Small Business Lending Fund

FY 2016

President’s Budget

February 2, 2015
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Table of Contents

Section 1 – Purpose ....................................................................................................................... 3

1A – Mission Statement.............................................................................................................. 3

1.1 – Program Account Summary............................................................................................... 3

1.2 – Financing Account Summary ............................................................................................ 3

1.3 – Program Disbursement, Repayments, and Cost/Savings................................................... 4

1B – Vision, Priorities and Context............................................................................................ 4

Section 2 – Budget Adjustments and Appropriation Language............................................... 6

2.1 – Budget Adjustments Table................................................................................................. 6

2A – Budget Increases and Decreases Description..................................................................... 6

2.2 – Operating Levels Table...................................................................................................... 7

2B – Appropriations Language and Explanation of Changes..................................................... 7

2C – Legislative Proposals.......................................................................................................... 7

Section 3 – Budget and Performance Plan ................................................................................. 8

3A – SBLF Program ................................................................................................................... 8

3B – SBLF Administration ....................................................................................................... 10

3.1.2 – SBLF Administration Budget and Performance Plan................................................... 10

Section 4 – Supplemental Information...................................................................................... 11

4A – Summary of Capital Investments..................................................................................... 11
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Section 1 – Purpose

1A – Mission Statement

The Small Business Jobs Act of 2010 (P. L. No. 111-240) (the “Act”) established the Small 

Business Lending Fund (SBLF). The SBLF is a dedicated fund designed to provide capital to 

qualified community banks (including banks, thrifts, and bank and thrift holding companies) and 

community development loan funds (CDLFs) with consolidated assets of less than $10 billion in 

order to encourage small business lending. The purpose of the SBLF program is to encourage 

Main Street banks and small businesses to work together, help create jobs, and promote 

economic growth in communities across the nation.

1.1 – Program Account Summary

Dollars in Thousands

 FY 2014 FY 2015 FY 2016 FY 2015 to FY 2016

 Actual Estimated Estimated $ Change % Change

AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT

Obligations

Subsidy Re-estimate 25,008 14,499 0 -14,499 -100.00%

Interest 1,610 1,137 0 -1,137 -100.00%

Small Business Lending Fund Admin Account 16,541 16,309 15,039 -1,270 -7.79%

Total Obligations $43,159 $31,945 $15,039 -16,906 -52.92%

Budget Authority 

Small Business Lending Fund Admin Account 15,541 14,809 15,039 230 1.55%

Small Business Lending Fund Program Account 26,618 15,636 0 -15,636 -100.00%

Total Budget Authority $42,159 $30,445 $15,039 -15,406 -50.60%

Outlays

Small Business Lending Fund Admin Account 14,556 16,952 16,534 -418 -2.46%

Small Business Lending Fund Program Account 26,618 15,636 0 -15,636 -100.00%

Total Outlays $41,174 $32,588 $16,534 -16,054 -49.26%

1.2 – Financing Account Summary

Dollars in Thousands

 FY 2014 FY 2015 FY 2016 Change % Change

 Actual Estimated Estimated FY 2015 to FY 

2016

FY 2015 to FY 

2016

AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT

Small Business Lending Fund 

Finance Account

Obligations 0 0 0 0 0.00%

Collections 538,000 216,000 2,408,000 2,192,000 1,014.81%

Financing Authority (net) 472,000 124,000 2,332,000 2,208,000 1,780.65%

Financing Disbursements (net) 472,000 124,000 2,332,000 2,208,000 1,780.65%
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1.3 – Program Disbursement, Repayments, and Cost/Savings 

Dollars in Billions

Cumulative 

Obligated

Cumulative 

Disbursed

Cumulative 

Outstanding 

(Includes 

Realized Losses)

Total 

Cumulative 

Income

Total 

Cumulative 

Repayments

Total 

Estimated 

Life Costs

SBLF Program 

Investments 4.03 4.03 3.13 0.27 0.90 -0.03

Total $4 $4 $3 $0 $1 ($0)

1B – Vision, Priorities and Context

SBLF supports the Treasury strategic goal, “Promote domestic economic growth, and stability 

while continuing reforms of the financial system.” In total, the SBLF invested $4.03 billion in

332 community banks and CDLFs.

In FY 2014, the SBLF program office continued its FY 2013 focus on investment management, 

operations, compliance and controls, and reporting activities. Specifically, the SBLF program 

office focused on the following activities:

Investment Management: SBLF monitored the SBLF investment portfolio and made 

recommendations to senior Treasury officials on decisions related to investment performance 

and activities.

Operations: SBLF managed the program’s data and information in connection with participant 

reporting, dividend, interest and fee payments, and capital repayments. 

Compliance and Controls: SBLF monitored participant conformance with program terms, 

including lending data, certification requirements, and other requirements provided for by the 

SBLF Securities Purchase Agreement. SBLF also developed and executed internal control

procedures for processes across SBLF program office functions.

Reporting: SBLF continued its reporting efforts in FY 2014. These activities included reporting 

to Congress on the program’s transactions, costs, and the participants’ lending growth, 

correspondence, and publishing the results of the program’s second annual lending survey.

Summary of SBLF Program Goals for FY 2015 and Forward

For FY 2015 and forward, the SBLF program office plans to continue its focus on investment

management, operations, compliance and controls, and reporting.

Investment Management: SBLF will continue to monitor the SBLF investment portfolio and 

make recommendations to senior Treasury officials on decisions related to investment 

performance and activities.

Operations: SBLF will continue to manage the program’s data and information in connection 

with participant reporting, dividend, interest and fee payments, and capital repayments. 

Compliance and Controls: SBLF will continue to execute a compliance program to monitor 

participant conformance with program terms, including lending data, certification requirements, 

and other requirements provided for by the SBLF Securities Purchase Agreement. SBLF also 

plans to continue executing internal control procedures for processes across SBLF program 

office functions.
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Reporting: SBLF will continue its outreach and reporting efforts. These activities include 

reporting to Congress on the program’s transactions, costs, and the participants’ lending growth, 

correspondence, and publishing the results of the program’s third annual lending survey.

Summary of Office of Inspector General (OIG) Activity

In FY 2016, the OIG will continue to provide audit and investigative oversight of the SBLF. The 

authorizing legislation for this small business lending initiative requires the OIG to conduct, 

supervise, and coordinate audits and investigations of the SBLF program and to issue a program 

oversight report no less than twice a year to the Congress and the Secretary of the Treasury. 

The FY 2016 budget request will support six OIG employees through a reimbursable agreement 

and will allow the OIG to augment its resources with contractors, as needed, to perform audits of 

financial institutions receiving SBLF investments. The OIG's efforts in FY 2016 will primarily 

focus on audits of selected financial institutions to determine whether they accurately reported 

their levels of small business lending activity, which Treasury uses to set the final lockdown 

dividend rate that participants will pay on Treasury's investment. Because the lockdown rate is 

based on the unverified lending activity reported by each institution, the OIG's audits will 

provide Treasury with assurance that participant reports can be relied upon when determining 

dividend rates and when assessing the effectiveness of the SBLF program. The OIG’s efforts 

will also focus on Treasury’s management of securities purchased with SBLF funds and payment 

of dividends by Community Development Loan Funds.
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Section 2 – Budget Adjustments and Appropriation Language

2.1 – Budget Adjustments Table

Dollars in Thousands

Small Business Lending Fund FTE Amount

FY 2015 Estimated 19 $16,309

Adjustments to Estimate: - -

Changes to Base:

Maintaining Current Levels (MCLs): - $314

Pay-Raise - $36

Pay Annualization - $9

FERS Contribution Increase - $10

Non-Pay - $259

Subtotal Changes to Base - $314

Total FY 2016 Base 19 $16,623

Program Changes:

Program Decreases: - ($1,584)

Contract and other reductions - ($1,584)

Total FY 2016 Estimated 19 $15,039

2A – Budget Increases and Decreases Description

Maintaining Current Levels (MCLs) .........................................................+$314,000 / +0 FTE

Pay-Raise +$36,000 / +0 FTE 

Funds are required for the proposed January 2016 pay-raise.

Pay Annualization +$9,000 / +0 FTE 

Funds are required for annualization of the January 2015 pay-raise. 

FERS Contribution Increase +$10,000 / +0 FTE 

Funds are required for increases in agency contributions to the Federal Employee Retirement 

System based on updated actuarial estimates.

Non-Pay +$259,000 / +0 FTE 

Funds are required for inflation adjustments in non-labor costs such as travel, contracts, rent, 

supplies, and equipment.

Program Decreases ....................................................................................-$1,584,000 / +0 FTE

Contract and other reductions -$1,584,000 / +0 FTE 

Reductions in contract support.
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2.2 – Operating Levels Table

Dollars in Thousands

Small Business Lending Fund FY 2014 FY 2015 FY 2016

Object Classification Actual Estimated Estimated

11.1 - Full-time permanent 1,659 2,062 2,089

11.3 - Other than full-time permanent 71 149 149

11.5 - Other personnel compensation 19 31 31

11.9 - Personnel Compensation (Total) 1,749 2,242 2,269

12.0 - Personnel benefits 494 537 547

Total Personnel and Compensation Benefits $2,243 $2,779 $2,816

21.0 - Travel and transportation of persons 2 20 20

23.1 - Rental payments to GSA 369 426 426

23.3 - Communication, utilities, and misc charges 19 0 0

25.1 - Advisory and assistance services 1,664 2,000 2,000

25.2 - Other services 9,166 8,077 6,733

25.3 - Other purchases of goods & serv frm Govt accounts 2,956 2,932 2,969

26.0 - Supplies and materials 122 75 75

Total Non-Personnel 14,298 13,530 12,223

Total Budgetary Resources $16,541 $16,309 $15,039

Budget Activities:

SBLF Administration 16,541 16,309 15,039

Total Budgetary Resources $16,541 $16,309 $15,039

FTE 15 19 19

2B – Appropriations Language and Explanation of Changes

SBLF does not receive any discretionary appropriation authority from Congress. Therefore, no 

appropriations language is proposed.

2C – Legislative Proposals

SBLF has no legislative proposals in the FY 2016 budget.
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Section 3 – Budget and Performance Plan

3A – SBLF Program

All investment activity occurred in FY 2011. The cost of purchases of preferred stock and other 

financial instruments made as capital investments are required by law to be determined as 

provided under the Federal Credit Reform Act (FCRA). 

The total program volume and anticipated repayments are reflected in the SBLF financing 

account (table 1.2). This non-budgetary account records all cash flows to and from the federal 

government resulting from direct capital obligated in FY 2011 and beyond. The amounts in this 

account are a means of financing and are not included in the budget totals.

Treasury completed investments in 332 institutions for a total of $4.03 billion in capital invested. 

Based on reports from participating institutions as of the fourth quarter FY 2014, program 

participants have increased their qualified small business lending by $14.3 billion over baseline 

levels. As of January 1, 2015, 52 institutions with aggregate investments of $759.5 million have 

fully redeemed their SBLF funding and exited the program, and 26 institutions have made partial 

redemptions totaling $261.1 million but continue to participate in the program.

The Small Business Jobs Act of 2010 includes specific reporting requirements for SBLF. The 

legislation requires a monthly written report describing all of the program transactions, the 

quarterly reporting of funds used by participating banks, a semi-annual report on administrative 

costs, and a report on the program’s impact on small business lending among women-, minority-, 

and veteran-owned businesses. 

In accordance with these statutory requirements, Treasury has published 60 transaction and 

program reports, including a detailed study of the impact of the SBLF program on women-, 

minority-, and veteran-owned businesses, as well as 14 quarterly “Lending Growth” (formerly 

“Use of Funds”) reports. In addition, Treasury released the results of the second annual SBLF 

lending survey, which expanded program reporting with respect to how SBLF funds were used 

by program participants. 

The SBLF program completed the review and, if applicable, funding of all eligible program 

applicants by the September 27, 2011 statutory deadline. 

The SBLF program office developed a set of asset management performance measures to 

continually monitor the impact of the Fund’s investments and the efficiency of its operations. 

The measures address two aspects of program performance:

1. Efficiency Measures (to assess the administrative aspects of the program)

a. Monitoring of investment portfolio condition

b. Review of compliance and supplemental report submissions by participants

c. Publication of reports as required by statute

In FY 2014, the SBLF program office has (a) produced, on a quarterly basis, portfolio 

monitoring reports that include institution-specific credit scores, dashboards, and watch lists; 

(b) maintained a record of compliance submissions and implemented an analytical process for 
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identifying errors in supplemental report submissions and receiving corrected submissions; 

and (c) published all reports required by the Small Business Jobs Act of 2010. 

2. Outcome Measures (to assess the impact of the program on small business lending)

a. Increase in small business lending by participating institutions

b. Increase in business lending by participating banks versus comparable institutions

c. Receipt of expected dividend, interest and fee payments by participating institutions

As of September 30, 2014, SBLF participants have increased their small business lending by 

$14.3 billion over a $31.6 billion baseline, which was a $720 million increase over the prior 

quarter. Increases in small business lending are widespread across SBLF participants, with 97

percent of participants having increased their small business lending over baseline levels. 

Most SBLF participants (93 percent) have increased small business lending by 10 percent or 

more. Over the same period, banks participating in SBLF have increased business loans 

outstanding by a median of 69.5 percent over baseline levels, versus a 20.4 percent median 

increase for a representative peer group of non-SBLF banks and a 15.1 percent median 

increase for a broader comparison group non-SBLF banks. As of January 1, 2015 SBLF has 

received dividend, interest and fee payments totaling $277.6 million. One institution has 

missed four dividend payments totaling $244.1 thousand.

Treasury currently estimates that the investments made through SBLF will generate a lifetime 

positive return of $10 million for the Treasury General Fund. The figures in the following table 

reflect Treasury’s calculation of the estimated cost of SBLF investments in the President’s 

Budget for FY 2016.

Estimated Cost of SBLF Investments

(Dollars in millions)

Subsidy Rate

Projected/Actual 

Investment 

Amount

Projected Lifetime 

Cost (Savings)

Original estimate 7.24% 17,399 1,260

President's Budget for fiscal year 2013 -2.08% 4,028 -84

President's Budget for fiscal year 2014 -1.26% 4,028 -50

President's Budget for fiscal year 2015 -0.63% 4,028 -25

President's Budget for fiscal year 2016 -0.26% 4,028 -10

Treasury estimated the program’s budget cost in conformance with the FCRA methodology 

using actual program data for FY 2011 – FY 2014. This data, combined with the expected future 

cash flows, results in a subsidy rate of -0.26 percent compared to an original subsidy rate of 7.24 

percent. 

Per FCRA requirements, the lifetime cost and subsidy rate of the SBLF program is estimated on 

a present value basis. Assumptions used to estimate future cash flows include, but are not 

limited to: (1) the cumulative default rate for program participants, (2) the cash flows received by 
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Treasury from the participants’ dividend, interest, and other payments, and (3) Treasury’s cost of 

raising funds to make SBLF investments. 

The current estimate of the program’s projected lifetime savings incorporates a forecasted 

cumulative default rate (i.e., lost principal investments) of 2.7 percent compared to a 3.28 

percent rate in the prior year’s estimate [1]. This lower rate reflects an overall improvement in the 

financial condition of program participants and, independent of other factors, would result in 

greater projected lifetime savings for the program. The current year estimate also incorporates, 

however, increased repurchase rates of SBLF investments which results in a reduction in 

expected lifetime dividend and interest payments to Treasury. Inclusive of these changes, the 

projected program lifetime savings is $10 million.

3B – SBLF Administration 

($15,039,000 from mandatory appropriations): 

The authority to pay administrative expenses is provided by Section 4108(b) of the Act. 

Administrative expenses include the costs of government employee salaries, contract support, 

and reimbursement to the Treasury Office of Inspector General for program audits. Treasury is 

required by law to submit semi-annual reports to the appropriate committees of Congress 

detailing administrative expenses.

3.1.2 – SBLF Administration Budget and Performance Plan

Dollars in Thousands

SBLF Administration Budget Activity

Resource Level FY 2009 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Actual Actual Actual Actual Estimated Estimated

 Mandatory Resources $0 $22,831 $18,705 $16,541 $16,309 $15,039

Budget Activity Total $0 $22,831 $18,705 $16,541 $16,309 $15,039
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Section 4 – Supplemental Information

4A – Summary of Capital Investments

SBLF uses Departmental Office’s (DO) systems and is part of DO’s capital investment strategy.

A summary of capital investment resources, including major information technology and nontechnology investments, can be viewed and downloaded 

at http://www.treasury.gov/about/budget-performance/Pages/summary-of-capitalinvestments.aspx

This website also contains a digital copy of this document.

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[1] The forecasted cumulative default rate represents the projected investment amounts not repaid by program participants as a 

percentage of all SBLF investments. The rate is estimated based on the financial condition of program participants relative to the 

historical performance of institutions rated by a major ratings agency.