However, the Guarantee Pilot has not been as successful as it could be. There are several restrictions in the structure of the pilot which anecdotal evidence suggests have made it difficult for lenders to become involved, and intermediaries to become interested. Since this pilot has been extended through the end of FY 2000, we will continue to test this concept. At the end of the pilot, SBA will be better able to assess changes needed to enhance this concept. The third line item affecting the program is technical assistance grant funding.
Technical assistance is the backbone of microenterprise development.
It provides the small business person with integrated training in business management, inventory control, cash management, marketing, and in other areas critical to the success of any business. Technical assistance helps to ensure microloan repayment because it strengthens the microborrower's ability to realize income. It is such a critical part of the lending process that when technical assistance funds are not adequate, microlenders will slow their lending rather than put loan capital at risk. Bonus percentages are also available for intermediaries doing business in areas of extreme poverty. During the demonstration years, appropriations for technical assistance were provided at varying levels.