SBA Budget Slashed by 45%
The SBA said its loan management and accounting systems could experience the largest savings under the agency's $985 million budget for 2012.
The agency said this fiscal year's budget is a 45% decrease from 2010's budget. It expects to save $20 million through more efficient loan management and accounting systems. There is also a proposed $10 million cut in the reduction of support to small business development centers and an $8 million decrease through the elimination of a duplicative technical assistance program.
The SBA it will also save $8 million due to reduction of 850 core staff of disaster employees and $1 million by eliminating a duplicative drug-free workplace program.
One of the two largest requested increases in budget authority is $132 million in loan subsidy to make new loans and to account for higher than estimated historical default rates in part due to loans made based on inflated collateral such as real estate, the SBA said. The other being $91 million for the disaster loan program due to a significant decrease in carryover funding from prior years, according to the agency.
The SBA has proposed $27 billion to support small business capital, which includes $130 million in subsidy to support $16.5 billion in 7(a) loans, $82 million to support $7.5 billion in 504 loans and $3.8 million to support $25 million in microloans.