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 other blogs in our series on congressional support for reauthorization here, here, here, here, here, here, and here.
Remarkably, the House and Senate Small Business Committees have reported two dozen bills this year with near unanimous bipartisan support. Addressing the three “C’s” of the Small Business Administration’s (SBA) mission—capital, contracting, and counseling—as well as other aspects of the agency, the bills present elements of what could be a significant modernization of SBA.
With Congress resuming legislative activity this month, and another markup already scheduled for September 14 in the House Small Business Committee, we address several key questions about SBA reauthorization in this final blog of the “Road to Reauthorization” series.
What’s Been Agreed to?
Members of both committees have found bipartisan agreement on nearly all of the bills that have been considered in the three markups held this year. Among other things, these bills make notable reforms to SBA’s flagship lending program, expand the kinds of services available to small businesses through SBA resource partners, and boost U.S. competitiveness by strengthening the commercialization of innovative technologies developed by small firms.
|Bills Reported by House Small Business Committee (May Markup | July Markup)|
|Bill Number||Bill Name||Vote||Topic|
|H.R. 1644||7(a) Loan Agent Oversight Act||22-0||Capital|
|H.R. 1651||Small Business 7(a) Loan Agent Transparency Act||21-0||Capital|
|H.R. 3511||Service-Disabled Veteran Opportunities in Small Business Act||23-0||Contracting|
|H.R. 4670||Small Business Contracting Transparency Act||26-0||Contracting|
|H.R. 4671||Corrective Action Report Oversight and Accountability Act||26-0||Contracting|
|H.R. 1541||Small Business Workplace Pipeline Act||21-1||Counseling|
|H.R. 1730||Supporting Small Businesses and Career and Technical Education Act||22-0||Counseling|
|H.R. 1606||Veteran Entrepreneurship Training Act||23-0||Counseling|
|H.R. 4666||To require the Inspector General of the SBA to submit a quarterly report on fraud relating to certain COVID-19 loans||26-0||Disaster/Lending|
|H.R. 4667||RECLAIM Taxpayer Funds Act||26-0||Disaster/Lending|
|H.R. 4669||DOE and SBA Research Act||26-0||Innovation|
|H.R. 4480||SERV Act||26-0||Other|
|H.R. 4668||POST IT Act||26-0||Rules & Regulations|
|H.R. 3995||Small Business Regulatory Reduction Act||14-12||Rules & Regulations|
|Bills Reported by Senate Small Business and Entrepreneurship Committee (July Markup)|
|Bill Number||Bill Name||Vote||Topic|
|S. 673||Small Business Childcare Investment Act||18-1||Capital|
|S. 1345||504 Credit Risk Management Improvement Act||18-1||Capital|
|S. 1352||504 Modernization and Small Manufacturer Enhancement Act||18-1||Capital|
|S. 2099||Supporting Community Lenders Act||18-1||Capital|
|S. 2212||SBIC Advisory Committee Act||18-1||Capital|
|S. 2482||Community Advantage Loan Program Act||18-1||Capital|
|S. 38||Veteran Entrepreneurship Training Act||18-1||Counseling|
|S. 936||Supporting Small Business and Career and Technical Education Act||18-1||Counseling|
|S. 943||Small Business Disaster Damage Fairness Act||18-1||Disaster|
|S. 1396||RAMP for Innovators Act||18-1||Innovation|
|S. 1156||Native American Entrepreneurship and Opportunity Act||18-1||Other|
The most consequential cooperation, however, occurred within the Senate Small Business and Entrepreneurship Committee, where the chairman and ranking member found common ground in the Community Advantage Loan Program Act on how to address recently enacted SBA rules that changed lending criteria and opened the door for more lenders to secure Small Business Lending Company licenses.
The SBA rules had created substantial concern among committee members—not to mention many small business stakeholders—and became an unexpected roadblock to SBA reauthorization. With 18 senators, plus industry groups, now backing a bill to roll back and reshape those rules, SBA reauthorization is back on track.
What Issues Remain Unaddressed?
Capital | Accessing capital is one of the most common challenges entrepreneurs and small businesses face. The committees have passed legislation to reform and enhance aspects of SBA lending and capital programs that will help more small business owners get the funding they need to start and grow their businesses. Additional opportunities exist to expand the availability of microloans and ensure 7(a) loans can be used to address a variety of needs modern small businesses have.
Contracting | While the federal government has met its topline goal of awarding at least 23% of contracts to small businesses for each of the last 10 years, small business owners, members of Congress, and the White House all support creating more opportunities for small businesses to supply goods and services to federal agencies. With this kind of alignment, bipartisan agreement is within reach on any number of reforms to small business contracting—whether those be increasing goals, improving the quality of procurement data, or helping more small businesses enter the procurement market.
Counseling | Starting and running a business is hard—especially for most Americans who don’t receive formal education or training on how to do so. That’s why business counseling, training, and technical assistance are so important. SBA’s resource partners provide entrepreneurs and small businesses with valuable help and advice, but these programs need to keep pace with current business trends and a diversifying population of small business owners. It shouldn’t be surprising that some members of Congress may have an affinity for particular counseling programs; BPC encourages legislators, though, to embrace the same adaptability that characterizes successful entrepreneurs and make changes to enhance the effectiveness of SBA’s counseling programs.
Where do Partisan Differences Remain?
The lone small business bill to make it through either small business committee that did not garner bipartisan support is H.R. 3995, the Small Business Regulatory Reduction Act. This legislation seeks to address a real issue that can cause headaches, and worse, for small businesses: complying with government rules. “Everyone on this committee wants to lessen the burden of regulations on small businesses,” Ranking Member Nydia Velázquez said at the July markup. Yet the parties differ on how best to accomplish this shared goal.
In April, BPC spoke with two former heads of SBA’s Office of Advocacy, which is responsible for monitoring federal agency compliance with the Regulatory Flexibility Act (RFA). This law requires agencies to consider regulatory alternatives if a regulation is expected to have a “significant economic impact” on a substantial number of small businesses.
Tom Sullivan, who led the Office of Advocacy under then-President George W. Bush, told us during that conversation that RFA responsibility is intended to be independent from “the policies and regulatory proposals” of a given administration. Dr. Winslow Sargeant, head of the Office of Advocacy during the Obama administration, said the RFA’s goal “is to make sure that the regulatory process is clear, transparent, and predictable” for small businesses.
Partisan differences on regulatory issues derailed the last attempt at SBA reauthorization in 2019. Small business owners would again be the losers in the unfortunate event that disagreements over regulatory issues torpedo reauthorization once more. Today, there is bipartisan recognition that the burden of regulatory compliance can fall more heavily on small businesses compared to larger companies. There also appears to be acknowledgment by both sides that regulation can be helpful in ensuring competitive market space for small businesses. Relieving the small business regulatory burden does not need to be the same as opposing regulation outright. Most important, as Dr. Sargeant pointed out, is transparency and predictability in the regulatory process.
Thankfully, with common ground on making life easier for small businesses, bipartisan compromise on updating the RFA is possible so long as legislators maintain a posture of cooperation.
Why Should It Be a Priority?
The pandemic unleashed a wave of entrepreneurship, with Americans starting a record number of businesses in 2021. This year is on track to see the second-highest number of new businesses started. With demand already increasing for SBA services, Congress must ensure the agency is prepared to “aid, counsel, and assist” these new businesses—not to mention the millions of existing small businesses looking for capital and contracts to grow.
Congress has passed important reforms to enhance SBA over the years, but it has been more than two decades since a comprehensive reauthorization bill became law.
SBA’s customers—small business owners—strongly support strengthening access to capital programs, expanding procurement opportunities, modernizing entrepreneurial development programs, and improving communication and customer service. The comprehensive nature of these desires amounts to a request that SBA modernization be a congressional priority.
The House and Senate Small Business Committees are showing it is. Now is the time to finish the work and pass a comprehensive SBA reauthorization bill.
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