67, 475,706; 

o Reduced or modified payments on 83,669 loans with outstanding balances of 

$5,044,127,557; 

o 4,402 subordinations to assist other critical financial needs of our borrowers. 

• Is the SBA actively reaching out to businesses to help them modify their loans? 

The SBA actively works to assist both residential and business customers to recover from 

disasters. This process begins with the granting of low interest loans and generous 

repayment terms. In situations where there is substantial need, the SBA will take 

subordinate positions on collateral and has rules in place that allow it to loan funds on the 

basis of need and not strictly on the "loan to value" ratio of the available collateral. 

In situations where the 4% interest rate has proven to be a persistent stumbling block to 

the successful repayment of an SBA Disaster Loan, we have recommended a reduced 

interest rate. It should be stated, however, that a decrease in the interest rate is not often a 

first line of attempted assistance, partly because SBA's Disaster Loan Servicing Centers 

have more effective tools to help borrowers who are in need. SBA has found that several 

loan modification tools, including loan repayment deferments, temporary or permanent 

monthly payment reductions, extensions of maturity, due date changes, and agreeing to 

subordinate SBA's lien positions, often produce satisfactory immediate relieffor 

borrowers facing disaster situations. 

Once a loan has been disbursed, the SBA's Loan Servicing Centers offer a range of 

options to assist borrowers to repay their loans. These Centers actively pursue contact 

with SBA's small business customers, whether on home loans or business loans. The 

SBA Loan Servicing Centers discuss delinquency, make payment arrangements, and 

ascertain situations where servicing actions may help a business or homeowner through 
52 

Æ 

economic difficulty. All monthly statements also include contact information for the 

customers' convenience to find relevant SBA staff support resources. Also, the Centers 

pro-actively assist customers by directly contacting them if the loan becomes ten days 

past due. The Centers' staff has been trained to be highly understanding and cooperative 

when speaking with these disaster-struck customers, in the attempt to discover the caseby-case financial situation behind any past-due loans. 

• Is there a consistent assessment process within the SBA to identify businesses that 

may be in trouble? If so, once these businesses are identified, what is the SBA doing 

to help them? 

The most helpful tool that SBA's Disaster Loan Servicing Center possesses to monitor 

distressed borrowers is our weekly Delinquency Report. This report system regularly 

accounts for all loans that are past due. From this list, our loan servicing personnel 

approach delinquency from a problem-solving point of view in either the orderly 

collection of past due payments, or the recommendation of actions that will provide 

necessary relief to borrowers in need. 

The primary tools the Centers use to assist borrowers in distress are deferment of past due 

and upcoming payments; a reduction in monthly payment; an extension of maturity date; 

the agreement to subordinate in order to allow borrowers to use their collateral to provide 

effective relief; or, under extreme circumstances, a change in interest rate. 

Deferments are the most common tool used to help borrowers recover from financial 

distress. These give borrowers breathing room from the repayment of their debt. For ongoing financial issues, a temporary or pennanent payment reduction can provide 

additional needed "breathing room" to allow a customer to recover. If a customer cannot 

make a lump-sum payment at the conclusion of their payments with SBA, a maturity date 

extension allows them to continue to make regular payments till the debt is satisfied. 

Subordinations allow borrowers to access available equity in collateral for various 

important purposes. In addition, the Centers have reduced interest rates for Customers 

under extreme hardship when none of the above remedies has helped the Customer 

recover.