Description:
Under current law, the Small Business Administration (SBA) operates a program that makes loans and grants to eligible nonprofit entities (known as intermediaries). Intermediaries use those funds to make very small loans (microloans that are less than $50,000) to newly-established or growing small businesses. Participating intermediaries use grant funds from SBA to provide technical assistance to small businesses receiving a microloan.
H.R. 2670 would make a number of changes to the microloan program, including raising the amount the SBA may commit to an intermediary, extending the maximum term for repayment of the microloan to the intermediary, and authorizing intermediaries to offer lines of credit as well as traditional loans. The bill also would direct the Government Accountability Office to conduct a study of intermediaries to determine why some that may be eligible to participate in the program fail to do so, and to recommend ways to increase participation in the program. Finally, the SBA’s Office of Advocacy would be directed to prepare an analysis of the effect of new rules on small businesses eligible to participate in the microloan program.
Based on information from the SBA, CBO estimates that implementing H.R. 2670 would cost about $2 million over the 2016-2020 period, assuming appropriation of the necessary amounts for monitoring, rulemaking, and reporting activities. CBO does not expect that provisions of the bill that would extend the term for borrowers to repay intermediaries would affect the subsidy rate for the microloan program. The subsidy rate is the estimated long-term cost to the government of a direct loan, calculated on a net-present-value basis. (In fiscal year 2015, that rate is estimated to be about 10 percent.) Microloan borrowers are repaying loans, on average, more quickly than the time allowed under current law. Enacting H.R. 2670 would not affect direct spending or revenues; therefore, pay-as-you-go procedures do not apply.
H.R. 2670 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would not affect the budgets of state, local, or tribal governments.
