Building Toward a Comprehensive SBA Modernization

This blog is part of our “Road to Reauthorization” blog series, that builds off BPC’s latest small business report, Small Agency, Big Mandate: A Bipartisan Road Map to Modernizing SBA. The series provides small business owners, stakeholders, and advocates with updates and insight on congressional progress toward reauthorization of SBA. You can read the first four blogs in our series on congressional support for reauthorization here, here, here, and here.

Proponents of modernizing the Small Business Administration (SBA), including the Bipartisan Policy Center, emphasize that it has been nearly 23 years since Congress last reauthorized SBA. While it’s been a long time since comprehensive reauthorization of the agency, it’s a misunderstanding to think Congress has been derelict in its responsibilities to America’s small businesses since 2000.

The House Small Business and Senate Small Business and Entrepreneurship Committees have provided critical oversight and worked in bipartisan fashion over the past two decades to make updates and improvements to SBA. Much of this work has been bipartisan, reflecting Democrats’ and Republicans’ longstanding commitment to supporting small businesses.

That work continues in the 118th Congress. After the House passed three bipartisan bills in January, the House Small Business Committee held a markup in late May, moving six bills forward for further consideration. Each had bipartisan cosponsors and received bipartisan support at markup.

Capital

Instances of fraud in SBA-managed COVID relief programs have been top-of-mind for many lawmakers. Bipartisan questions about changes to SBA’s 7(a) loan guaranty program recently made through regulatory rulemaking have increased members’ interest in oversight. On May 23, the House Small Business Committee reported two bills—H.R. 1644, the 7(a) Loan Agent Oversight Act, and , the Small Business 7(a) Loan Agent Transparency Act—aimed at strengthening oversight of the 7(a) loan program by instituting new requirements for 7(a) loan agents.

Counseling

The American Express Small Business Financial Confidence Report, released in late May, found that 51% of small businesses surveyed are currently hiring. While it has always been the case that small businesses need qualified and talented workers to help their businesses grow, workforce challenges have been particularly vexing since the start of the pandemic.

The House Small Business Committee passed two bills to help small businesses meet their workforce needs. H.R. 1730, the Supporting Small Business and Career and Technical Education Act, directs Small Business Development Centers (SBDCs) and Women’s Business Centers to help small businesses hire graduates from career and technical education programs.

Similarly, the committee approved H.R. 1541, the Small Business Workforce Pipeline Act, which expands the suite of services SBDCs provide to also include information on how small businesses can establish apprenticeships and work-based learning opportunities.

The Committee also passed H.R. 1606, the Veteran Entrepreneurship Training Act of 2023,
which reauthorizes an SBA-run program that provides entrepreneurship training to veterans and active members of the armed forces.

Contracting

The federal government has met its goal of awarding at least 3% of prime contracts to small businesses owned by service-disabled veterans for the past 10 years. Yet not all 24 agencies subject to the goal meet it each year. In fiscal year 2021, for example, 25% of agencies failed to meet the target.

At the May markup, the House Small Business Committee passed legislation (H.R. 3511) that directs SBA to provide training to agencies that fail to meet the 3% goal on how to increase contract awards to service-disabled veteran-owned small businesses.

Building Blocks 

Five of the six bills passed by the House Small Business Committee last month were also passed by the full House last Congress yet stalled before becoming law. These and dozens of other bipartisan small business bills are building blocks the committees of jurisdiction can use to construct an SBA reauthorization bill.

While improvements to SBA and its services to small businesses are valuable however they come, reform through reauthorization presents Congress with a valuable opportunity to harmonize programs and requirements that have been enacted in a piecemeal fashion.

A house built by one builder over the course of several consecutive months is likely to be more consistent in quality and cohesive in appearance than a home built by dozens over the course of decades. So too is an agency likely to be more efficient and effective when modernized through a top-to-bottom reauthorization than one that has been shaped by dozens of legislative changes for more than 20 years.