Small Business Lending Fund
 

2015 President’s Budget
 
 

 

 

 

 

 

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

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

4A – Summary of Capital Investments .....................................................................................11

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 FY 2013 FY 2014 FY 2015 FY 2014 to FY 2015 

 Actual Estimated Estimated Change % Change 

AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT 

Obligations 

SBLF Administration 18,704 20,469 17,361 -3,108 -15.18% 

SBLF Subsidy Reestimate 33,679 27,000 0 -27,000 -100.00% 

Total Obligations $52,383 $47,469 $17,361 ($29,817) -62.81% 

Budget Authority 

SBLF Administration 24,707 20,469 17,361 -3,108 -15.18% 

SBLF Subsidy Reestimate 33,679 27,000 0 -27,000 -100.00% 

Total Budget Authority $58,386 $47,469 $17,361 ($30,108) -63.4% 

Outlays 

SBLF Administration 16,645 15,352 13,239 -2,113 -13.76% 

SBLF Subsidy Reestimate 33,679 27,000 0 -27,000 -100.00% 

Total Outlays $50,324 $42,352 $13,239 ($29,113) -68.74% 

1.2 – Financing Account Summary Dollars in Thousands 

 FY 2013 FY 2014 FY 2015 Change % Change 

 Actual Estimated FY 2014 to FY Estimated 2015 

FY 2014 to FY 

2015 

AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT 

Small Business Lending Fund 

Finance Account 

Obligations 0 

Collections 477,190 

Financing Authority (net) 322,000 

Financing Disbursements (net) 385,017 

0 

483,618 

381,000 

407,618 

0 0 

457,000 (26,618) 

381,000 0 

381,000 (26,618) 

0.00% 

-5.50% 

0.00% 

-6.53% 

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 

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Dollars in Billions 

 

SBLF Program

Investments 

Cumulative 

Obligated 

4.03 

Cumulative 

Disbursed 

4.03 

Cumulative 

Outstanding

(Includes

Realized Losses) 

3.63 

Total 

Cumulative 

Income 

0.21 

Total 

Cumulative 

Repayments 

0.40 

Total 

Estimated 

Life Costs 

-0.03 

Total $4 $4 $4 $0 $0 ($0) 

1B – Vision, Priorities and Context 

Summary of SBLF Program Activity – FY 2013 

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 2013, the SBLF program office continued its FY 2012 focus on investment management, 

operations, compliance and controls, and outreach 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 and Outreach: SBLF continued its outreach and reporting efforts in FY 2013. 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 first 

annual lending survey. 

Summary of SBLF Program Goals for FY 2014 and Forward 

For FY 2014 and forward, the SBLF program office plans to continue its focus on investment 

management, operations, compliance and controls, and reporting and outreach. 

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

make recommendations to senior Treasury officials on decisions related to investment 

performance and activities. 

1.3 – Program Disbursement, Repayments, and Cost/Savings 

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Operations: SBLF plans to 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 plans to 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. 

Reporting and Outreach: SBLF plans to 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 second annual 

lending survey. 

Summary of Office of Inspector General (OIG) Activity 

In FY 2015, 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 2015 budget request will support the 6 OIG-SBLF employees and 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 FYs 2015 and beyond will primarily focus on audits of 

selected financial institutions to determine whether they accurately reported their levels of small 

business lending activity to Treasury and how they have used their funds. Because the final 

lockdown dividend rate that participants will pay on Treasury's investment 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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 Dollars in Thousands 

Small Business Lending Fund FTE Amount 

FY 2014 Estimated 19 $20,469 

Changes to Base: 

Maintaining Current Levels (MCLs): - $347 

Pay-Raise - $27 

Non-Pay - $320 

Other Adjustments - ($1,157) 

Reduction in OIG Reimbursable - ($1,157) 

Subtotal Changes to Base - ($810) 

Total FY 2015 Base 19 $19,659 

Program Changes: 

Program Decreases: - ($1,983) 

Contract and other reductions - ($1,983) 

Total FY 2015 Estimated 19 $17,361 

 

 

 

 

 

 

 

Section 2 – Budget Adjustments and Appropriation Language 

2.1 – Budget Adjustments Table 

2A – Budget Increases and Decreases Description 

Maintaining Current Levels (MCLs) ......................................................... +$347,000 / +0 FTE
 

Pay-Raise +$27,000 / +0 FTE 

Funds are requested for the proposed January 2015 pay-raise and annualization of the January 

2014 pay raise. 

Non-Pay +$320,000 / +0 FTE 

Funds are requested for inflation adjustments in non-labor expenses such as GSA rent 

adjustments, postage, supplies and equipment. 

Other Adjustments .................................................................................... -$1,157,000 / +0 FTE
 

Reduction in OIG Reimbursable -$1,157,000 / +0 FTE 

Reduction in cost reimbursable to the OIG. 

Program Decreases .................................................................................... -$1,983,000 / +0 FTE
 

Contract and other reductions -$1,983,000 / +0 FTE 

Reductions in contract support and other costs such as rent and supplies. 

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D 

2.2 – Operating Levels Table 

ollars in Thousands 

Small Business Lending Fund - Administration 

Object Classification 

11.1 - Full-time permanent 

11.3 - Other than full -time permanent 

11.5 - Other personnel compensation 

11.9 - Personnel Compensation (Total) 

12.0 - Personnel benefits 

FY 2013 

Actual 

2,546 

149 

31 

2,726 

718 

FY 2014 

Estimated 

1,925 

113 

23 

2,061 

463 

FY 2015 

Estimated 

2,870 

0 

0 

2,870 

857 

Total Personnel and Compensation Benefits $3,444 $2,524 $3,727 

21.0 - Travel and transportation of persons 

23.1 - Rental payments to GSA 

25.1 - Advisory and assistance services 

25.2 - Other services 

25.3 - Other purchases of goods & serv frm Govt accounts 

26.0 - Supplies and materials 

14 

402 

1,934 

10,498 

2,368 

45 

20 

414 

2,260 

12,185 

2,891 

175 

20 

434 

0 

11,364 

1,741 

75 

Total Non-Personnel 

Total Budgetary Resources 

Budget Activities: 

SBLF Administration 

Total Budgetary Resources 

FTE 

*Table includes direct and reimbursable FTEs. 

15,275 17,945 

$18,704 $20,469 

18,704 20,469 

$18,704 $20,469 

24 25 

Reimbursable support moved from direct payroll charge to 

13,634 

$17,361 

17,361 

$17,361 

25 

 

 

 

reimbursable payroll charge in FY 2014. 

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 2015 budget. 

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Section 3 – Budget and Performance Plan 

3A – SBLF Program 

($27,000,000 of obligations in FY 2014 and $0 in FY 2015) 

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 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 third quarter 2013, program participants 

have increased their qualified small business lending by $11.2 billion over baseline levels. As of 

January 31, 2014, 32 institutions with aggregate investments of $472 million have fully 

redeemed their SBLF funding and exited the program, and 16 institutions have made partial 

redemptions totaling $131 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 55 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 10 quarterly “Lending Growth” (formerly 

“Use of Funds”) reports. In addition, Treasury released the results of the first 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 

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Estimated Cost of SBLF Investments 

(Dollars in millions) 

Projected/Actual

Investment Projected Lifetime!

Subsidy Rate Amount Cost (Savings)

Original estimate 7.24% 17,399 1,260

President's Budget for fiscal year 2013 M2.08% 4,028 M84

President's Budget for fiscal year 2014 M1.26% 4,028 M50

President's Budget for fiscal year 2015 M0.63% 4,028 M25

 

 

In FY 2013, 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 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, 2013, SBLF participants have increased their small business lending by 

$11.2 billion over a $35.1 billion baseline and by $819 million over the prior quarter. Increases 

in small business lending are widespread across SBLF participants, with 93 percent of 

participants having increased their small business lending over baseline levels. Most SBLF 

participants (90 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 52.1 percent over baseline levels, versus a 11.4 percent median increase for a representative 

peer group of non-SBLF banks and a 7.2 percent median increase for a broader comparison 

group non-SBLF banks. As of January 31, 2014, SBLF has received dividend, interest and fee 

payments totaling $238.5 million. One institution has missed a dividend payment of $40,000. 

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

positive return of $25 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 2015. 

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

using actual program data for fiscal years 2011, 2012 and 2013. This data, combined with the 

expected future cash flows, results in a subsidy rate of -0.63 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 

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to: (1) the cumulative default rate for program participants, (2) the cash flows received by 

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 3.28 percent compared to a 3.78 

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, a reduction in expected lifetime dividend and interest payments to Treasury as a result 

of higher-than-projected increases in small business lending by program participants, in 

accordance with the lending incentives provided for by the Act. Changes in economic 

projections also contributed to the decrease in program cost. Inclusive of these changes, the 

projected program lifetime savings is $25 million. 

3B – SBLF Administration 

($20,469,000 of obligations in FY 2014; $17,361,000 of obligations in FY 2015) 

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. 

[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. 

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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/downloaded at: http://www.treasury.gov/about/budgetperformance/Pages/summary-of-capital-investments.aspx 

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