Small Business Lending Fund

FY 2017

President’s Budget

February 9, 2016
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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

1.2 – Financing Account Summary

Dollars in thousands

 FY 2015 FY 2016 FY 2017

 Actual Estimated Estimated $ Change % Change

Obligations AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT

Subsidy Re-estimate 15,636 0 0 0 0.00%

Small Business Lending Fund Admin Account 14,949 10,868 13,405 2,537 23.34%

Total Obligations 30,585 $10,868 $13,405 $2,537 23.34%

Budget Authority 

Small Business Lending Fund Admin Account 14,949 10,868 13,405 2,537 23.34%

Small Business Lending Fund Program Account 15,636 0 0 0 0.00%

Total Budget Authority 30,585 $10,868 $13,405 $2,537 23.34%

Outlays

Small Business Lending Fund Admin Account 6,009 11,238 13,394 2,156 19.19%

Small Business Lending Fund Program Account 21,065 0 0 0 0.00%

Total Outlays 27,074 $11,238 $13,394 $2,156 19.19%

FY 2016 to FY 2017

Dollars in thousands

 FY 2015 FY 2016 FY 2017 Change % Change

 Actuals Estimated Estimated FY 2016 to 

FY 2017

FY 2016 to FY 

2017

Small Business Lending Fund Finance Account AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT

Obligations 0 0 0 - 0.00%

Collections 681,000 1,943,000 150,000 (1,793,000) -92.28%

Financing Authority (net) 589,000 1,867,000 130,000 (1,737,000) -93.04%

Financing Disbursements (net) 589,000 1,867,000 130,000 (1,737,000) -93.04%
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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 2.36 0.31 1.66 -0.05

Total $4.0 $4.0 $2.4 $0.3 $1.7 ($0.1)

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 Fiscal Year (FY) 2015, the SBLF program office continued its FY 2014 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. In addition, SBLF 

prepared for the expected surge of participants exiting the program prior to the step up rate in 

the first quarter of 2016.

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 2015. 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 third annual lending survey.

Summary of SBLF Program Goals for FY 2016 and Forward

For FY 2016 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, including evaluation of the portfolio following the step up rate 

and consideration of potential disposition strategies.

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.
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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.

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 fourth annual lending

survey.

Summary of Office of Inspector General (OIG) Activity

In FY 2017, 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 2017 budget request will support six OIG employees through a reimbursable agreement 

to perform audits of financial institutions receiving SBLF investments. The OIG's efforts in

FY 2017 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. 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 2016 Estimated 19 $10,868

Changes to Base:

Maintaining Current Levels (MCLs): - $269

Pay-Raise - $28

Pay Annualization - $9

Non-Pay - $232

Subtotal Changes to Base - $269

Total FY 2017 Base 19 $11,137

Program Changes:

Program Decreases: - ($232)

Contracts and other reductions - ($232)

Program Increases: - $2,500

Disposition Agent - $2,500

Total FY 2017 Estimated 19 $13,405

2A – Budget Increases and Decreases Description

Maintaining Current Levels (MCLs) .......................................................+$269,000 / +0 FTE

Pay-Raise +$28,000 / +0 FTE

Funds are required for the proposed January 2017 pay-raise.

Pay Annualization +$9,000 / +0 FTE

Funds are required for annualization of the January 2016 pay-raise.

Non-Pay +$232,000 / +0 FTE

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

rent, supplies, and equipment.

Program Decreases .......................................................................................-$232,000 / +0 FTE

Contract and other reductions -$232,000 / +0 FTE

Reductions in contract support.

Program Increases ...................................................................................+$2,500,000 / +0 FTE

Disposition Agent +2,500,000 / +0 FTE

The SBLF portfolio of banks and community development loan funds will likely be disposed of 

at some point after the rate step-up. A financial disposition agent would assist the SBLF 

program in preparing for various wind down disposition, including primarily auctions and 

restructurings for those institutions that don't repay on their own.
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2.2 – Operating Levels Table

Dollars in Thousands

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.

Small Business Lending Fund FY 2015 FY 2016 FY 2017

Object Classification Actual Estimated Estimated

11.1 - Full-time permanent 1,662 2,269 2,296

11.9 - Personnel Compensation (Total) 1,662 2,269 2,296

12.0 - Personnel benefits 489 547 557

Total Personnel Compensation and Benefits $2,151 $2,816 $2,853 

21.0 - Travel and transportation of persons 2 20 20

23.1 - Rental payments to GSA 4569 426 426

25.1 - Advisory and assistance services 759 2,014 2,014

25.2 - Other services 4,786 2,950 5,450

25.3 - Other purchases of goods & serv frm Govt accounts 2,524 2,478 2,478

26.0 - Supplies and materials 158 164 164

41.0 - Grants, subsidies, and contributions 15,636 0 0

Total Non-Personnel 28,434 8,052 10,552

Total Budgetary Resources $30,585 $10,868 $13,405 

Budget Activities:

SBLF Program 15,636 0 0

SBLF Administration 14,949 10,868 13,405

Total Budgetary Resources $30,585 $10,868 $13,405 

FTE 14 19 19
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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 quarter ending March 31, 2015, program 

participants have increased their qualified small business lending by $15.4 billion over baseline 

levels. As of August 1, 2015, 73 institutions with aggregate investments of $1.2 billion have 

fully redeemed their SBLF funding and exited the program, and 31 institutions have made partial 

redemptions totaling $339.7 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 83 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 16 quarterly “Lending Growth” (formerly 

“Use of Funds”) reports. In addition, Treasury released the results of the third 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 2015, the SBLF program office has:

a. produced, on a quarterly basis, portfolio monitoring reports that include institution-specific

credit scores, dashboards, and watch lists; 
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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 March 31, 2015, SBLF participants have increased their small business lending by

$15.4 billion over a $31.3 billion baseline, which was a $280 million increase over the prior 

quarter. Increases in small business lending are widespread across SBLF participants, with 98

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 73.6 percent over baseline levels, versus a 23.1 percent median 

increase for a representative peer group of non-SBLF banks and a 17.8 percent median increase

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

dividend, interest, and fee payments totaling $277.6 million.

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

positive return of $51 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 2017.

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 -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

President’s Budget for fiscal year 2017 -1.27% 4,028 -51

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

methodology using actual program data for FY 2011 – FY 2015. This data, combined 

with the expected future cash flows, results in a subsidy rate of -1.27 percent compared to 

an original subsidy rate of 7.24 percent.

As required by FCRA, 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 of 0.42 percent compared to a 2.70 percent rate in the prior year’s

estimate [1]. This lower rate reflects an overall improvement in the financial condition of

program participants and increased repurchase rates of SBLF investments. Inclusive of these

changes, the projected program lifetime savings is $51 million.

3B – SBLF Administration

($13,405,000 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 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Actual Actual Actual Actual Estimated Estimated

 Mandatory Resources $22,831 $18,705 $20,469 $14,949 $10,868 $13,405

Budget Activity Total $22,831 $18,705 $20,469 $14,949 $10,868 $13,405

[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

non-information technology investments, can be viewed and downloaded at:

http://www.treasury.gov/about/budget-performance/Pages/summary-of-capital-investments.aspx

This website also contains a digital copy of this document.