Sequestration will cut federal contracts & SBA loan subsidies for small businesses
Small businesses will be awarded fewer federal contracts and face greater difficulties in obtaining business loans if sequestration takes effect on March 1.
The Small Business Administration, which guarantees many bank loans made to small businesses and provides training and counseling for entrepreneurs, is funded through the non-defense discretionary budget, which is facing another $492 billion in across-the-board “sequester” cuts unless Congress and the White House reach a $1.2 trillion deficit reduction deal by the end of February.
If the sequester is triggered, the SBA would cut loan guarantees for small businesses, scale back training and business development programs to help small businesses win federal contracts, and counseling services to help start up businesses across the country.
“Sequestration’s indiscriminate cuts would limit our ability to deliver these vital services to small businesses at a time when they, and our nation’s economy, can scarcely afford it,” wrote SBA Administrator Karen Mills to the Senate Appropriations Committee.
- cut SBA loan subsidy by $10.5 million. Since every dollar of SBA’s subsidy is used to guarantee about $51 worth of loan, sequestration would take away $530 million worth of loans for 1,100 small businesses. “These funds would have supported approximately 5,800 jobs in industries like manufacturing, food services and hospitality,” according to the SBA;
- reduce training to help small businesses win federal contracts, resulting in $4 billion of lost revenue for small businesses;
- turn away 12,000 small businesses seeking technical assistance and training from Women Business Centers [WBC], resulting in between 100 and 200 fewer women-owned start-ups compared to last year;
- cut 2,000 long-term counseling clients serviced by Small Business Development Centers [SBDC];
- and cut SBA funding for Advanced Manufacturing Clusters.
- WhatTheFolly.com: 5 key facts about sequestration
- WhatTheFolly.com: Analysis: Impact of sequestration on non-defense discretionary spending
- WhatTheFolly.com: Transcript: OMB Controller Daniel Werfel’s testimony on impacts of sequestration before the Senate Appropriations Committee
- Senate Appropriations Committee: Letter from SBA Administrator Karen Mills on the impacts of sequestration (PDF)
- Senate Appropriations Committee: Video of the Senate Appropriations Committee hearing on the impacts of sequestration on Feb. 14, 2013
- Senate Appropriations Committee: Hearing on the impacts of sequestration on Feb. 14, 2013
- Small Business Administration: Women’s Business Centers
- Advanced Manufacturing Jobs and Innovation Accelerator