For the first time since before the recession, the federal Small Business Administration will not have to seek taxpayer dollars to make up for funds it loaned to small businesses that are not paying their bills.
According to report, that’s one of the most significant findings for U.S. small businesses in President Obama’s 2016 budget proposal, and it emerges buried on Page 1,197 of the document.
The Washington Post reported Tuesday (March 3) that Obama has not requested any funding whatsoever to cover costs of the SBA’s two small business lending programs. This means that SMEs are sufficiently repaying their loans, avoiding defaults and delinquencies, and creating a self-sufficient government program.
According to SBA Administrator Maria Contreras-Sweet, the revelation is noteworthy. “We are proud of this achievement and the fiscal responsibility it represents,” she said at a hearing. “It is an important accomplishment for the agency, not only because of the savings it represents for taxpayers, and not merely because it suggests a healthier financial climate on Main Street. It’s also key because the agency has come under fire lately for what some lawmakers have described as unnecessary spending on programs that haven’t been approved by Congress.”
Contreras-Sweet was referring to the SBA’s newly announced online portal that connects small businesses with potential lenders. The platform, launched just weeks ago, came under fire by some lawmakers that believe the SBA is not conservative enough with its funds.
According to reports, the White House budget proposal shows that the SBA may gain leverage in convincing federal officials overseeing the administration to let the group innovate.
Earlier figures stemming from the SBA’s lending programs did not fare so well for the agency. Reports say the SBA needed a subsidy of $299 million in 2009. By 2011, they needed $562 million to cover losses. Since, reports say, the group has raised fees on some loans and strengthened oversight of the financing process.