Better Support for Small Businesses: Recommendations for SBA

The Bipartisan Policy Center convened the Task Force on the Future of SBA with generous support from several different organizations. Through conversations and research over many months, the task force worked to identify feasible, bipartisan actions that could help strengthen what the Small Business Administration (SBA) already does well and address areas where improvement is warranted. Our guiding question: How can SBA’s relevance to and effectiveness for small businesses of all kinds, and the communities where they operate, be enhanced?

SBA might be a relatively small agency, accounting for a tiny share of the federal budget, but it handles a broad portfolio of programs for the benefit of millions of American small businesses. During the COVID-19 pandemic, SBA became almost a household name to many. The agency played a major part in the government’s emergency response, distributing about one-sixth of all federal relief funds. Application rates for SBA-guaranteed loans doubled. Intake volume at many of SBA’s entrepreneurial development resource partners, such as Small Business Development Centers, more than doubled and remains at elevated levels. SBA is no longer, as many have referred to it, the government’s “best-kept secret.”

Yet the pandemic period also highlighted long-standing challenges facing SBA. In conversations with subject matter experts, former agency officials, advocates, and policymakers, the task force heard consistently that SBA modernization would have been a priority even without the pandemic. In 2019, a bipartisan effort to reauthorize and comprehensively improve the agency failed. At the end of 2022, Sen. Ben Cardin (D-MD), chair of the Senate Small Business Committee, introduced a package of bills laying the groundwork for modernization. Sen. Joni Ernst (R-IA), ranking member on the committee, has also pushed for improvements at SBA. Many advocacy groups, including some of those the task force met with, have made SBA modernization a priority and released recommendations to that end.

The task force also met with local government officials and spoke with former heads of SBA district offices. These conversations helped ground the task force’s approach in the localized reality of small businesses and those serving them. Most small businesses operate locally and play important roles in their communities. When elected officials pay homage to small businesses as America’s “backbone,” they are highlighting this local character. Small businesses’ importance is particularly true in rural regions, where they account for a greater share of local employment than in urban areas.

Reforms undertaken at the national level as part of SBA modernization must take this local perspective into account. We encourage members of Congress and SBA officials to continue talking with as many small business owners and entrepreneurs as they can, to understand how SBA programs and services are used and how changes would affect local small business support systems. The recommendations fall into the three areas addressed by the task force: access to credit; marketing and customer service; and entrepreneurial development.

The task force is comprised of former SBA officials, leaders at financial institutions, small business owners, and advocates. With support from BPC staff, members conferred with dozens of subject matter experts and reviewed publicly available data and research. As part of its work on access to credit, the task force published several short empirical briefs on small business financing. The Task Force on the Future of SBA is grateful to supporters for making this possible and to those former SBA officials, small business advocates, and others who lent their time and expertise.