February

Cost R

Report to

of the Sm

Introduc

Small bus

the econo

Lending F

communit

of the SBL

and prom

This repor

Treasury t

operating

to the SBL

actual ope

Treasury i

operation

Investmen

savings) o

initial and

participat

fewer act

cost of ra

investmen

In additio

versus an

reduction

Estimate

Treasury i

investmen

institution

21, 2011,

statutory

y 2012

Report

o Congress s

mall Busines

tion

inesses are a

omic recovery

und (SBLF) is

ty developme

LF is to encou

mote economi

rt is submitte

to provide a s

g expenses, in

LF program.  T

erating expen

is pleased to

ns will be sign

nts made thro

of $80 million

d current cost

ting institutio

ual investme

ising funds, w

nts were mad

n, Treasury in

operating ex

n from the July

ed Cost of SB

invested over

nts of $3.9 bi

ns operate in

with subsequ

funding dead

submitted p

ss Jobs Act o

vital part of t

y.   Establishe

a dedicated f

ent loan fund

urage Main St

c growth in c

ed pursuant to

semiannual w

ncluding comp

This report re

nses for the fi

report that it

ificantly less

ough the SBL

in contrast to

t estimates is

ns as their fin

nts than initia

which is the re

de and lower

ncurred $33 m

xpense budge

y 2011 estima

BLF Investme

r $4.0 billion

llion in 281 co

over 3,000 lo

uent transact

dline.

pursuant to S

of 2010

the American

ed by the Sma

fund designe

ds (CDLFs) in o

treet banks an

ommunities a

o Section 410

written report

pensation for

eflects the est

iscal year end

t expects that

than initial es

F program ar

o an initially‐

due to a redu

nancial condit

ally forecast.

esult of lower

projected ma

million in fisca

et of $55 milli

ate of $40 mi

ents

in 332 institu

ommunity ba

ocations acro

tions complet

1

Section 4106

n economy, an

all Business Jo

d to provide

order to enco

nd small busi

across the Na

06(2) of the A

t to Congress

r financial age

timated cost

ding Septemb

t expenditure

stimates pres

e presently e

projected cos

uction in the

tion is stronge

The cost sav

r interest rate

arket rates ov

al year 2011 o

on.  These re

illion.

tions through

anks and $104

ss 48 states.  

ted thereafte

 

6(2)  

nd their succ

obs Act of 201

capital to qua

ourage small b

nesses to wo

ation.   

Act, which dire

on all project

ents, and all t

of the progra

ber 30, 2011.

es associated

sented in the

expected to ge

st of $1.3 billi

projected de

er than initia

vings is also d

es than expec

ver the life of

operating exp

alized expens

h the SBLF pro

4 million in 51

The initial SB

r until the pro

 

ess is a critica

10 (the Act), t

alified comm

business lend

rk together, h

ects the Secre

ted costs and

ransactions m

am’s investme

with SBLF inv

President’s 2

enerate a pro

ion.  The savi

fault rates es

lly forecast, c

ue to a decre

cted at the tim

f the program

penses for the

ses represent

ogram.  Thes

1 CDLFs.  Coll

BLF funding o

ogram’s Sept

al component

the Small Bus

unity banks a

ding.  The pur

help create jo

etary of the

d liabilities, al

made with res

ents and the

vestments an

2012 Budget.

ofit (or budge

ngs between

stimated for

coupled with

ease in Treasu

me the SBLF

m.

e SBLF progra

t a further

e amounts in

ectively, thes

ccurred on Ju

ember 27, 20

t of

siness

and

pose

obs,

l

spect

d

  

et

the

ury’s

am,

nclude

se

une

011
Treasury c

be return

which wa

decrease

Budget.  T

and the re

Treasury e

(FCRA) me

expected

rate of 7.2

principal i

As applied

default ra

participan

SBLF inve

present v

Operatin

Treasury i

achieving

program o

investmen

monitorin

performa

of securit

The figure

which cov

amounts,

existing re

among ot

                  

1 Treasury p

Treasury’s f

Original e

Reestimat

currently esti

ed to the Tre

s prepared fo

in projected

The figures in

eestimate as

estimated the

ethodology u

future cash f

24 percent.  T

investments)

d to the SBLF

ate for progra

nts’ dividend,

stments.  Usi

alue of the pr

ng Expenses

is committed

the program

office, condu

nt transaction

ng the perform

nce and costs

ies purchased

es shown in th

vers the first y

and $7 millio

esources and

ther efficienci

                       

prepares subsidy

financial stateme

stimate

te as of Novem

mates1 that t

asury Genera

or inclusion in

budget cost f

the following

of November

E

e program’s b

sing actual pr

flows, results

The current e

of 4.29 perce

program, the

m participant

interest, and

ng this inform

rogram’s exp

to implemen

m’s objectives.

cting outreac

ns.  Going for

mance and co

s, maintaining

d.   

he following t

year of the pr

on in savings v

employ cont

ies.  Certain a

                   

y rate reestimate

ents for fiscal ye

mber 2011

the investmen

al Fund of $80

n Treasury’s fi

from the $1.3

g table reflec

r 2011.  

Estimated Cos

(Doll

budget cost in

rogram data f

in a subsidy r

stimate incor

ent.

e FCRA metho

ts, (2) the est

d other payme

mation, Treas

ected cash flo

nting the SBLF

.  The operati

ch to potentia

rward, expens

ompliance of

g program ac

table reflect o

rogram.  Thes

versus July 20

tract specialis

accounting ob

es for all of its cr

ear 2011 were re

S

2

nts made thro

0 million over

iscal year 201

3 billion estim

t the original

st of SBLF Inv

lars in millions)

n conformanc

for fiscal year

rate of ‐1.98 p

rporates a for

odology inclu

timated cash

ents, and (3)

ury calculate

ow.

F in a cost‐eff

ng expenses

al applicants,

ses for the SB

participating

counts, and m

operating exp

se figures refl

011 estimates

sts for certain

bligations for

redit reform pro

eleased in Novem

Subsidy Rate

7.24%

‐1.98%

 

ough SBLF wi

r the life of th

11 financial st

mate containe

ly estimated

vestments

ce with the Fe

r 2011.  This d

percent comp

recasted cum

des: (1) an es

flow received

Treasury’s co

d the subsidy

fective manne

reflect the co

reviewing ap

BLF program w

institutions,

managing the

penses incurr

lect $22 millio

s, driven by T

n temporary a

the program’

ograms for inclus

mber 2011.

P

Investment

                            

                            

 

ill generate a

he program.  T

tatements, re

ed in the Presi

cost of the SB

ederal Credit

data, combin

pared to an o

mulative defau

stimate of the

d by Treasury

ost of raising f

y rate for SBL

er to protect

osts of establ

pplications, an

will relate pri

reporting on

e portfolio an

red as of Sept

on in savings

Treasury’s abi

and volume‐d

’s operating e

sion in its annua

rojected

t Amount

            17,399

               4,028

budget savin

This estimate

epresents a

ident’s 2012

BLF investme

Reform Act

ed with the

original subsid

ult rate (i.e., l

e cumulative

y from the

funds to mak

F based on th

taxpayers wh

ishing the SB

nd funding

marily to

program

d the disposit

tember 30, 20

versus budge

ility to build u

dependent tas

expenses in fi

l financial statem

Projected Life

Cost (Sav

                           1

                            

ngs to

e,

ents

dy

ost

ke

he

hile

LF

tion

011,

eted

upon

sks,

iscal

ments.  

etime

vings)

1,260

    (80)
year 2011

in the thir

Descriptio

As of Sept

now staff

lending an

the 2011

than the b

Departme

Througho

potential

initiating

primarily

institution

Salaries an

Travel

Contracts

Legal s

Custod

Asset

Intern

Office

Other

Subtotal (

Total

‐‐

[2] Include

[3] Include

[1] As pre

not includ

1 will be de‐o

rd column of

ons of operat

tember 27, 20

ed primarily t

nd program a

fiscal year, ac

budgeted am

ental Offices t

out the implem

applicants, p

more than 4,

to outreach a

ns regarding t

nd benefits

and other

support

dian and infra

managers

nal controls

e of the Treasu

r (equipment,

contracts and

es actual expendit

es all financial com

sented in the Pres

de a detailed line i

bligated and

the table.  Bu

ing expenses

SBLF O

011, the SBLF

to monitor, m

activities.  Bec

ctual salary ex

ount.  SBLF is

to further min

mentation of

articipating in

600 outboun

activities to b

the SBLF prog

structure prov

ury Inspector G

supplies, rent

other)

tures from the be

mmitments, oblig

sident's Budget fo

item budget beyon

returned to t

udgeted expe

follow the ta

Operating Ex

F program’s c

manage, and r

cause many e

xpenses incur

s utilizing adm

nimize expen

the SBLF pro

n over 50 ind

d calls directl

uild awarene

gram.  

     

     

vider

General

)

     

     

ginning of the pro

gations and expen

or Fiscal Year 2012

nd “Salaries and b

3

the Treasury G

enditures for f

able below.

penses for Fi

ore investme

report on the

employees joi

rred through

ministrative in

ses.

ogram, Treasu

ustry events,

ly to institutio

ess of the prog

Expenditu

FY 2011 Budge

               7,025,0

                   187,0

n

n

n

n

n

n

             47,437,0

             54,649,0

ogram (9/27/10) t

ditures as of 9/30

2, the SBLF progra

benefits,” “Travel,

 

General Fund

fiscal year 20

scal Year 201

ent activities h

ese investmen

ined the SBLF

September 3

nfrastructure

ury engaged i

teleconferen

ons.  Travel e

gram and to

[1]

ures Ex

eted as

000                  

000                  

n/a                  

n/a                  

n/a                  

n/a                  

n/a                  

n/a                  

000                  

000                  

through 9/30/11.

0/11.  

am—which was e

” and “Contracts a

 

d.  These oblig

12 are $26 m

11

have been co

nts and relate

F program ove

30, 2011 are s

available thr

n extensive o

nces, and web

expenses to d

provide educ

[2]

Actual

xpenditures

s of 9/30/11

       3,551,843

             29,110

       4,694,349

10,517,454     

       8,345,000

       4,427,859

           696,194

       1,000,286

29,681,142     

33,262,095     

established on Sep

and other.”

gations are sh

million.  

ompleted.  SB

ed participant

er the course

substantially

ough the Tre

outreach with

binars as well

ate relate

cation to eligi

Commitm

Obligat

and Expendi

as of 9/

                   3,551

                         38

                   9,518

                 12,163

                   9,869

                   5,262

                       987

                   1,148

                 38,949

                 42,539

ptember 27, 2010—

hown

LF is

t

e of

lower

asury

h

l as

ble

[3]

ments,

tions,

itures

/30/11

1,843

8,475

8,806

3,493

9,125

2,364

7,000

8,314

9,102

9,420

—did
The cost o

and mark

number o

 Le

cl

ex

ot

d

 Fi

re

e

ap

vo

ag

in

 In

co

d

p

Th

o

 O

Tr

Tr

Th

Th

of legal servic

et research) i

of investment

egal Support:

osing transac

xpenses are e

ther transact

ependent.  

inancial Agen

elated to (i) b

ligible institut

pplicants, and

olume‐ and a

gents that ma

nvestments.   

nternal Contr

ontrols assoc

ecisions.  This

rocedures, in

hese contract

perational pr

Office of the T

reasury Office

reasury’s OIG

hrough Septe

his cost is not

ces and financ

is largely prop

s (332 investm

:  These expe

ctions with th

expected to b

ions related t

nts (Custodia

ank custodia

tions, and pay

d (iii) market

ctivity‐depen

anage investm

rols:  These ex

iated with set

s activity inclu

formation da

tual expenses

ocesses and c

Treasury Insp

e of the Inspe

G is required t

ember 30, 201

t volume‐dep

cial agents (in

portionate to

ments):

nses are for l

he 332 institut

be incurred in

to the manag

n and Infrast

l services wit

yments proce

research of t

ndent.  Going

ment account

xpenses relat

tting up the p

udes work pe

atabases, and

s will be signi

controls are e

ector Genera

ector General

to issue repor

11, a total of

pendent.

4

ncluding custo

o the volume o

egal services

tions particip

connection w

gement of the

ructure Prov

h respect to S

essing for SBL

he communit

forward, the

ts and perform

e principally t

program, revi

erformed by c

other docum

ficantly reduc

established.  T

al:  These exp

l (OIG) for aud

rts on the SBL

$696,194 had

 

ody of securit

of application

for investme

pating in the S

with repurcha

e investments

ider, Asset M

SBLF securitie

LF participant

ty banking se

program wil

m financial an

to the design

iewing applic

consultants re

mentation for

ced in future

This cost is no

penses reflect

dits of the SB

LF not less tha

d been spent

 

ties, payment

ns (933 applic

ent‐related do

SBLF.  Going f

ases of SBLF s

s.  These cost

Managers):  Th

es and docum

ts, (ii) financia

ctor.  These c

l incur costs f

nalyses on Tr

n of processes

ations and m

egarding the

r the processi

years, as the

ot volume‐de

t reimbursem

BLF program.

an two times

on audit rela

ts, credit ana

cations) and t

ocumentation

forward, lega

securities and

s are volume

hese expense

ments, outrea

al analysis of

costs were lar

from financia

easury’s

s and interna

aking investm

development

ng of applicat

e program’s

ependent.   

ents to the

Per the Act,

each year.  

ated activities

lysis,

the

n and

l

d

‐

es are

ch to

SBLF

rgely

l

l

ment

t of

tions.

s.