Administration Proposes Another Cut in SBA Budget Democrats on the House Small Business Committee criticized President Bush’s proposed SBA budget as inadequate, but SBA Administrator Hector Barreto said he is proud of “doing more with less.” Defending the budget at a committee hearing Feb. 9, Barreto said his agency in 2004 made loans to more businesses for more dollars than ever before and provided counseling to a record number of entrepreneurs. President Bush’s budget would allocate $593 million for SBA in fiscal 2006, down from $610 million in the current year. “Every year when I think the budget can’t get any worse for the SBA, the administration turns around and proves me wrong,” said the committee’s ranking Democrat, Rep. Nydia Velazquez (NY). She said the agency’s budget has shrunk from nearly $1 billion when President Bush took office, while SBA “has sadly become the shell of an agency.” Barreto told the committee, “I know that in Washington, DC, it’s difficult to imagine strongly supporting a program without continually increasing its budget, but SBA has proved that it can be done.” In a conference call with reporters, he cited increased use of technology as one reason he can “do more with less.” SBA has created an online application for the 8(a) program and is providing some training and counseling services through the Internet. In the contracting area, the agency’s procurement center representatives — now called “electronic PCRs” — use technology to cover multiple contracting offices. The budget calls for hiring six additional PCRs, bringing the total to about 55. Many small business advocates say that is far too few. The PCRs are supposed to push for set-aside opportunities and monitor contract bundling. “Using technology to the fullest extent possible” allows the agency “to become more innovative and more effective,” Barreto said. The proposed budget would support up to $16.5 billion in loans under SBA’s flagship 7(a) program, up from $14.5 billion this year. Congress voted last year to raise fees for borrowers and lenders so that the program is self-supporting. Barreto said demand for 7(a) loans has continued to increase since the fees were raised. The administration’s 2006 budget proposes to end the Microloan program and PRIME counseling program, calling them duplicative. Congress refused to eliminate the programs in the 2005 budget. Microloans for less than $35,000 are SBA-guaranteed loans made to low-income entrepreneurs through local nonprofit groups. Barreto said the program made just 2,400 loans last year, while the larger 7(a) program made 10 times as many in the under-$35,000 category. In addition, he said, administrative costs mean that Microloans “cost us a dollar for every dollar we lend.” The budget also proposes to end government-backed equity investments by Small Business Investment Companies. They are venture capital firms that are licensed by SBA. Barreto said those investments have lost an estimated $2.7 billion over 10 years. SBICs will still lend money to entrepreneurs.