State Small Business Credit Initiative: Opportunities Exist to Enhance Performance Measurement and Evaluation
Released: 2013-12-18T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: The Small Business Jobs Act of 2010 created SSBCI within Treasury. The program provides direct funding to participants for programs that expand access to capital for small businesses. The act mandates that GAO conduct an annual audit of the program. GAO's first two reports examined Treasury's implementation of SSBCI and its processes for monitoring compliance and procedures for evaluating and communicating program outcomes. This third report examines, among other things, the extent to which (1) participants have used their SSBCI allocations and faced challenges in using the funds, and (2) Treasury has used performance measures and program evaluation to manage SSBCI. GAO reviewed Treasury's SSBCI policies and procedures and participants' data on fund usage and interviewed officials from Treasury, eight states, and one municipality. GAO selected the states and municipality based on usage of SSBCI funds, the number of programs they implemented, and geographic dispersion, among other things.

section_title: What GAO Found
paragraphs: As of June 30, 2013, State Small Business Credit Initiative (SSBCI) participants--states, territories, and municipalities--had used $549 million of the $1.5 billion the Department of the Treasury (Treasury) allocated to them, nearly four times the amount used as of June 30, 2012. However, the rates at which participants have used funds continue to vary, as shown below. While initial challenges generally have been addressed, others remain. Participants' challenges with using funds at the start of the program resulted from some program policies not being finalized and low demand for some program types, among other things. Treasury and participants have since addressed many of these issues, but according to agency officials and others, participants will likely continue to face some challenges in using SSBCI funds. For example, some large lenders have been reluctant to partner with SSBCI participants because the variation in participants' programs makes it difficult for lenders to implement the program on a national basis, which has limited the program's reach into the small business lending market.

Treasury uses performance measures to manage SSBCI. For example, Treasury uses performance measures to adjust staff allocations and to identify participants that may need additional assistance. Although Treasury has set targets for program administration measures (for example, how long it takes the agency to approve participants' requests to modify their programs), it has not set targets for performance (for example, the amount of funds used over time). Federal internal control standards and performance management leading practices encourage agencies to set targets, where appropriate. Targets could help Treasury identify program areas needing improvement. Treasury has also recently started to determine how it will evaluate SSBCI's effectiveness and plans to form a working group of participants to help design the format of the evaluation. GAO guidance on designing evaluations encourages agencies to obtain input from external stakeholders, including Congress, that are expected to be interested in the results. By seeking input from external stakeholders early in the design phase, Treasury can help ensure that it designs an evaluation that is useful for decision makers and other agencies working to promote small business credit access.

section_title: What GAO Recommends
paragraphs: GAO recommends that Treasury set targets for selected measures to track SSBCI's performance and seek input from Congress and other federal agencies on what information will be useful in assessing SSBCI's effectiveness as Treasury designs its program evaluation. Treasury agreed with both of these recommendations.

section_title: Letter
paragraphs: Congress enacted the Small Business Jobs Act of 2010, which created  the $1.5 billion State Small Business Credit Initiative (SSBCI) program to  address difficulties small businesses faced in accessing credit due to  disruptions of the credit markets in 2008 and 2009. The act was intended  to address concerns that small businesses might not be able to access  enough capital to enable them to spur job creation during the nation’s  ongoing economic recovery. SSBCI, which is administered by the  Department of the Treasury (Treasury), is designed to create or  strengthen state programs that support private financing to small  businesses and small manufacturers that, according to Treasury, are not  obtaining the loans or investments they need to expand and to create  jobs. SSBCI received a one-time appropriation and is designed to  generate up to $15 billion in lending to small businesses. SSBCI  participants—states, territories, municipalities, and the District of  Columbia—are to use the funds for programs that leverage private  lending to help finance small businesses and manufacturers that are  creditworthy but have been unable to secure the loans needed to expand  and to create jobs.

The act mandates that we conduct an annual audit of the SSBCI  program. In our first and second reports, we reviewed the  implementation of SSBCI and made recommendations to improve the  management oversight of the program. This third report examines the  extent to which (1) SSBCI participants have used their SSBCI allocations  and faced challenges in using the funds, (2) Treasury and program  stakeholders have used outreach activities to promote use of the program  and assessed the success of these efforts, and (3) Treasury has used  performance measures and program evaluation to manage SSBCI.

To assess the extent to which SSBCI participants have used their SSBCI  allocations, we analyzed program data, as of June 30, 2013, on fund  usage, allocation amounts, disbursement requests, and program types,  as well as whether participants developed new programs to participate in  SSBCI or expanded existing programs with SSBCI funds. We determined  that the data were sufficiently reliable for the purposes of describing these  factors. To examine the extent to which SSBCI participants faced  challenges in using SSBCI funds, we reviewed relevant reports from  Treasury’s Office of the Inspector General (OIG), our 2011 and 2012   We also  reports on SSBCI, and Treasury’s policies and procedures.interviewed officials from Treasury; nine SSBCI participants (Arizona;  Iowa; Maryland; Missouri; Montana; New York; City of Carrington, North  Dakota; Vermont; and Virginia); and representatives from trade  associations representing the lending and venture capital communities.  Factors we used for selecting the SSBCI participants included their  percentage of funds used, allocation amounts, number of programs  implemented, and geographic dispersion. Appendix I contains detailed  information on the process we used to select participants.

To examine the extent to which Treasury and program stakeholders,  including SSBCI participants, federal banking regulators, and trade  associations, have used outreach activities to promote use of the program  and assessed the success of these efforts, we interviewed Treasury  officials and representatives of stakeholder groups and reviewed  materials pertinent to SSBCI outreach. Specifically, we interviewed  officials from Treasury; the nine SSBCI participants identified above; the  federal banking regulators: Board of Governors of the Federal Reserve  System (Federal Reserve), Federal Deposit Insurance Corporation  (FDIC), and Office of the Comptroller of the Currency (OCC); and  representatives from lending and venture capital trade associations to  learn about outreach activities they have conducted for SSBCI and to  obtain relevant materials and documentation. We reviewed Treasury  guidance on SSBCI outreach, including marketing best practices for three  SSBCI program types and Treasury budget documents. We also  reviewed SSBCI outreach materials developed by participants, banking  regulators, and trade associations and all participants’ SSBCI websites to  understand how they are providing information about SSBCI to interested  parties.

To assess the extent to which Treasury has used performance measures  and program evaluation to manage SSBCI, we reviewed performance  measures and targets Treasury has set for SSBCI and a summary report  on performance information Treasury developed from participants’ 2012  annual reports. We also interviewed Treasury officials on their actions to  manage the SSBCI program using performance measures. We identified  relevant criteria in the Small Business Jobs Act of 2010, the federal  internal control standards, and leading practices for federal agencies’  performance management.

We conducted this performance audit from May 2013 to December 2013  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: SSBCI provides direct support to participants for use in programs  designed to increase access to credit for small businesses. Using a  formula contained in the Small Business Jobs Act of 2010, Treasury  calculated the amount of SSBCI funding for which each of the 50 states,  as well as the District of Columbia, the Commonwealth of Puerto Rico,  the Commonwealth of the Northern Mariana Islands, Guam, American  Samoa, and the United States Virgin Islands, were eligible to apply. This  formula takes into account a state’s job losses in proportion to the  aggregate job losses of all states. In addition to states, the act granted  permission to municipalities to apply directly for funding under SSBCI in  the event that their state did not apply for funding. Municipalities in  Alaska, North Dakota, and Wyoming used this option. Participants are  expected to use their SSBCI funds to leverage private financing and  investment that is at least 10 times the amount of their SSBCI allocation  (a leverage ratio of 10-to-1) by December 31, 2016. Forty-seven states;  the District of Columbia; the Commonwealth of Puerto Rico; the  Commonwealth of the Northern Mariana Islands; Guam; American  Samoa; the United States Virgin Islands; Anchorage, Alaska; Carrington,  North Dakota; Mandan, North Dakota; and Laramie, Wyoming, currently  participate in the program.

The act allowed Treasury to provide SSBCI funding for two program  categories: capital access programs (CAP) and other credit support  programs (OCSP). For both CAPs and OCSPs, the act requires that  lenders have a meaningful amount of their own capital at risk. Loan  terms, such as interest and collateral, are typically negotiated between  the lender and the borrower, although in some cases loan terms are  subject to SSBCI participant approval and, in many cases, the SSBCI  participant and lender will discuss and negotiate loan terms and  guarantee options prior to reaching agreement to approve the loan and  issue a guarantee.

A CAP is a loan portfolio insurance program wherein the borrower and  lender, such as a small business owner and a bank, contribute to a  reserve fund held by the lender. Under a CAP, when a participating  lender originates a loan, the lender and borrower combine to contribute  an amount equal to a percentage of the loan to a loan reserve fund, which  is held by the lender. Under SSBCI, the contribution must be from 2  percent to 7 percent of the amount borrowed. Typically, the contribution  ranges from 3 percent to 4 percent. The SSBCI participant then matches  the combined contribution and sends that amount to the lender, which  deposits the funds into the lender-held reserve fund. Under SSBCI,  approved CAPs are eligible to receive federal contributions to the reserve  funds held by each participating financial institution in an amount equal to  the total amount of the contributions paid by the borrower and the lender  on a loan-by-loan basis.

In addition, the following OCSPs are examples of types of programs  eligible to receive funding under the act:

Collateral support programs. A collateral support program is designed  to enable financing that might otherwise be unavailable due to a  collateral shortfall. It provides pledged cash collateral to lenders to  enhance the collateral coverage of individual loans. The SSBCI  participant and lender negotiate the amount of cash collateral to be  pledged by the participant.

Loan participation programs. SSBCI participants may structure a loan  participation program in two ways: (1) through purchase transactions,  also known as purchase participations, in which the SSBCI participant  purchases a portion of a loan originated by a lender, or (2) by  participating in a loan as a co-lender, where a lender originates a  senior loan and the SSBCI participant originates a second loan to the  same borrower that is usually subordinate to the lender’s senior loan  should a default occur. SSBCI loan participation programs encourage  lending to small businesses because the lender is able to reduce its  potential loss by sharing its exposure to loan losses with the SSBCI  participant.

Loan guarantee programs. These programs enable small businesses  to obtain a term loan or line of credit by providing the lender with the  necessary security in the form of a partial guarantee. In most cases,  the SSBCI participant sets aside funds in a dedicated reserve or  account to collateralize the guarantee of a specified percentage of  each approved loan. The guarantee percentage is determined by the  participants and lenders but, under SSBCI, may not exceed 80  percent of loan losses.

Venture capital programs. These programs provide investment capital  to create and grow start-ups and early-stage businesses, often in one  of two forms: (1) a SSBCI participant-run venture capital fund (which  may include other private investors) that invests directly in  businesses, or (2) a fund of funds, which is a fund that invests in other  venture capital funds that in turn invest in individual businesses.

Direct loan programs. Although Treasury does not consider these  programs to be a separate SSBCI program type, it acknowledges that  some participants may identify programs that they plan to support with  SSBCI funds as direct loan programs. The programs that some  SSBCI participants label as direct loan programs are viewed by  Treasury as co-lending programs categorized as loan participation  programs, which have lending structures that are allowable under the  statute.

OCSPs approved to receive SSBCI funds are required to target small  businesses with an average size of 500 or fewer employees and to target  support towards loans with an average principal amount of $5 million or  less. In addition, these programs cannot lend to borrowers with more than  750 employees or make any loans in excess of $20 million.

After their applications were approved, SSBCI participants entered into  Allocation Agreements with Treasury before they received their funds.  SSBCI Allocation Agreements are signed by Treasury and participants,  and they outline how participants are to comply with program  requirements. The act requires that each participant receive its SSBCI  funds in three disbursements or tranches of approximately one-third of its  approved allocation. As part of its request to receive the second and third  disbursements, a participant must certify that it has expended,  transferred, or obligated 80 percent or more of the previous  disbursement. When participants request subsequent disbursements,  Treasury reviews the request and certification for completeness. Treasury  may also review a sample of the participant’s transactions for compliance  with SSBCI requirements. All SSBCI Allocation Agreements will expire on  March 31, 2017. Treasury may terminate any portion of a participant’s  allocation that Treasury has not yet transferred to the participant within 2  years of the date on which its SSBCI Allocation Agreement was signed.  Treasury may also reduce or terminate a participant’s allocation at any  time during the term of the Allocation Agreement upon an event of default  under the agreement. Under the act, participants are required to submit  quarterly and annual reports on their use of SSBCI funds.

Changes to participants’ Allocation Agreements generally must be  approved by Treasury through a program modification. For example,  participants must submit a program modification to Treasury for approval  in order to use SSBCI funds for a new program that was not originally  approved by Treasury, to materially change the scope or purpose of an  approved program, or to reapportion and transfer allocated SSBCI funds  among approved programs when the cumulative amounts transferred  exceed 10 percent of the participant’s total SSBCI allocation. Treasury  has procedures for participants to apply for modifications and for its  processing of modification approval requests. In general, the procedures  require participants to submit, among other things, justification of the  need for the modification and the impact of the change on program  performance, including the 10-to-1 private leverage expectation. As of  June 30, 2013, Treasury had approved 32 modifications of SSBCI  participants’ programs.

The act requires Treasury’s OIG to conduct audits of participants’ use of  their SSBCI allocations. As of November 8, 2013, Treasury’s OIG has  conducted 12 audits of SSBCI participants’ use of SSBCI funds.

section_title: SSBCI Participants Have Used Funds at Varying Rates and a Number of Challenges Have Been Addressed
paragraphs: Between June 30, 2012, and June 30, 2013, SSBCI participants nearly  quadrupled their overall use of SSBCI funds, but individual participants  continue to use their funds at varying rates and for different types of  programs. SSBCI participants faced challenges using their SSBCI funds  in the early stages of the program. For example, because Treasury  initially implemented the program without issuing final policies and  procedures, some SSBCI participants experienced delays in receiving  subsequent disbursements of funds. While initial challenges have mostly  been addressed, participants continue to face ongoing challenges with  using SSBCI funds, including reluctance from large banks to participate in  the program.
subsections: section_title: SSBCI Fund Usage Has Increased but Continues to Vary Widely across Participants
paragraphs: As of June 30, 2013, SSBCI participants had used a total of about $549  million in SSBCI funds, which represents about 38 percent of the $1.5  billion allocated for the program. As shown in figure 1, usage of SSBCI  funds by participants has nearly quadrupled since June 30, 2012, when  participants had used about $150 million.

In 2012, we found that participants had used their SSBCI funds at  different rates. As of June 30, 2013, SSBCI participants were continuing  to use their SSBCI allocations at varying rates, as shown in figure 2. Fifty- five of the 57 participants had used some portion of their allocation as of  June 30, 2013. Idaho had used the highest percentage of its allocated  funds, approximately 94 percent of the $13 million it was allocated. Two  territories—American Samoa and Northern Mariana Islands—had not  used any of their allocation, which, according to Treasury officials, is  because both territories have limited small business credit and investment  markets. As of June 30, 2013, 18 participants had used more than 50  percent of their allocations, 14 participants had used more than 25 to 50  percent of their allocation, 19 participants had used more than 10 to 25  percent of their allocation, and 6 participants had used 10 percent or less  of their allocation. As previously discussed, participants can request  subsequent SSBCI disbursements when they have used at least 80  percent of their current tranche of SSBCI funds. As of June 30, 2013,  Treasury had disbursed almost $811 million in SSBCI funding to  participants. Eight participants had received their third and final  disbursement of funds, 19 participants had received their second  disbursement, and 30 participants were still working to use their first  disbursement of SSBCI funding.

SSBCI participants have used their allocations to fund a variety of  different program types. SSBCI allows participants to use their allocations  to support program types that best meet their individual circumstances  and demands. This flexibility has resulted in participants implementing  numerous types of programs to use their SSBCI allocations (see fig. 3).  Similar to what we reported in 2012, loan participation and venture capital  programs had used the most funds, as of June 30, 2013.between June 30, 2012, and June 30, 2013, venture capital programs  surpassed loan participation programs to become the program type with  the highest percentage of funds used. As of June 30, 2013, venture  capital programs accounted for approximately 37 percent of SSBCI funds  used. Loan participation programs accounted for the next highest  percentage of funds used (36 percent), followed by loan guarantee  programs and collateral support programs (each about 13 percent). The  remaining program type—CAP—represented only approximately 1  percent of the funds used. Figure 3 also shows that venture capital  programs and loan participation programs were the most common  program types implemented, representing more than half of all SSBCI  programs. Three of the six participants with whom we spoke during this  review said that demand for their venture capital programs was higher  than their lending programs. Further, figure 3 demonstrates that while  CAPs accounted for 17 percent of the programs implemented, their fund  usage represented only 1 percent of the funds used by SSBCI  participants. Multiple participants we interviewed during our 2012 and  2013 reviews noted that the demand for their CAPs was low, which  resulted in them reallocating funds to SSBCI programs with higher  demand.

section_title: Treasury and Stakeholders Undertake Various Outreach Activities to Promote Use of SSBCI
paragraphs: Treasury, SSBCI participants, federal banking regulators, and trade  associations all conduct numerous outreach activities to promote the use  of SSBCI. These activities include presenting information on SSBCI at  conferences and lender roundtables, conducting face-to-face meetings  with lenders and investors, and distributing information through brochures  and websites. Challenges with promoting SSBCI have been identified by  Treasury and SSBCI stakeholders, including the variation among SSBCI  participants’ programs and the amount of time and resources involved in  conducting outreach. To address these challenges, Treasury is working  with SSBCI participants to identify best practices for marketing SSBCI.
subsections: section_title: Treasury Collaborates with Stakeholders to Promote Use of SSBCI
paragraphs: Treasury conducts numerous outreach activities to promote the use of  SSBCI, many of which are conducted in conjunction with program  stakeholders, including federal banking regulators, trade associations,  and SSBCI participants. Outreach conducted in collaboration with  external stakeholders is consistent with federal internal control standards,  which state that adequate means of communicating with, and obtaining  information from, external stakeholders that may have a significant impact  on the agency achieving its goals should exist. To help promote use of  the participants’ SSBCI lending programs, Treasury officials stated that  they work with federal banking regulators on a regular basis. For  example, Treasury officials have participated in lender roundtables  sponsored by federal banking regulators and written articles for their  newsletters that describe SSBCI and, in some cases, contain case study  examples of some SSBCI participants’ programs. Treasury officials also  said that they have developed a national awareness campaign in which  they work with relevant trade associations—representing both the lending  and venture capital communities—to promote use of SSBCI. Treasury  officials explained that this outreach consists of presenting information on  SSBCI at trade associations’ conferences and writing articles for their  member newsletters. Treasury officials also participate in SSBCI  participants’ outreach activities. For example, representatives from  Montana’s SSBCI program told us that the Treasury SSBCI program  director participated in meetings with CDFIs that they held when the  program was first started. Finally, Treasury maintains a webpage  dedicated to SSBCI. The site contains program policy and procedure  documents, guidance materials on specific program types, and links to  each participant’s SSBCI program website, among other items.

In 2012, Treasury piloted a program in which it hired consultants to assist  three SSBCI participants—Mississippi, Ohio, and South Carolina—with  program outreach. The goal of the pilot was to increase financial  institutions’ awareness and use of the states’ SSBCI lending programs. In  each state, consultants developed action plans detailing the assistance  they would provide to the state to help promote the use of SSBCI by  lenders. The consultants also conducted in-person meetings or telephone  calls directly to lending institutions to discuss SSBCI, designed program  marketing materials, and reviewed the states’ websites, among other  things. In addition, in South Carolina, the consultant assisted in the  development of a webinar presentation, which was offered to all South  Carolina banks and was later posted to the state’s website. Treasury  officials said that while the consultants’ work could provide a useful  outside perspective and help to identify improvements needed in  participants’ programs, the process of finding and contracting with an  appropriate consultant is time consuming and its effectiveness depends  on whether participants are able to take advantage of the consultants’  recommendations. Treasury officials explained that they would like to  continue to provide consultant assistance to participants and have  requested additional funds for their 2014 budget to do so. They explained  that, with congressional approval for additional funding, they would  expand the amount of time the consultants work with the states. For  example, the outreach consultant pilot program provided for 100 hours of  consultant assistance to each state, and officials said they would like to  expand this type of assistance to selected participants for 6 to12 months.

Treasury officials explained that it is difficult to quantify the success of  their outreach efforts and that they mostly rely on the feedback they  receive from SSBCI participants to gauge the success of their outreach  efforts. Treasury officials also explained that they conduct satisfaction  surveys after each conference to ask what attendees thought of the  conference. Our review of Treasury’s analysis of the conference survey  results showed that the majority of those that responded to the surveys  found the conferences very good or excellent. Treasury officials said that  they also track some indicators in addition to conference survey results.  For example, they track the number of attendees at the SSBCI  conferences, the number of participants that join webinars or conference  calls, and, when feasible, the number of hits received by articles posted  on the SSBCI webpage.

Treasury plans to continue to provide assistance to SSBCI participants on  program outreach in order to increase the effectiveness and rate of  deployment of SSBCI funds. Treasury’s 2014 SSBCI Congressional  Justification for its budget notes that Treasury will expand individualized  technical assistance to participants by training and supporting SSBCI  participants on outreach to financial institutions. Treasury officials  explained that they plan to do this in several ways, including conducting  state-specific outreach to state banking associations and state banking  regulators. They also plan to conduct roundtables consisting of local  bankers, some of whom have used SSBCI and can share their  experiences with bankers who have not used the program. As described  previously, they would also like to provide longer-term consultant  assistance to states. Finally, Treasury officials would like to develop a  “tool box” of SSBCI marketing materials, such as templates for websites,  presentations, work plans, and forums. The 2014 Congressional  Justification also noted that Treasury is planning to add additional  relationship managers to support state outreach to the lending industry.  SSBCI relationship managers are responsible for working with an  assigned group of participants to help them successfully allocate funds to  lenders and subsequently borrowers. Treasury officials explained that  SSBCI currently has three relationship managers, each of whom handles  a portfolio of between 15 and 20 participants, which officials view as a  heavy workload. Treasury officials noted that all outreach efforts  discussed in Treasury’s 2014 Congressional Justification, including its  ability to expand assistance to participants on program outreach and to  hire additional relationship managers, are contingent upon congressional  approval of Treasury’s proposed budget for the agency.

section_title: SSBCI Stakeholders Also Conduct Outreach Activities
paragraphs: In addition to Treasury’s outreach efforts, SSBCI participants, federal  banking regulators, and a number of trade associations also  independently conduct outreach to promote the use of the program.  Treasury’s program guidance states that one of the roles of SSBCI  participants is to conduct program outreach. The guidance varies  depending on the type of program. For example, guidance on venture  capital programs is general and states only that SSBCI participants are  responsible for marketing the program in their region or community.

Guidance on loan guarantee programs is more explicit and instructs that  participants are responsible for conducting outreach to inform lenders and  trade associations of the program, including activities such as distributing  press releases and speaking at industry or small business conferences.

All of the SSBCI participants with whom we spoke conduct outreach on  an ongoing basis to promote use of their programs. Many of the outreach  activities they conduct are similar to those used by Treasury.

Collaboration with other organizations. Eight of the nine SSBCI  participants with whom we spoke told us that they collaborate with  other organizations to help them promote SSBCI. Many work with  state banking associations, local economic development groups,  small business development centers, and local or regional Chambers  of Commerce to reach potentially interested parties. For example,  officials from Virginia’s SSBCI program explained that they collaborate  with the Virginia Bankers Association, Virginia Association of  Community Banks, small business development centers, regional  Chambers of Commerce, and Virginia Economic Development  Partnership by educating these groups about SSBCI and soliciting  their assistance in promoting the program to their members.

Presentations on SSBCI. SSBCI participants also told us that they  hold lender roundtables; present information on SSBCI to groups of  potentially interested parties, including CDFIs, economic developers,  and manufacturing associations; and hold conference calls and  webinars for potential program users.

Face-to-face meetings. Five of the nine participants with whom we  spoke discussed having face-to-face meetings with lenders or  economic developers to promote use of the program. In fact, some  participants stated that they found this type of outreach, although time  consuming, to be the most effective in encouraging use of the  program.

Distribution of information. SSBCI participants also distribute  marketing materials, such as program brochures and electronic  newsfeeds; issue press releases; publish print advertisements and  testimonials on the experiences of program users; send emails with  program information; and use social media to promote SSBCI.

Website. Each SSBCI participant also maintains a website where  SSBCI program information can be found. Our review of all SSBCI  participants’ websites found that the majority included detailed  descriptions of their SSBCI programs, links to related materials,  information on how to apply for the program, and contacts for  additional information. In addition, some websites included other  useful promotional information, such as a list of participating financial  institutions and testimonials on the program’s benefits.

In addition to Treasury and SSBCI participants, federal banking regulators  also conduct outreach activities to promote the use of SSBCI. Outreach  conducted by the federal banking regulators has been done on both a  national and regional basis. However, regulators’ regional offices focus  more specifically on states in their regions and tend to be in a better  position to focus on the differences between SSBCI participants’  programs. Specific outreach activities they have conducted include  participating in or sponsoring lender roundtables, conferences, and  forums in which SSBCI is discussed. These events are often held in  conjunction with the promotion of other small business credit programs  and include representatives from each of the federal banking regulators,  as well as state economic development agencies. For example, an official  from OCC’s Southern District office stated that her office held a series of  outreach events throughout the district. Each event included a regulatory  panel of officials from OCC, FDIC, and the Federal Reserve Bank of  Atlanta in which they discussed SSBCI with lenders and CDFIs. In  addition, some federal banking regulators have used their newsletters to  provide information about SSBCI. For example, regulators have written  articles about how states are using SSBCI to increase the amount of  credit available for small businesses, and they have also published  articles that Treasury has written on SSBCI. Further, as discussed  previously, both FDIC and OCC published a list of Frequently Asked  Questions to address their regulated entities’ concerns regarding the  regulatory implications of participating in SSBCI.

Finally, trade associations for lenders, CDFIs, and venture capitalists  have also helped to promote the use of SSBCI to their members. Similar  to the types of outreach activities conducted by Treasury, SSBCI  participants, and federal banking regulators, trade associations have  provided information on SSBCI at their conferences and, as noted earlier,  included articles in member newsletters and magazines. In addition,  some trade associations, including the American Bankers Association,  Opportunity Finance Network, and Council of Development Finance  Agencies, hosted conference calls and webinars for their members to  promote the use of SSBCI. Representatives from the Opportunity Finance  Network—a national network of CDFIs—explained that because some  CDFIs were not familiar with SSBCI and some agencies that implement  SSBCI at the state level were not familiar with the function of CDFIs, they  used conference calls and webinars to connect their members with the  appropriate SSBCI stakeholders.

section_title: Treasury and Stakeholders Identified Challenges to Promoting SSBCI, as Well as Promising Practices for Conducting Outreach
paragraphs: Treasury and other stakeholders have identified various challenges with  promoting SSBCI, including variation among SSBCI participants’  programs, limited time and resources, and limited experience with  marketing small business programs.

Variation among SSBCI participants’ programs. Treasury, Federal  Reserve, and OCC officials, as well as representatives from the  National Association of Federal Credit Unions (NAFCU), all said that  the variation among SSBCI participants’ programs creates marketing  challenges because different program types have different users. For  example, if a SSBCI participant operates only a venture capital  program, lenders, such as credit unions in that state or territory, would  not be eligible to participate in SSBCI. Treasury officials added that  the variation makes it hard for them to build awareness of SSBCI at a  national level, and representatives from NAFCU stated that the  variation in participants’ programs made it difficult to educate their  member credit unions about how they could promote SSBCI to their  customers.

Time and resources. Five of the nine SSBCI participants with whom  we spoke stated that reaching out to and educating interested parties  on SSBCI has been a challenge because of the time commitment and  a lack of resources. For example, officials from the municipality of  Carrington, North Dakota—whose SSBCI program consists of a  consortium of 36 municipalities—explained that outreach is  challenging because of the amount of time involved in developing  relationships, setting up meetings, and educating lenders and CDFIs  about their program. As noted earlier, some participants who  implemented new programs did not have established networks of  lenders and said that establishing such networks was time  consuming. Further, the Carrington, North Dakota, officials noted that  small community banks and rural economic development groups can  have high turnover rates, which requires them to conduct continual  outreach to re-educate staff on the program. Officials from both  Carrington and Montana also added that the large geographic  footprint covered by their SSBCI programs makes it difficult to reach  all lenders in the communities. Montana officials added that this is  why they collaborated with other organizations in the state, such as  CDFIs, to help promote SSBCI.

SSBCI participants’ experience. SSBCI participants’ experience with  marketing small business programs may also vary, resulting in  challenges in promoting use of the program. At its October 2012  national SSBCI conference, Treasury identified participants’ lack of  experience in program marketing as a challenge for participants’  deploying funds in SSBCI lending programs.

Other challenges that participants mentioned with conducting outreach for  SSBCI include that it can be difficult to distinguish SSBCI from other  federal and state programs that assist small businesses and, as noted  earlier, that some lenders have concerns about being subject to additional  regulatory scrutiny for using SSBCI programs to underwrite loans.

Treasury has stated that promoting best practices in marketing is one of  SSBCI’s priorities. To achieve this goal and to help address some of the  challenges mentioned above, Treasury developed working groups  consisting of officials from participating states, territories, and  municipalities for the different SSBCI program types. These groups have  been working to identify best practices for how to operate each program  type, including best practices on marketing the program. As of September  2013, working groups for loan guarantee programs, loan participation  programs, and collateral support programs had issued best practice  guidance for these program types. Best practices identified in the  guidance for all three program types include using consistent marketing;  developing and maintaining websites that are current, easy to find, and  contain all pertinent information; identifying and reaching out to the small  group of key small business lenders; publishing testimonials from lenders  that have successfully used SSBCI; and asking the state banking  regulators for the opportunity to brief the state examiners so that the  examiners can inform lenders about SSBCI. The guidance also includes  additional best practices unique to each program type. Treasury officials  said that they are working with the group for venture capital programs as  well to develop similar best practice guidance for SSBCI participants who  operate that type of program. The federal banking regulators also offered  some examples of best practices they have identified to promote their  programs. One of these was using technology and mobile resources to  conduct outreach, such as using webinars to reach a larger audience.  OCC officials stated that they have found that collaborating with state  banking associations to help design the outreach efforts is effective, as is  having lenders that participate in the program share their experiences  with other lenders. Similarly, FDIC officials noted that it is important to  leverage relationships with the appropriate networks of organizations and  to conduct follow-up on activities in which relationships are established.

Prior to the development of the loan participation, collateral support, and  loan guarantee programs best practice guidance, Treasury had not  provided SSBCI participants with any specific written guidance on  program outreach. Instead, Treasury officials told us they mostly relied on  peer-to-peer learning among SSBCI participants. Treasury officials  explained that its SSBCI conferences provide a good forum for  participants to exchange ideas on how to market their programs. In  addition, each of Treasury’s three SSBCI conferences has included a  session on different aspects of conducting program outreach. The March  2012 SSBCI conference included a session on how to market SSBCI to  underserved communities, the October 2012 conference session focused  on how to market SSBCI to lenders, and the June 2013 conference  session was on how to market SSBCI with partner organizations.

section_title: Treasury’s Efforts to Measure and Evaluate Performance Could Be Enhanced
paragraphs: Treasury uses performance measures to manage SSBCI in a number of  ways, such as to allocate program resources and to identify participants  that might need additional assistance. However, Treasury has not  developed targets for all of its performance measures. Federal internal  control standards and leading performance management practices  identified in prior GAO work state that, where appropriate, management  should set performance targets and measure results against these  targets, and this practice can help management to identify performance  gaps. In addition, Treasury has started to determine how it will evaluate  the performance of SSBCI at the end of the program in 2017. Our  guidance on designing program evaluations suggests that gathering input  from external stakeholders during the design of an evaluation can help  better ensure that the evaluation is useful for decision makers and other  interested parties.
subsections: section_title: Treasury Uses Performance Measures to Manage SSBCI but Has Not Set Targets for All Measures
paragraphs: In 2012 we reported that Treasury had established performance  measures for both the timeliness of program administration and the  monitoring of program performance, which are listed in table 1.

Treasury officials explained that they have used these performance  measures in a variety of ways to manage SSBCI. First, Treasury officials  stated that they use the measure on the amount of SSBCI funds  participants have used to adjust staff allocations, which has helped them  to improve efficiency in program operations. For example, by tracking  quarterly report data on participants’ use of SSBCI funds, officials realized  that a large number of participants would be submitting requests for  subsequent disbursements of funds. To manage this increase in  disbursements, Treasury increased the number of compliance team staff  from two to four in order to better handle the processing of the requests.

Second, Treasury officials also stated that they use information on  participants’ fund usage to identify participants that have been slow to  request subsequent disbursements of funds, and that they contact these  participants to see if they need additional technical assistance from  Treasury. Treasury officials explained that the relationship managers  monitor participants’ fund usage each quarter and develop action plans  for participants with the lowest fund usage to help them address  challenges they are facing in using SSBCI funds. Third, Treasury officials  told us that they use performance measures on the timeliness of program  administration to help manage staff performance. They explained that  they compare the amount of time it takes Treasury staff to respond to  program modifications and disbursement requests to the goals they have  set. They maintain a spreadsheet to track the status of pending  modifications and disbursements and distribute it during weekly staff  meetings for staff to see if they are on track to meet the performance  goals. Officials added that they have started to use these measures in  staff performance reviews to hold staff accountable.

As shown in table 1, Treasury has created targets for its measures  related to the timeliness of program administration but not for its  measures used to monitor the performance of SSBCI. In our 2012 review  of SSBCI, as well as in this review, Treasury officials said that they have  not developed targets for their measures that monitor program  performance and that SSBCI’s performance cannot be summarized using  a single number or performance indicator because SSBCI now consists of  150 different programs. Further, they explained that specific numeric  indicators, such as the number of loans resulting from participants’  programs, may or may not indicate the performance of SSBCI. They  added that outcomes can also be highly dependent on factors outside of  the program’s control, such as the demand for credit in a given locality  and the quality of the small business borrowers’ requests for such funds.  In addition, because many participants did not receive their first SSBCI  allocation until late 2011, they did not submit annual reports—which  contain data on SSBCI funds used to support small business loans or  investments—for that year. As a result, Treasury had little data to assess  program performance and set baselines for the targets for program  performance measures. In early 2013, Treasury received participants’  2012 annual reports, which represent the first complete set of annual  reports Treasury has received since the inception of the program.

Federal internal control standards state that management should review  performance reports and measure results against targets. Leading  practices in federal agency performance management previously  identified by GAO also state that, where appropriate, performance  measures should have quantifiable, numerical targets, and that agencies  can use baselines to set realistic but challenging targets. Numerical  targets facilitate future assessments of whether overall goals and  objectives were achieved because comparisons can be easily made  between projected performance and actual results. In addition, numerical  targets can also create motivation for improving program performance.  Further, Treasury has established targets for performance measures for  other programs, including its CDFI Fund programs—programs similar to  SSBCI that are administered by locally based organizations and help to  promote access to capital and local economic growth. Our previous  work has recognized the challenges and provided strategies for agencies  in measuring performance and setting performance targets when factors  outside of an agency’s control impact the results of a program. For  example, one strategy is to set goals at the lowest, most disaggregated  level for distinct target populations for which the agency has different  expectations. In the case of SSBCI, this could mean setting different  performance targets for different program types. Despite these  challenges, developing targets for selected SSBCI measures that monitor  program performance could help Treasury identify performance gaps and  highlight program areas that need additional attention.

section_title: Treasury Recently Released SSBCI Performance Information
paragraphs: Treasury officials stated that they share the performance information they  collect on SSBCI with Treasury management, other agencies, and SSBCI  participants. For example, officials told us that they share SSBCI  performance information regularly with SSBCI program management,  including the director and deputy director, and with Treasury departmental  management to provide information on the progress of the program. In  addition, Treasury shares SSBCI performance information with other  agencies working on the Entrepreneurship and Small Business Cross- Agency Priority goal. This Cross-Agency Priority goal seeks to increase  federal services, including promoting access to capital, to entrepreneurs  and small businesses. Within the Cross-Agency Priority goal, a working  group consisting of Treasury, U.S. Export-Import Bank (Ex-Im), Small  Business Administration (SBA), and U.S. Department of Agriculture  (USDA) was developed specifically for the goal’s objective related to  increasing access to capital for entrepreneurs and small businesses.  SSBCI is one of the programs that will help to contribute to this objective.  The fiscal year 2013 third-quarter status update for this Cross-Agency  Priority goal included information on the amount of new private sector  lending or investment that SSBCI supported and the percentage of  participants who had used SSBCI funds to support loans or investments.

Treasury has also shared some performance information with SSBCI  participants and recently released summary performance information from  participants’ 2012 annual reports to the public. Officials from Treasury and  some participants with whom we spoke told us that Treasury has also been  sharing some SSBCI performance information with participants at its  SSBCI national conferences. For example, at its June 2013 conference,  Treasury shared preliminary performance information from the 2012 annual  reports on the number of loans and investments made with SSBCI funds  and the amount of SSBCI funds loaned or invested. In 2012 we  recommended that in order to provide information on the progress of  SSBCI to Congress and the SSBCI participants, Treasury should make  information publicly available on its performance indicators for SSBCI.September 2013, Treasury released a summary report of performance   In  information collected in participants’ 2012 annual reports.contains information on each of Treasury’s program performance  measures, as of December 31, 2012 (see table 2). The report also  summarizes participants’ data in numerous ways, such as by program type,  distribution of loans or investments by size and industry, loans or  investments made in low- and moderate-income communities, and lender  and investor participation by size of lender. Treasury officials added that  they expect to continue to release quarterly report data and issue annual  reports to the public going forward.

As previously discussed, because of the variety of SSBCI programs  implemented by participants, as well as the influence of factors beyond  Treasury’s control, Treasury officials said that SSBCI’s performance  cannot be evaluated using a single number or performance indicator.  Further, performance measures may not always give a complete  understanding of a program’s effectiveness. To address these issues,  Treasury has started to determine how it will evaluate the performance of  SSBCI at the end of the program in 2017. As part of Treasury’s SSBCI  oversight and performance strategy, all Allocation Agreements require  participants to conduct a final assessment on their programs’  performance at the end of the program in 2017. Treasury officials  explained that they are in the early stages of thinking about how they will  use this information to help them evaluate SSBCI’s performance and to  determine if the program model for SSBCI was successful. Officials  explained that they are planning on convening a working group of  program participants to help Treasury design the format for participants’  final assessments. They added that they are planning on inviting experts  in program measurement to the meeting to help determine the design of  the evaluation. Officials added that they have reviewed evaluations of  other Treasury programs, as well as evaluations conducted by other  agencies and SSBCI participants, to help them in their planning process.  Treasury officials explained that they expect to convene the working  group of participants by the end of 2013, but that they expect that the  design of the evaluation will not be finalized until late in 2014.

The Small Business Jobs Act of 2010 was signed by the President on  September 27, 2010. As described in this report, as well as our 2011 and  2012 reports, Treasury has spent the last few years starting up the SSBCI  program office; developing policies, procedures, and guidance; assisting  participants with the implementation of their programs; and developing  measures to monitor program administration and performance. Also as  previously discussed, 2013 is the first year in which Treasury had a  complete set of participants’ annual reports. As a result, Treasury now  has more complete information to analyze the program. As Treasury  begins to design its evaluation, it should consider requirements in the act,  including the Secretary of the Treasury consulting with SBA and the  appropriate federal banking agencies on the administration of the  program. In addition, because the SSBCI program is included as one of  the programs that will help to meet a Cross-Agency Priority goal,  obtaining input from the agencies involved in the working group on  increasing access to capital for entrepreneurs and small businesses (Ex- Im, SBA, and USDA) could help to ensure that the evaluation is useful in  measuring progress toward that goal. Further, our guidance on designing  program evaluations encourages agencies to obtain input from external  stakeholders, such as Congress, that are expected to be interested in the  evaluation results. By seeking input from Congress on the types of  information in which it is interested, Treasury can help ensure that it  designs an evaluation that is useful for decision makers.

section_title: Conclusions
paragraphs: In SSBCI’s third year, participants’ fund usage has started to accelerate,  with participants nearly quadrupling the amount of funds they used  between June 30, 2012, and June 30, 2013. Treasury implemented  measures in 2012 to help monitor the administration and performance of  SSBCI. However, while it developed targets for the measures related to  administration, it did not develop targets for the measures related to  program performance. Treasury officials stated that it did not develop  these targets because, among other things, factors outside of the  program’s control can have a significant impact on SSBCI’s outcomes.  Federal internal control standards and leading performance management  practices state that agencies should set performance targets, where  appropriate. Targets for selected performance measures could help  Treasury better manage SSBCI by identifying performance gaps and  highlighting program areas that may need additional attention. While we  recognize that it could be challenging to set performance targets when  the program is influenced by external factors, SSBCI is not the only  federal program facing this challenge, and our previous work has  identified strategies for setting targets in similar situations. Moreover,  Treasury has set targets for performance measures of other programs  that, like SSBCI, include multiple programs that are administered locally  and help to promote access to capital. In addition, now that Treasury has  received participants’ 2012 annual reports, it has baseline data to analyze  and use to help set targets for selected measures on program  performance.

Treasury has also begun to consider how it will evaluate the effectiveness  of the program at the program’s conclusion in 2017. Our guidance on  designing performance evaluations encourages agencies to obtain input  from external stakeholders, including Congress, who are expected to be  interested in the evaluation results. In addition, the Small Business Jobs  Act of 2010 requires the Secretary of the Treasury to consult with SBA  and the appropriate federal banking agencies on the administration of  SSBCI. Because Treasury’s SSBCI evaluation could be useful in  informing future policymakers about programs that are intended to  increase capital to small businesses in distressed credit markets,  gathering input from external stakeholders on what information would be  most valuable to them is essential.

section_title: Recommendations for Executive Action
paragraphs: We recommend that the Secretary of the Treasury take the following actions:  To enhance the use of performance measures to manage SSBCI and  assess progress, Treasury should establish targets for selected  performance measures related to monitoring program performance.

To better ensure that Treasury’s SSBCI program evaluation provides  information useful for future decision making and effective management  and oversight, Treasury should seek input from program stakeholders— including other agencies involved in promoting small businesses and  Congress—as it designs its SSBCI program evaluation.

section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to Treasury, FDIC, Federal Reserve,  and OCC for their review and comment. Treasury provided written  comments, which are reprinted in appendix III. FDIC, Federal Reserve,  and OCC did not provide written comments on the draft report. In its  written comments, Treasury agreed with our recommendations and stated  that it has begun to take steps to implement both of them. Specifically,  Treasury said it has begun establishing targets for program performance  measures and gathering input from program stakeholders in designing  SSBCI’s program evaluation. Treasury noted that the report reflected the  progress SSBCI participants have made in using their SSBCI funds and  that program stakeholders have undertaken numerous outreach activities  to promote SSBCI. Treasury also stated that it is confident that as SSBCI  progresses it will continue to promote access to credit for small  businesses, allowing them to expand and create new jobs. Treasury also  provided a technical comment on the draft report, which we’ve  incorporated in the final report.

We are sending copies of this report to appropriate congressional  committees and Treasury, FDIC, Federal Reserve, and OCC. In addition,  the report is also available at no charge on the GAO website at  http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-8678 or garciadiazd@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made major contributions to  this report are listed in appendix IV.

section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our objectives were to examine the extent to which (1) State Small  Business Credit Initiative (SSBCI) participants have used their SSBCI  allocations and faced challenges in using the funds, (2) the Department of  the Treasury (Treasury) and program stakeholders have used outreach  activities to promote use of the program and assessed the success of  these efforts, and (3) Treasury has used performance measures and  program evaluation to manage SSBCI.

To assess the extent to which SSBCI participants have used their SSBCI  allocations, we analyzed Treasury program data on participants’  allocation amounts, disbursement requests, and program types, and  whether participants developed new programs to participate in SSBCI or  expanded existing programs with SSBCI funds. In addition, we analyzed  participants’ June 30, 2013, SSBCI quarterly report data—the most recent  quarter available—on the total amount of funds used and fund usage by  program type. To show the trend in participants’ total fund usage from  June 30, 2012, to June 30, 2013, we also analyzed data from participants’  June 30, 2012, and March 31, 2013, quarterly reports. To assess the  reliability of SSBCI data on participants’ fund usage, allocation amount,  and program type, and whether participants developed new programs or  expanded existing ones, we performed electronic testing for obvious  errors in accuracy and completeness and compared Treasury’s data on  program type to participants’ quarterly data. Where there were questions  or discrepancies we identified related to the data, we clarified them  through discussions with Treasury officials. We also interviewed  knowledgeable Treasury officials on how they assess the reliability of  participants’ quarterly data and the information they maintain on SSBCI.  We determined that the data were sufficiently reliable for the purposes of  describing these factors.

To examine the extent to which SSBCI participants faced challenges in  using SSBCI funds, we reviewed reports from Treasury’s Office of the  Inspector General (OIG) on participants’ usage of SSBCI funds; our 2011  and 2012 reports on SSBCI; and Treasury’s policies and procedures,  including its policies on disbursing subsequent tranches of SSBCI funds  and terminating the availability of participants’ SSBCI allocations.addition, we interviewed officials from Treasury and nine SSBCI   In  participants: Arizona; Iowa; Maryland; Missouri; Montana; New York; City  of Carrington, North Dakota; Vermont; and Virginia. We selected these  nine participants from the total of 57 participants—which included 47  states; Washington, D.C.; four municipalities; and five U.S. territories— using participants’ March 31, 2013, quarterly report data. We based our  selection on the following criteria: (1) the percentage of SSBCI funds  participants had used as of March 31, 2013; (2) the amount of SSBCI  funds allocated to participants; (3) the number of programs participants  implemented and whether the programs were new or existing; and (4)  geographic dispersion. We selected this nonrandom sample of  participants because we assumed that the types of challenges related to  using SSBCI funds would vary for participants characterized by a mix of  fund usage histories, allocation amounts, and numbers of new and  existing programs across all regions. To reduce administrative burden, we  excluded from our selection (1) the seven participants that the OIG told us  it was in the process of auditing or was planning to audit at the time we  selected the participants, and (2) the nine participants we interviewed in  our 2012 SSBCI review. When we selected participants to interview, the  March 31, 2013, quarterly data were the most recent available. Because  Treasury had not completed its review of the data at that time, we used  preliminary quarterly report data for our selection. We also reviewed  testimonial evidence we obtained during our 2011 and 2012 SSBCI  reports related to challenges SSBCI participants faced in using SSBCI  funds. Finally, we interviewed representatives from a number of trade  associations representing the lending and venture capital communities:  the Conference of State Bank Supervisors, Community Development  Venture Capital Alliance, Council of Development Finance Agencies,  Independent Community Bankers Association, National Association of  Federal Credit Unions, Opportunity Finance Network, and State Science  & Technology Institute. We selected these trade associations based on  information from Treasury officials on the organizations with whom they  had worked.

To examine the extent to which Treasury and program stakeholders,  including SSBCI participants, federal banking regulators, and trade  associations, have used outreach activities to promote use of the program  and assessed the success of these efforts, we interviewed Treasury  officials and representatives of stakeholder groups and reviewed  materials pertinent to SSBCI outreach. Specifically, we interviewed  Treasury officials, representatives from the nine SSBCI participants and  seven trade associations identified above, and officials from the federal  banking regulators—Board of Governors of the Federal Reserve System  (Federal Reserve), Federal Deposit Insurance Corporation (FDIC), and  Office of the Comptroller of the Currency (OCC)—to learn about outreach  activities they have conducted for SSBCI and to obtain relevant materials  and documentation. We reviewed Treasury guidance on SSBCI outreach,  including marketing best practices for SSBCI loan participation, loan  guarantee, and collateral support programs, as well as Treasury budget  documents. We also reviewed materials related to Treasury’s pilot  program to hire outreach consultants for the SSBCI programs in  Mississippi, Ohio, and South Carolina. These materials included the  solicitation for subject-matter experts for lender outreach support,  technical assistance plans, and final reports developed by the consultants  for the three states. We reviewed outreach materials SSBCI participants,  federal banking regulators, and trade associations had developed related  to SSBCI. We also reviewed all 57 SSBCI participants’ websites to  understand how SSBCI participants are providing information about  SSBCI to interested parties.they contained detailed program descriptions; information on the amount  of SSBCI funds allocated to the participants; links to additional, related  materials; information or materials on how to apply for the program; and  contact information for additional information, among other things. We  interviewed officials from Treasury, the federal banking regulators, and  the nine SSBCI participants identified above on the methods they used to  assess the success of their outreach efforts. We also reviewed Treasury’s  conference summary memorandums, which include conference  attendees’ responses to the satisfaction surveys that Treasury  administers after each conference, as well as other general observations  on the conferences.

We examined the websites to determine if  To assess the extent to which Treasury has used performance measures  and program evaluation to manage SSBCI, we reviewed performance  measures and targets Treasury has set for SSBCI. We also reviewed a  tool Treasury uses to track its progress on some performance measures  and interviewed officials on actions they have taken to manage the  program by using performance measures. We identified relevant criteria  on setting targets for performance measures in the federal internal control  standards and leading practices for federal agencies’ performance  management. In addition, we reviewed performance information  Treasury has shared with SSBCI participants at its conferences and a  summary report of performance information that Treasury developed in  September 2013, and we interviewed officials on their plans to publicly  release SSBCI performance information. We also reviewed the second  and third quarter fiscal year 2013 status update documents developed for  the Cross-Agency Priority goal on Entrepreneurship and Small Business  to identify SSBCI performance data Treasury has shared with other  federal agencies. Finally, we reviewed the Small Business Jobs Act of  2010 to identify requirements for Treasury to evaluate SSBCI. We also  interviewed Treasury officials on their plans to evaluate SSBCI, including  how they intend to use participants’ 2017 assessments of their programs,  as required by their Allocation Agreements. We used criteria from our  guidance on designing program evaluations to evaluate Treasury’s plans  for its evaluation of SSBCI.

We conducted this performance audit from May 2013 to December 2013  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

section_title: Appendix II: SSBCI Participants’ Allocation Amount and Fund Usage, as of June 30, 2013
paragraphs: We reviewed Treasury’s program data and SSBCI participants’ quarterly  report data as of June 30, 2013, and found that SSBCI participants had  used their SSBCI allocations at varying rates.

section_title: Appendix III: Comments from the Department of the Treasury

section_title: Appendix IV: GAO Contacts and Staff Acknowledgements
subsections: section_title: GAO Contact
paragraphs: Daniel Garcia-Diaz, (202)-512-8678, garciadiazd@gao.gov.

section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Kay Kuhlman (Assistant  Director), Bethany Benitez, Anna Chung, Elizabeth Curda, Pamela  Davidson, Christine Houle, Beverly Ross, Jennifer Schwartz, and Jena  Sinkfield made key contributions to this report.


Question-summary annotations: questions: question: How has the amount of money allocated to SSBCI participants changed since 2012?
answer: As of June 30, 2013, State Small Business Credit Initiative (SSBCI) participants--states, territories, and municipalities--had used $549 million of the $1.5 billion the Department of the Treasury (Treasury) allocated to them, nearly four times the amount used as of June 30, 2012.

question: What challenges do SSBCI participants face with funds?
answer: Participants' challenges with using funds at the start of the program resulted from some program policies not being finalized and low demand for some program types, among other things.
child_questions: question: What challenges will SSBCI participants continue to face?
answer: For example, some large lenders have been reluctant to partner with SSBCI participants because the variation in participants' programs makes it difficult for lenders to implement the program on a national basis, which has limited the program's reach into the small business lending market.

questions: question: How is SSBCI managed?
answer: Treasury uses performance measures to manage SSBCI.

question: How does Treasury use performance measures?
answer: For example, Treasury uses performance measures to adjust staff allocations and to identify participants that may need additional assistance.
child_questions: question: What has Treasury not yet done with performance measures?
answer: Although Treasury has set targets for program administration measures (for example, how long it takes the agency to approve participants' requests to modify their programs), it has not set targets for performance (for example, the amount of funds used over time).

question: How could setting targets be beneficial to Treasury?
answer: Targets could help Treasury identify program areas needing improvement.

question: How could seeking input from external stakeholders early in the design process be beneficial to Treasury?
answer: By seeking input from external stakeholders early in the design phase, Treasury can help ensure that it designs an evaluation that is useful for decision makers and other agencies working to promote small business credit access.

questions: question: How was the SSBCI created?
answer: The Small Business Jobs Act of 2010 created SSBCI within Treasury.
child_questions: question: What does SSBCI do?
answer: The program provides direct funding to participants for programs that expand access to capital for small businesses.

question: What have GAO's reports about SSBCI said?
answer: GAO's first two reports examined Treasury's implementation of SSBCI and its processes for monitoring compliance and procedures for evaluating and communicating program outcomes. This third report examines, among other things, the extent to which (1) participants have used their SSBCI allocations and faced challenges in using the funds, and (2) Treasury has used performance measures and program evaluation to manage SSBCI.
child_questions: question: How did GAO get information for these reports?
answer: GAO reviewed Treasury's SSBCI policies and procedures and participants' data on fund usage and interviewed officials from Treasury, eight states, and one municipality. GAO selected the states and municipality based on usage of SSBCI funds, the number of programs they implemented, and geographic dispersion, among other things.