GAO-23-105293: State Small Business Credit Initiative: Improved Planning Could Help Treasury Limit Additional Delays
Summary
GAO report GAO-23-105293, "State Small Business Credit Initiative: Improved Planning Could Help Treasury Limit Additional Delays," a report to congressional addressees dated February 2023. It states that the American Rescue Plan Act of 2021 reauthorized the State Small Business Credit Initiative (SSBCI) with $10 billion appropriated, and that the Department of the Treasury extended application deadlines multiple times. All 50 states, five territories and the District of Columbia applied for capital program funds, and as of September 30, 2022, Treasury had approved 31 applications and disbursed $1.3 billion. GAO recommends that Treasury incorporate certain best practices for project scheduling in its SSBCI planning, and Treasury agreed to review options for doing so.
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United States Government Accountability Office
Report to Congressional Addressees
STATE SMALL
February 2023
BUSINESS CREDIT
INITIATIVE
Improved Planning
Could Help Treasury
Limit Additional
Delays
GAO-23-105293
February 2023
STATE SMALL BUSINESS CREDIT INITIATIVE
Improved Planning Could Help Treasury Limit
Additional Delays
Highlights of GAO-23-105293, a report to
congressional addressees
Why GAO Did This Study What GAO Found
SSBCI was reauthorized by the The State Small Business Credit Initiative (SSBCI) provides funds to eligible
American Rescue Plan Act of 2021 jurisdictions—states, territories, the District of Columbia, and tribal
(ARPA) to support small businesses governments—to support small business lending and investment programs
recovering from the economic effects through its capital program. Eligible jurisdictions also can apply for technical
of the COVID-19 pandemic. Congress assistance funding (such as for legal, accounting, and financial advisory
appropriated $10 billion for the services) to support certain businesses that apply to an SSBCI program or
program. another government small business program.
The CARES Act and ARPA include The Department of the Treasury, which administers SSBCI, extended application
provisions for GAO to monitor the
deadlines for the capital and technical assistance programs multiple times (see
federal government’s efforts to respond
figure). All 50 states, five territories, and the District of Columbia submitted
to COVID-19. Among its objectives,
this report examines Treasury’s efforts
applications for capital program funds, and as of September 30, 2022, Treasury
to complete key implementation steps had approved 31 applications and disbursed $1.3 billion.
for SSBCI and manage program risks
and measure program performance. Application Deadline Extensions for State Small Business Credit Initiative, March
2021–March 2023
GAO reviewed relevant legislation and
SSBCI documentation and analyzed
Treasury data on allocated and
disbursed funds. GAO also interviewed
Treasury officials, representatives of
four territories, and representatives of
nongeneralizable samples of 12 states
and three tribal governments—
selected to represent a range of
geographic regions and other
characteristics.
What GAO Recommends Partly because of these deadline extensions and the time needed to review and
approve numerous applications, Treasury has taken longer than expected to
GAO recommends that Treasury fully
disburse SSBCI funds. Significant SSBCI implementation steps remain, such as
incorporate certain best practices for
reviewing remaining applications and implementing compliance monitoring and
project scheduling in its planning
efforts for SSBCI. Treasury agreed to performance measurement plans. However, Treasury’s planning efforts have not
review options for incorporating such fully incorporated certain best practices GAO previously developed for reliable
practices in line with GAO’s project scheduling. For example, Treasury’s work plan has not identified which
recommendation. staff or contractors would be responsible for each activity. Fully incorporating
these best practices could help limit the potential for delays and help ensure
timely disbursement and oversight of program funds.
Treasury has been developing a framework to support and monitor jurisdictions’
compliance with SSBCI guidelines. In November 2022, Treasury published
compliance and oversight standards for jurisdictions to use for their programs.
Officials said they have been building on procedures used for the original SSBCI
and planned to develop compliance monitoring procedures (for Treasury to use)
by December 31, 2022. Treasury also has published data collection and
reporting requirements for SSBCI and has been developing key indicators to
View GAO-23-105293. For more information, measure program performance.
contact Michael Clements at (202) 512-8678
or clementsm@gao.gov.
United States Government Accountability Office
Contents
Letter 1
Background 4
Participating Jurisdictions Plan to Use a Mix of Program Types to
Meet SSBCI Objectives 11
Treasury Had Delays Disbursing Program Funds and Has Not
Fully Implemented Best Practices for Project Scheduling 17
Treasury’s Compliance and Performance Monitoring Efforts Are in
Progress 24
Conclusions 27
Recommendation for Executive Action 27
Agency Comments and Our Evaluation 27
Appendix I Objectives, Scope, and Methodology 31
Appendix II Best Practices for Creating and Maintaining Reliable Schedules
35
Appendix III Comments from the Department of the Treasury 37
Appendix IV GAO Contact and Staff Acknowledgments 39
Tables
Table 1: Program Types for State Small Business Credit Initiative
Capital Program 4
Table 2: Number of Jurisdictions Proposing Programs and
Number of Planned Programs for State Small Business
Credit Initiative (SSBCI) and Change in Number from
Original SSBCI, by Type 13
Table 3: GAO’s Best Practices for Project Schedules 35
Figures
Figure 1: Overview of Flow of Funds in State Small Business
Credit Initiative (SSBCI) 6
Page i GAO-23-105293 State Small Business Credit Initiative
Figure 2: State Small Business Credit Initiative Funding
Allocations, 2010 and 2021 7
Figure 3: Major Milestones for State Small Business Credit
Initiative, March 2021–March 2023 9
Figure 4: Organizational Chart for the State Small Business Credit
Initiative Program Office 10
Figure 5: Total Preliminary Funding Allocations and States That
Received Disbursements for the State Small Business
Credit Initiative (SSBCI), as of September 30, 2022 12
Figure 6: Application Deadline Extensions for State Small
Business Credit Initiative, March 2021–March 2023 19
Abbreviations
ARPA American Rescue Plan Act of 2021
CDFI community development financial institution
FAQ frequently asked questions
SEDI socially and economically disadvantaged individual
SSBCI State Small Business Credit Initiative
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Page ii GAO-23-105293 State Small Business Credit Initiative
Letter
441 G St. N.W.
Washington, DC 20548
February 2, 2023
Congressional Addressees
To help small businesses recover from the COVID-19 pandemic,
Congress has provided nearly $1 trillion through grants, loan subsidies,
and commitment authority to various programs. In March 2021, the
American Rescue Plan Act of 2021 (ARPA) reauthorized the State Small
Business Credit Initiative (SSBCI) in the Department of the Treasury to
strengthen state, territory, District of Columbia, and tribal government
programs that support lending and investment in small businesses. 1
The current SSBCI program retains key features of the original program,
which operated from 2010 through 2017, but it received a much larger
appropriation ($10 billion compared to $1.5 billion). The current program
also includes an allocation for tribal governments and allocations for very
small businesses and those owned and controlled by socially and
1Congress first authorized SSBCI in the Small Business Jobs Act of 2010, appropriating
$1.5 billion in funding following the 2007–2009 financial crisis. GAO issued four reports on
the program and made recommendations to Treasury on improving oversight and
enhancing performance measurement and evaluation. Treasury implemented our
recommendations. See GAO, State Small Business Credit Initiative: Opportunities Exist to
Improve Program Oversight, GAO-12-173 (Washington, D.C.: Dec. 7, 2011); Small
Business Lending: Opportunities Exist to Improve Performance Reporting of Treasury’s
Programs, GAO-13-76 (Washington, D.C.: Dec. 5, 2012); State Small Business Credit
Initiative: Opportunities Exist to Enhance Performance Measurement and Evaluation,
GAO-14-97 (Washington, D.C.: Dec. 18, 2013); and Small Business Credit Programs:
Treasury Continues to Enhance Performance Measurement and Evaluation but Could
Better Communicate and Update Results, GAO-15-105 (Washington, D.C.: Dec. 11,
2014).
Page 1 GAO-23-105293 State Small Business Credit Initiative
economically disadvantaged individuals (SEDI-owned businesses). 2
Moreover, it provides technical assistance funds that jurisdictions or
Treasury can use to provide legal, accounting, and financial advisory
services to support certain businesses that apply for SSBCI or another
government small business program (technical assistance program). 3
The CARES Act and ARPA include provisions for GAO to monitor and
oversee the federal government’s efforts to prepare for, respond to, and
recover from COVID-19. In January 2022, we reported on steps Treasury
had taken to begin implementing the program and potential challenges
facing Treasury and program participants. 4 This report examines (1)
jurisdictions’ planned use of SSBCI funds to meet program objectives; (2)
Treasury’s completion of key implementation steps for SSBCI; and (3)
Treasury’s efforts to manage program risks and measure program
performance.
2Very small businesses are those with fewer than 10 employees and may include
independent contractors and sole proprietors. According to Treasury’s capital program
policy guidelines, Treasury considers SSBCI funds to be expended for SEDI-owned
businesses if the funds are expended for loans, investments, or other credit or equity
support to business enterprises that (1) certify they are owned and controlled by
individuals who have had their access to credit on reasonable terms diminished as
compared to others in comparable economic circumstances, due to their (a) membership
of a group that has been subjected to racial or ethnic prejudice or cultural bias within
American society, (b) gender, (c) veteran status, (d) limited English proficiency, (e)
disability, (f) long-term residence in an environment isolated from the mainstream of
American society, (g) membership of a federally or state-recognized Indian Tribe, (h) long-
term residence in a rural community, (i) residence in a U.S. territory, (j) residence in a
community undergoing economic transitions, or (k) membership of another “underserved
community” as defined in Executive Order 13985; (2) certify they are owned and
controlled by individuals whose residences are in Community Development Financial
Institutions (CDFI) Investment Areas, as defined in 12 C.F.R. § 1805.201(b)(3)(ii); (3)
certify they will operate a location in a CDFI Investment Area, as defined in 12 C.F.R. §
1805.201(b)(3)(ii); or (4) are located in CDFI Investment Areas, as defined in 12 C.F.R. §
1805.201(b)(3)(ii). The term “owned and controlled” means, if privately owned, 51 percent
is owned by such individuals; if publicly owned, 51 percent of the stock is owned by such
individuals; and in the case of a mutual institution, a majority of the board of directors,
account holders, and the community which the institution services predominantly consists
of such individuals.
3Treasury also can transfer technical assistance funds to the Minority Business
Development Agency in the Department of Commerce.
4GAO, COVID-19: Significant Improvements Are Needed for Overseeing Relief Funds and
Leading Responses to Public Health Emergencies, GAO-22-105291 (Washington, D.C.:
Jan. 27, 2022).
Page 2 GAO-23-105293 State Small Business Credit Initiative
For the first objective, we reviewed and analyzed Treasury data on state
and territory planned programs. We assessed the reliability of these data
by obtaining written responses from Treasury officials about their process
for ensuring the accuracy of the data. We found these data to be
sufficiently reliable for describing the planned programs. We also
interviewed representatives of four of the five permanently inhabited
territories and nongeneralizable selections of 12 states and three tribal
governments on their planned programs and for perspectives on
Treasury’s implementation of SSBCI. 5 We selected states to reflect a
range of funding allocation amounts and geographic diversity, and to
include states that did and did not participate in the original SSBCI
program. We contacted 16 tribal governments from among those that
submitted a Notice of Intent to apply for SSBCI and to represent a range
of geographic regions and sizes based on preliminary total funding
allocations. We interviewed representatives of the three tribal
governments that responded, which represented three different
geographic regions (Midwest, Northwest, and Southern Plains) and all
had preliminary allocation amounts greater than the median amount of
approximately $686,000. 6 We also interviewed experts from three
business organizations, two lender organizations, and six tribal
organizations.
For the second objective, we reviewed relevant legislation and Treasury’s
SSBCI program guidelines, frequently asked questions (FAQ), notices on
Treasury’s website, and other SSBCI program documentation. We
analyzed Treasury’s time frames for developing and updating program
guidelines and application deadlines and compared Treasury’s efforts to
consult with tribal governments against its 2015 Tribal Consultation
Policy. We reviewed Treasury’s work plan and other planning efforts for
SSBCI and compared them to our best practices for project scheduling. 7
Specifically, we compared Treasury’s work plan and planning efforts to
best practices related to sequencing and establishing the duration of
activities, assigning resources to activities, and updating schedules using
actual progress. We interviewed Treasury officials on the steps they took
5The five permanently inhabited U.S. territories are American Samoa, the Commonwealth
of the Northern Mariana Islands, Guam, Puerto Rico, and the U.S. Virgin Islands. We
requested interviews with all five territories and one did not respond to our request.
6We categorized tribal governments by geographic region based on the 12 regions used
by the Bureau of Indian Affairs in the Department of the Interior.
7See GAO, GAO Schedule Assessment Guide: Best Practices for Project Schedules,
GAO-16-89G (Washington, D.C.: Dec. 22, 2015).
Page 3 GAO-23-105293 State Small Business Credit Initiative
to implement SSBCI, including hiring staff, implementation time frames,
and any planning efforts.
For the third objective, we reviewed Treasury’s oversight and monitoring
plans and reporting guidance and interviewed Treasury officials. For more
detailed information about our scope and methodology, see appendix I.
We conducted this performance audit from August 2021 to February 2023
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
As with the original SSBCI, the current program includes a capital
Background program that jurisdictions can use to fund lending programs that facilitate
loans to small businesses—including capital access, collateral support,
loan participation, and loan guarantee programs—and venture capital and
other equity investment programs (see table 1). Each type of program
shares lending or equity financing risks with lenders or investors, thereby
facilitating transactions that otherwise might not have occurred. Eligible
jurisdictions can design new programs, restart previous programs, or
scale up existing programs. They also can implement multiple programs
of the same type.
Table 1: Program Types for State Small Business Credit Initiative Capital Program
Type of program Program description
Capital access Provides loan portfolio insurance wherein the borrower and lender, such as a small business
owner and a bank, contribute to a reserve fund held by the lender. Amounts in the lender’s
reserve fund are available to cover any losses incurred in its portfolio of capital access loans.
Loan guarantee Allows jurisdictions to use State Small Business Credit Initiative funds to provide assurance to
lenders that they will be partially repaid in the event of default, after the lender makes every
reasonable effort to collect funds. The guarantees help small businesses secure loans that
otherwise may have been inaccessible or prohibitively expensive.
Collateral support Supplies cash collateral accounts to lenders to enhance the collateral coverage of borrowers,
enabling business owners to borrow funds to help their businesses grow.
Loan participation Allows jurisdictions to buy an interest in the loans made by lenders or lend directly alongside
private lenders, providing additional direct lending to finance small businesses.
Venture capital and other equity Allows jurisdictions to set up public-private partnerships for equity investing or investment in
investment venture capital funds. These investments may be focused on providing capital to underserved
startups and making venture capital more available across geography and business founders.
Source: GAO analysis of Department of the Treasury documents. | GAO-23-105293
Page 4 GAO-23-105293 State Small Business Credit Initiative
As stipulated by ARPA, the current capital program retains key features of
the original program, including the formula for allocating a portion of the
funds for states, the District of Columbia, and territories; the disbursement
structure; and private funding requirements.
• Main allocations for states, territories, and the District of Columbia
generally were based on each jurisdiction’s decline in employment
from 2019 to 2020 as a proportion of national employment decline. 8
• Participating jurisdictions receive up to three installments over the life
of the program, and must use at least 80 percent of the previous
disbursement before receiving the next installment.
• Participating jurisdictions must match the federal contribution with
private dollars at a level of 1:1 for each loan guarantee, collateral
support, or loan participation program or for each fund within venture
capital programs. 9 Jurisdictions are expected to leverage $10 in
lending or investing for every $1 of SSBCI funding spent over the life
of the SSBCI programs (achieve a 10:1 leverage ratio). 10
As with the original program, eligible jurisdictions can administer funds
directly or they can partner with a third party, such as an economic
development corporation or business development center, to serve as the
program administrator with state oversight (see fig. 1).
8Main allocations refer to capital program allocations that are distinct from allocations for
very small or SEDI-owned businesses and incentive allocations to support SEDI-owned
businesses.
9SSBCI funds may be used to match aggregate borrower and lender contributions at a
level of 1:1 for each capital access program.
10During the original SSBCI, participants leveraged $8.95 in new financing for every $1 in
SSBCI funds as of December 31, 2016.
Page 5 GAO-23-105293 State Small Business Credit Initiative
Figure 1: Overview of Flow of Funds in State Small Business Credit Initiative
(SSBCI)
The current program received a much larger appropriation than the
original ($10 billion compared to $1.5 billion in 2010) and includes an
allocation for tribal governments and allocations for certain types of small
businesses and the technical assistance program (see fig. 2).
Page 6 GAO-23-105293 State Small Business Credit Initiative
Figure 2: State Small Business Credit Initiative Funding Allocations, 2010 and 2021
Notes: Only municipalities in states that do not submit complete applications are eligible to receive
funding. In addition to their direct allocations, the jurisdictions (including tribal governments) may
receive portions of the funding for technical assistance, very small businesses, and businesses
owned and controlled by socially and economically disadvantaged individuals (SEDI-owned
businesses) and incentive funding to support SEDI-owned businesses.
Treasury also applied the employment-based formula to determine
allocations for very small businesses to states, territories, and the District
of Columbia. In contrast, Treasury based allocations related to SEDI-
owned businesses on the percentage of each jurisdiction’s total
population residing in Community Development Financial Institution
(CDFI) Investment Areas. 11 Treasury based allocations to all eligible tribal
governments on the number of enrolled tribal members for each tribe
(using available data). 12
As required by ARPA, Treasury published capital program allocations for
states, territories, and the District of Columbia by April 9, 2021. Treasury
required these jurisdictions to submit a Notice of Intent to apply for the
program by May 10, 2021, and initiate capital program applications by
11CDFI Investment Areas, as defined in 12 C.F.R. § 1805.201(b)(3)(ii), are generally low-
income, high-poverty areas that do not receive sufficient access to capital or support for
the needs of small businesses.
12The employment-based methodology used for main allocations for states, territories,
and the District of Columbia is statutorily defined, but Treasury developed the
methodologies for allocating funds to very small and SEDI-owned businesses and tribal
governments.
Page 7 GAO-23-105293 State Small Business Credit Initiative
December 11, 2021. 13 As discussed in more detail later in this report,
Treasury set later deadlines for tribal governments to submit a Notice of
Intent to apply and subsequently complete applications. ARPA requires
Treasury to complete all disbursements and remaining obligations before
September 30, 2030. 14 Any remaining unexpended funds are to be
rescinded and deposited in Treasury’s general fund. Figure 3 provides a
timeline of major milestones and key implementation steps through the
end of March 2023 for the capital and technical assistance programs of
the current SSBCI.
13Eligible jurisdictions had to initiate capital program applications by December 11, 2021.
Specifically, they had to designate the implementing entity, identify key contacts, and
provide a list of proposed programs and statement of legal action. Jurisdictions were
required to complete capital program applications by February 11, 2022. That is, they had
to describe how each of their proposed programs satisfied the requirements in the SSBCI
statute and Treasury program guidelines and provide the signature of the authorized
official.
14Each jurisdiction approved for participation in SSBCI will receive main allocations of
capital funds in three disbursements (each approximately 33 percent of the total). As a
precondition to receipt of the second and third disbursements, the jurisdiction must certify
to Treasury that 80 percent or more of the prior disbursement had been expended,
transferred, or obligated to one or more approved programs. Funds generally will be
considered “expended” if the expenses were paid by or are for an approved state
program. They are considered “transferred” if they have been transferred to the
implementing or contracted entity administering daily operations of an SSBCI program to
reimburse actual expenses, when there is a clearly documented actual and immediate
cash need to fund a loan or investment to an eligible small business, or to pay for
allowable administrative expenses. Finally, funds are considered “obligated” if they have
been committed in writing to pay for orders placed, contracts awarded, goods and
services received, and similar transactions.
Page 8 GAO-23-105293 State Small Business Credit Initiative
Figure 3: Major Milestones for State Small Business Credit Initiative, March 2021–March 2023
Page 9 GAO-23-105293 State Small Business Credit Initiative
The program office responsible for administration and oversight of SSBCI
operates within Treasury’s Office of Recovery Programs. 15 As of August
2022, the program office had 23 full-time authorized positions and
administered SSBCI through groups responsible for policy, compliance,
outreach, and technical assistance (see fig. 4). Treasury also has a
contract in place to hire additional support for the program as needed.
Figure 4: Organizational Chart for the State Small Business Credit Initiative Program Office
15Treasury established the Office of Recovery Programs in April 2021 to lead
implementation of the department’s pandemic relief and recovery programs.
Page 10 GAO-23-105293 State Small Business Credit Initiative
Participating
Jurisdictions Plan to
Use a Mix of Program
Types to Meet SSBCI
Objectives
All States and Territories Some of the states already have begun to receive SSBCI funding, and
Applied to Participate and most states and territories plan to use it for a mix of lending and equity
investment programs.
Most Plan to Use a Variety
of Lending and Investment Status of applications and allocations. All 50 states, all five territories,
Programs and the District of Columbia submitted a complete application for SSBCI
funding to Treasury by the February 11, 2022 deadline. 16 As of
September 30, 2022, Treasury had approved 31 applications and
disbursed the first tranche (portion) of funding to 26 jurisdictions, which
totaled $1.3 billion or approximately 13 percent of program funds. Figure
5 summarizes the amount of funding allocated and disbursed to states,
the District of Columbia, and territories.
16All five territories (American Samoa, the Commonwealth of the Northern Mariana
Islands, Guam, Puerto Rico, and the U.S. Virgin Islands), the District of Columbia, and all
but three states (Alaska, North Dakota, and Wyoming) also participated in the original
SSBCI. However, one or more municipalities in each of those three states participated. In
lieu of state programs, Anchorage (Alaska), two consortiums of municipalities in North
Dakota, and one consortium of municipalities in Wyoming participated in the original
SSBCI.
Page 11 GAO-23-105293 State Small Business Credit Initiative
Figure 5: Total Preliminary Funding Allocations and States That Received Disbursements for the State Small Business Credit
Initiative (SSBCI), as of September 30, 2022
Note: Once Treasury approves an application, the jurisdiction is notified of its full funding obligation
and, after execution of its allocation agreement, receives its first tranche (portion) of funding, which is
typically equal to approximately one-third of the preliminary allocation. Funding is disbursed in three
approximately equal tranches if the jurisdiction meets SSBCI requirements. As of September 30,
2022, Treasury had approved applications but not yet disbursed the first tranche to five states
(Kentucky, Missouri, Nevada, Oklahoma, and Oregon).
Type and numbers of planned programs. According to preliminary data
from Treasury, 45 percent of the participating jurisdictions plan to
implement more than one type of lending program as well as a venture
capital or other equity investment program. Of the planned programs, 58
percent are lending programs, 34 percent are venture capital and other
equity investment programs, and 8 percent are other types. As shown in
table 2, the jurisdictions plan to implement 213 programs in total—61
more than the original SSBCI.
Page 12 GAO-23-105293 State Small Business Credit Initiative
Table 2: Number of Jurisdictions Proposing Programs and Number of Planned Programs for State Small Business Credit
Initiative (SSBCI) and Change in Number from Original SSBCI, by Type
Number of jurisdictions that plan to
Total number of proposed SSBCI programs
implement a program typea
Change in number of Proposed SSBCI Change in number of
Current program as of jurisdictions from the programs as of programs from the
Program type September 2, 2022 original SSBCI September 2, 2022 original SSBCI
Capital access (Loan loss 12 -12↓ 12 -12↓
reserve)
Loan guarantee 24 +5↑ 27 +5↑
Collateral support 22 +5↑ 22 +5↑
Loan participation 43 +4↑ 63 +15↑
Venture capital and other equity 45 +7↑ 72 +31↑
investment
Other program types 12 +12↑ 17 Not applicable
Total number and change in 56 -1↓ 213 (+61↑)
number of jurisdictions
participating / Total number
and change in number of
programs
Source: GAO analysis of Department of the Treasury data. | GAO-23-105293
a
Excluding tribal governments, 56 jurisdictions plan to participate in the current SSBCI (50 states, five
territories, and the District of Columbia). Fifty-seven jurisdictions participated in the original SSBCI (47
states, five territories, the District of Columbia, Anchorage, Alaska, two consortiums of municipalities
in North Dakota, and one consortium of municipalities in Wyoming). Tribal governments were not
eligible to participate in the original SSBCI.
Under the current SSBCI, loan participation and venture capital programs
are the most common planned program types and capital access
programs are the least common. The number of planned capital access
programs declined by 12 compared to the original SSBCI, while the
planned number of other lending program types increased. Under the
original SSBCI, capital access programs generated the least amount of
new financing of all program types, which may have contributed to the
decrease in their planned use under the current SSBCI. 17
Of the 16 jurisdictions whose representatives we interviewed, 10 states
and four territories participated in the original SSBCI. Of the 10 states,
three plan to restart programs used in the original SSBCI, three plan to
17Under the original SSBCI, capital access programs generated $640 million in total new
financing, and loan participation and venture capital programs generated $3.2 and $4.2
billion, respectively. See Department of the Treasury, State Small Business Credit
Initiative: A Summary of States’ 2016 Annual Reports (Washington, D.C.: July 24, 2017).
Page 13 GAO-23-105293 State Small Business Credit Initiative
implement new programs, and three plan to implement a mix of new and
continuing programs. Three of the four territories plan to implement new
programs, and three also plan to restart programs operated under the
original SSBCI. Twelve of the 16 jurisdictions plan to implement three or
more program types.
Officials from the 12 states we interviewed described how their
jurisdictions selected different program types to meet SSBCI program
requirements and objectives.
• Meeting leverage requirements. States provided examples of how
they selected certain types of programs to help ensure they meet the
10:1 leverage ratio requirement, which was a challenge for many
states in the original SSBCI. Officials from five states that plan to
implement venture capital programs told us they chose such
programs in part because they typically result in higher leverage
ratios. 18 For example, two states estimated that their venture capital
programs would achieve a leverage ratio of 20:1 or higher. They said
this would help them to meet the overall leverage requirement even if
their other programs did not reach the 10:1 leverage target.
• Reaching very small and SEDI-owned businesses. The states
described how they plan to leverage partnerships and deploy different
program types to reach a range of small businesses, including very
small and SEDI-owned businesses. All 12 states said they plan to
leverage existing partnerships with lenders, CDFIs, small business
development centers, or other community groups to provide support
to very small and SEDI-owned businesses. For example, officials from
four states said they plan to work with CDFIs or other community-
based lenders to implement loan guarantee and loan participation
programs. Officials from two states said they plan to continue their
capital access programs from the original SSBCI because those were
their primary programs for reaching very small and SEDI-owned
businesses.
Officials from four territories we interviewed also said they plan to use a
mix of program types to meet SSBCI requirements.
18According to Treasury’s 2016 Summary of States’ Annual Reports, venture capital
programs had an overall leverage ratio of 12.8:1, compared to an overall ratio of 7.7:1 for
loan guarantee programs, 7.5:1 for loan participation programs, and 5.6:1 for collateral
support programs.
Page 14 GAO-23-105293 State Small Business Credit Initiative
• Meeting leverage requirements. To meet the 10:1 leverage ratio,
officials from two territories said they plan to implement a venture
capital program in addition to at least one lending program, so that
their combined programs can achieve the leverage ratio. An official
from another territory said it plans to implement three different lending
programs and use a mix of short-, medium-, and long-term loans to
meet the leverage ratio.
• Reaching very small and SEDI-owned businesses. Officials from
all four territories told us that most or all of the businesses in their
territories qualify as SEDI-owned, so all of their planned programs
would serve these businesses and help them meet that requirement. 19
Finally, all four territories we interviewed plan to use SSBCI funds to
expand or further develop certain business sectors. For example, officials
from two territories told us they intend to use SSBCI funds to expand
equity investments to businesses in industries other than construction and
manufacturing, which are currently their main industries.
Tribal Governments Tribal governments were at an earlier stage of program planning and
Recently Completed design than states and territories at the time of our review because their
deadline for completing capital program applications (October 31, 2022)
Applications and Some
was about 8 months later than the deadline for states and territories. Data
Noted Potential on program types proposed by tribal governments were not available at
Challenges for Program the time of our review. According to information from Treasury, 283 tribal
Implementation governments submitted an application either individually or as part of a
consortium. 20 Representatives from a regional tribal organization we
19According to Treasury’s capital program guidelines, SEDI allocations are based on the
percentage of the jurisdiction’s total population residing in CDFI Investment Areas, as
defined in 12 C.F.R. § 1805.201(b)(3)(ii), relative to the total population residing in all
CDFI Investment Areas. Treasury determined that American Samoa, the Commonwealth
of the Northern Mariana Islands, Guam, and the U.S. Virgin Islands in their entirety
constitute CDFI Investment Areas for purposes of SSBCI, because each of these
territories has a poverty rate of at least 20 percent.
20According to data from Treasury, over 400 Notices of Intent to apply to SSBCI were
received from tribal governments by the December 2021 deadline. According to Treasury
officials, Treasury identified 582 tribal governments as eligible to apply to the program.
This included 574 federally recognized tribes and eight component bands of those tribes
that had submitted tribal enrollment data to the Bureau of Indian Affairs.
Page 15 GAO-23-105293 State Small Business Credit Initiative
interviewed said tribes may apply as part of a consortium to pool funding
and share administrative resources. 21
As Treasury reviews and approves applications, tribal governments will
be notified of their full funding obligation, and after executing allocation
agreements, will receive the first of their three funding tranches. The
preliminary (or minimum) allocations for tribal governments that submitted
a Notice of Intent to apply for SSBCI ranged from about $600,000 to
about $89 million, according to data from Treasury. Eighty percent of
tribal governments (333) received a preliminary allocation of less than $1
million, 19 percent (78) received between $1 million and $20 million, and
1 percent (four) received more than $20 million.
Representatives of tribal governments and tribal organizations we
interviewed offered perspectives on how their governments might deploy
SSBCI funds to meet program requirements and objectives. A
representative from a regional tribal organization told us loan guarantee
programs may be popular options because they offer greater security to
lenders that otherwise might not provide funding to tribal entrepreneurs.
Officials from two tribal governments told us they plan to implement
lending programs through CDFIs. Officials from one of these
governments said they plan to implement a loan participation program in
partnership with a CDFI with which they have an existing relationship.
Officials from the other tribal government told us they plan to work with
their tribe’s CDFI to implement a small business lending program.
Tribal government officials and organizations we interviewed indicated
potential challenges with designing and implementing programs and
meeting statutory requirements. These challenges may influence which
tribal governments participate in SSBCI and the types of programs they
implement. Specifically, interviewees highlighted the challenges of being
first-time participants, including navigating the complexity of SSBCI and
learning how to develop and operate eligible programs. Interviewees also
said that tribal governments may face challenges associated with limited
administrative resources, technical expertise, or lending capacity to
administer programs and access private capital to meet the 1:1 matching
requirement or the 10:1 leverage ratio target.
21In contrast, officials from two tribal governments we interviewed said they were leaning
towards applying individually so they could implement targeted programs to best meet the
needs of the small businesses in their communities.
Page 16 GAO-23-105293 State Small Business Credit Initiative
Treasury officials noted that because of these challenges, the smallest
and most economically distressed tribes may find it particularly difficult to
access and navigate SSBCI. As discussed in the next section, Treasury
has taken steps to conduct outreach and provide assistance to tribes to
mitigate these challenges.
Treasury Had Delays
Disbursing Program
Funds and Has Not
Fully Implemented
Best Practices for
Project Scheduling
Treasury Hired Program In the first year, Treasury staffed the SSBCI program office and generally
Office Staff, Conducted focused on conducting outreach to stakeholders and eligible jurisdictions
and developing guidelines and application materials for the capital
Outreach to Stakeholders,
program. Treasury began staffing the SSBCI program office in March
and Completed Initial 2021 and filled about half the positions by October 2021. Initial hires
Program Guidelines included the Director and Deputy Director/Chief of Staff, who had worked
on the original SSBCI program. 22 By October 2021, Treasury filled
additional lead roles such as the Senior Policy Advisor, Compliance
Manager, Technical Assistance/Grants Lead, and Supervisory Outreach
Manager to begin work on program implementation. By August 2022, all
but one position in the SSBCI program office was filled.
Program office staff put essential administrative plans and functions in
place. For example, in March and April 2021, staff coordinated with
Treasury budget personnel to establish an administrative budget and
staffing plan. They also started working with Office of Recovery Programs
and procurement personnel to put in place a project management support
contract. In August 2021, Treasury awarded a contract for support with
program design, operations and implementation, and outreach and
technical assistance to applicants.
Treasury also obtained input from stakeholders to inform the development
of program guidelines and materials. In May 2021, Treasury published a
22In addition to bringing back staff with experience from the original SSBCI program,
Treasury officials noted they reviewed organizational charts and consulted with staff from
the original program to inform the rebuild of the SSBCI program office.
Page 17 GAO-23-105293 State Small Business Credit Initiative
Request for Information in the Federal Register to obtain public input on
effective approaches for delivering capital and technical assistance to
small businesses through SSBCI. Treasury received more than 90
responses by the June 2021 deadline, including from state agencies,
tribal organizations, and representatives of other program stakeholders,
such as lender and investor associations. From spring to fall 2021,
Treasury also held over 50 listening sessions with state and territory
officials and other organizations to identify potential implementation
issues. According to Treasury officials, Treasury updated its capital
program guidelines to provide additional clarity and flexibility in response
to these listening sessions.
Beginning in May 2021, Treasury also conducted extensive outreach to
jurisdictions to provide assistance with program design and help them
understand SSBCI program requirements. Treasury officials said they
held approximately 70 webinars and daily office hour sessions through
December 11, 2021. They also convened working groups of states and
connected jurisdictions with subject matter experts. Nine of the 16 states
and territories we interviewed reported that Treasury facilitated
connections with other jurisdictions, and four told us these connections
were helpful for sharing knowledge about specific program types.
Treasury officials said they recognized that tribal governments would
require additional support and guidance as first-time participants. In
accordance with its 2015 Tribal Consultation policy, Treasury held an
initial consultation with tribal governments in May 2021 on the capital
program and another in January 2022 on the technical assistance
program. According to officials, Treasury also conducted approximately
15 webinars and seven regional leadership meetings in 2021 to inform
tribal governments of the reauthorized SSBCI. 23
Treasury Disbursed Funds Treasury began disbursing capital program funds later than it planned,
Later Than It Planned, partly because it required more time and resources than anticipated to
support first-time participants and establish comprehensive guidelines for
Partly Because of Time
new program components. The larger size and increased complexity of
Needed to Implement New the current SSBCI in comparison to the original introduced additional
Program Components challenges in setting and meeting planned time frames for the program.
For example, Treasury officials noted they needed more time and
resources to provide support to tribal governments that had not previously
23In the period before the deadline for tribal governments to submit a Notice of Intent to
apply, Treasury’s outreach to tribes also included information sessions, periodic office
hours, and one-on-one outreach to eligible tribal governments.
Page 18 GAO-23-105293 State Small Business Credit Initiative
participated in the program, and to implement the technical assistance
component of SSBCI.
Treasury issued guidelines for the capital program on November 10,
2021, later than originally estimated. Officials said they wanted to allow
enough time to ensure the guidelines were comprehensive and minimize
the need for later revisions, a lesson learned from the previous program.
In the original SSBCI, Treasury issued revised guidelines and materials
after a number of states had submitted applications. As a result, some
states had to amend their programs to comply with Treasury’s revised
guidelines.
Treasury extended the application deadlines for both the capital and
technical assistance programs (see fig. 6). It did so to give jurisdictions
more time to design programs following the release of its capital program
guidelines, and to accommodate the additional time needed to support
tribal governments.
Figure 6: Application Deadline Extensions for State Small Business Credit Initiative, March 2021–March 2023
Capital program deadlines for states and territories. On September
27, 2021, Treasury extended the deadline for states and territories to
complete their capital program applications from December 11, 2021, to
February 11, 2022. 24 Treasury officials said they extended the application
24Treasury initially required states, territories, and the District of Columbia to initiate
applications for the capital program by December 11, 2021, and to submit a complete
application by February 11, 2022.
Page 19 GAO-23-105293 State Small Business Credit Initiative
deadline to allow more time for jurisdictions to design their programs after
capital program guidelines were issued in November 2021.
Capital program deadlines for tribal governments. Treasury extended
the capital program application deadline for tribal governments four
times. 25 Treasury first extended the deadline in response to concerns
from tribal governments about the feasibility of submitting applications by
the original deadline of December 11, 2021. It extended the deadline a
second time to update preliminary allocations for tribal governments and
allow additional time for tribes to form consortiums, and because tribal
governments lacked experience with the original SSBCI. 26 Treasury then
extended the deadline two more times to continue to give tribal
governments time to design their programs and for Treasury staff to
continue outreach efforts.
Treasury officials said that providing support to tribal governments has
taken more time and resources than they expected because tribal
governments are statutorily held to the same requirements as states but
generally do not have similar experience in implementing capital lending
and investment programs. To assist tribal governments, Treasury
facilitated connections between tribal governments to form consortiums
and incorporated flexibilities into the program guidance where possible,
such as allowing businesses owned by tribal governments to participate
in SSBCI.
Technical assistance deadlines. Treasury also extended deadlines for
the technical assistance program multiple times. For states and territories,
Treasury extended the deadline three times from March 31, 2022, to a
final deadline of October 14, 2022. For tribal governments, it extended the
deadline four times from March 11, 2022, to March 31, 2023.
One factor that contributed to the first extension was the delayed
issuance of the technical assistance guidelines. Treasury communicated
in November 2021 that it would issue these guidelines in the following
weeks, but did not do so until April 28, 2022. Officials said the guidelines
25Treasury initially required tribal governments to submit a Notice of Intent to apply by
September 16, 2021, and subsequently extended this deadline to December 11, 2021.
26According to officials, Treasury initially communicated preliminary allocations to each
eligible tribal government before the deadline for tribal governments to submit a Notice of
Intent to apply and updated allocations after the Notice of Intent deadline. Treasury then
re-calculated the allocations based on the number of entities that submitted a Notice of
Intent to apply by the December 2021 deadline.
Page 20 GAO-23-105293 State Small Business Credit Initiative
were issued later than planned because they wanted to make sure they
were fully developed and reflected the capital program guidelines. They
also were balancing competing program priorities and needed time to
solidify their partnership with the Department of Commerce’s Minority
Business Development Agency, which will administer part of the program.
More broadly, according to Treasury officials, timelines for the technical
assistant component shifted from their original estimates because they
did not fully anticipate the resources needed to develop and issue
extensive reporting guidance, compliance standards, and FAQs. They
also did not fully anticipate the time and effort needed to review capital
program applications.
Finally, officials said deadlines were extended in response to feedback
from jurisdictions that wanted to complete their capital program
applications before submitting technical assistance applications. The
deadline for tribal governments to submit technical assistance
applications also was pushed back when Treasury extended the deadline
for them to submit capital program applications.
Timing of disbursements. The deadline extensions, and the time
needed to review numerous applications (many proposing multiple
programs and program types) affected the timing of disbursements of
funds to jurisdictions. In September 2021, Treasury officials said they
planned to start disbursing funds in the first quarter of 2022. They did not
begin disbursing funds until May 26, 2022—about 3 months after the
February 2022 capital program application deadline for states and
territories. As of September 30, 2022, Treasury had approved 31
applications and disbursed the first tranche of funds to 26 of the 56
jurisdictions that applied.
According to officials, completing application reviews and disbursing
funds took longer than expected in part because of the timing and volume
of capital program applications. Nearly all of the 56 capital program
applications from states, territories, and the District of Columbia were
submitted shortly before the February 11, 2022 deadline, and collectively
proposed substantially more programs than implemented during the
original SSBCI. Officials also said participating jurisdictions were planning
a wider variety of programs to absorb the increased amount of funding.
They noted that it generally takes a month to complete an application
review, including 1–3 weeks to pose questions to a jurisdiction about their
application and receive answers.
Page 21 GAO-23-105293 State Small Business Credit Initiative
Participants and stakeholder views on timelines for guidance,
applications, and fund disbursement. While tribal governments and
organizations generally reported that the deadline extensions were
helpful, several states we interviewed between March and May 2022 told
us they made it more difficult to design or start their programs. Two of the
three tribal governments we interviewed said the deadline extensions
were helpful and gave them more time to design their programs. Similarly,
four of the six tribal organizations we interviewed noted that the
extensions allowed tribal governments to explore private funding options,
flesh out program designs, clarify guidance, obtain additional assistance
from Treasury, or communicate with other tribal governments.
However, eight of 12 states noted that collective program delays hindered
their efforts to design or put their programs in place. In particular, five
states reported that Treasury’s delays issuing guidance made it more
challenging to design their programs because they had to work with
incomplete information. Three states reported that Treasury’s guidance
delays made it more difficult to develop partnerships or work with third
parties necessary for their programs. Representatives from a financial
organization similarly reported that the later-than-expected disbursal of
funds caused program partners to drop out, which might affect
jurisdictions’ ability to administer programs.
The remaining four states did not report implementation challenges
resulting from the extension of SSBCI timelines. However, two of these
states said that delays raised concerns about getting funds to small
businesses in need. Three of the four territories told us that Treasury
could have improved the timeliness of the guidance or application
process.
Treasury’s Planning Could Treasury has faced challenges setting and maintaining a reliable
More Fully Incorporate schedule for key SSBCI program implementation steps, as indicated by
multiple deadline extensions and later-than-expected disbursements.
Certain Best Practices for
Although Treasury moved back some time frames to allow more time to
Project Scheduling properly manage new SSBCI components and allow jurisdictions
additional time they needed, some jurisdictions reported challenges
arising from certain delays, such as increased difficulty in working with
partners to implement their programs.
Treasury’s planning efforts have not fully incorporated certain best
practices for creating and maintaining a reliable schedule—a document
that integrates the planned work of government staff and contractors, the
resources necessary to accomplish that work, and the associated budget
Page 22 GAO-23-105293 State Small Business Credit Initiative
(see app. II for more details). 27 Incorporating these best practices can
help agencies improve their project planning processes and reduce the
potential for delays. These practices include, but are not limited to, the
following:
• Sequencing and establishing the duration of activities. Activities
should be logically sequenced and linked, and a schedule should
realistically reflect how long each activity will take. Treasury officials
noted that they began drafting a work plan in March 2022 and
produced an updated work plan in September 2022 to help set work
streams, develop high-level deliverables for a period of time, and
communicate the SSBCI program office’s goals internally and to
management. However, while Treasury’s September 2022 work plan
documented goals and objectives through December, it did not
describe the interim steps needed to reach deadlines for major work
streams, how Treasury planned to sequence planned work, or
estimations for how long each activity would take.
• Assigning resources to activities. A schedule should reflect the
resources needed to do the work. Treasury’s September 2022 work
plan did not identify which staff or contractors would be responsible
for leading and conducting each activity or reflect a consideration of
resource availability or constraints.
• Updating the schedule using actual progress. A schedule should
be updated with actual dates and progress to adjust time frames for
remaining efforts. Treasury officials noted that since spring 2021, they
have used frequent internal meetings to establish and revise time
frames and plan to revisit the work plan at least annually to identify
gaps in resources and set objectives. However, Treasury’s work plan
did not include time frames for such updates, reflect progress updates
based on prior work plans, or report on program performance relative
to the documented objectives.
Fully incorporating these practices for creating and maintaining a reliable
schedule could help Treasury communicate accurate time frames to
program stakeholders and ensure timely and efficient implementation of
remaining SSBCI components. These components include
• reviewing capital program applications and disbursing funds for tribal
governments and consortiums;
27See GAO-16-89G.
Page 23 GAO-23-105293 State Small Business Credit Initiative
• reviewing applications for all participating jurisdictions for the technical
assistance program; and
• developing compliance and performance monitoring plans for the
capital and technical assistance programs.
Treasury officials noted that Treasury’s approach to work planning was
influenced by a variety of factors, including the program office’s limited
staff resources and the need for flexibility in planned time frames. Officials
noted the value of conducting planning exercises to align staff resources
and sequence project activities. But they said that rigorous and time-
consuming project planning practices might not be appropriate because
of the significant workload required to implement the program. However,
incorporating these best practices for project scheduling does not
necessarily require significant staff resources and could help Treasury
more efficiently use the limited staff resources it has available.
Without a planning process that incorporates best practices for project
scheduling, Treasury may experience additional delays as it executes the
remaining key implementation steps for SSBCI. In turn, this may impede
efforts to disburse the remaining funds and conduct oversight of
jurisdictions’ use of funds in a timely manner. Treasury also may be
unable to share reliable time frames with participating jurisdictions, which
could hinder jurisdictions’ efforts to design and implement programs and
meet the needs of small businesses.
Treasury’s
Compliance and
Performance
Monitoring Efforts Are
in Progress
Treasury Has Begun Treasury has taken steps to support and monitor jurisdictions’ compliance
Developing a Compliance with SSBCI capital program guidelines, and has been developing
compliance procedures. Key components of Treasury’s compliance
Framework for the Capital
efforts include the following:
Program
• Compliance monitoring procedures. Treasury officials said the
agency plans to use compliance monitoring procedures similar to
those used for the original SSBCI. They plan to adjust those
procedures to account for the current program’s increased size and its
Page 24 GAO-23-105293 State Small Business Credit Initiative
new components, such as the addition of tribal governments and
funding for very small and SEDI-owned businesses. According to
officials, they expect these procedures to include conducting risk-
based sampling of participant transactions, reviewing participant
transactions prior to disbursing additional funds, and reviewing
jurisdictions’ quarterly and annual reports. As of November 2022,
officials were drafting a plan for these procedures. According to
Treasury’s September 2022 work plan, the agency planned to
complete a compliance monitoring plan for the SSBCI capital program
by December 31, 2022.
• National compliance and oversight standards. Treasury published
standards for compliance and oversight by jurisdictions on November
17, 2022. Similar to national compliance and oversight standards
published for the original program, these standards describe best
practices and Treasury’s recommended approach for designing and
implementing a comprehensive compliance and oversight system.
Treasury officials said the capital program policy guidelines also
included some of the guidance from the original standards.
• Compliance training. Treasury officials said they plan to conduct
periodic compliance training for jurisdictions, particularly for tribal
governments and smaller states and territories that may need
additional support to handle the larger allocations they received under
the current program. According to officials, the agency developed
compliance training materials and held multiple rounds of this training
as of December 31, 2022.
To mitigate potential compliance issues that may arise while the agency
develops its compliance framework, officials said jurisdictions will be able
to submit compliance questions to Treasury. They plan to meet frequently
with jurisdictions and lending partners to answer compliance questions.
Officials also said the application review process allows them to identify
potential issues and address them with jurisdictions before programs are
implemented. 28
In interviews conducted between March and May 2022, some states and
territories indicated a need for additional compliance guidance and tools.
28As part of the application review process, Treasury reviews whether the applicant has
represented that it completed the legal actions necessary to implement the proposed
capital programs and whether the application demonstrates an understanding of SSBCI
capital program guidelines. Treasury also evaluates the reporting mechanisms, audits, or
other internal controls and compliance activities the jurisdiction has in place to conduct
oversight and meet annual and quarterly reporting requirements.
Page 25 GAO-23-105293 State Small Business Credit Initiative
Six of 12 states and one of four territories told us that additional checklists
or templates from Treasury would be helpful. For example, checklists or
templates that could be shared with participating small businesses or
lenders could help jurisdictions meet program requirements or prevent
compliance issues. Two states said Treasury’s guidance was unclear and
a third said it would be helpful if Treasury’s FAQs were more complete.
In the months since our interviews were conducted, Treasury issued
FAQs in June, July, August, September, and December 2022 to clarify
existing program guidelines. Treasury also published sample certifications
in June 2022 to help participating jurisdictions comply with certification
requirements in the SSBCI capital program guidelines, and published
standards for compliance and oversight by jurisdictions in November
2022. Treasury officials said they do not have immediate plans to develop
compliance templates and checklists, because it would be difficult to
develop a document that covers the nuances of every program that
jurisdictions plan to implement.
Treasury Plans to Use Treasury officials said their approach to measuring performance for the
Performance Measures SSBCI capital program will be similar to their approach for the original
SSBCI, with some additions such as measuring performance for the
from the Original SSBCI
SEDI-owned business component. As we reported in December 2013,
and Develop Measures for Treasury’s performance measures for the original program included the
New Program Elements
• amount of SSBCI funds used over time, as reported in SSBCI
quarterly reports;
• volume and dollar amount of loans or investments supported by
SSBCI funds, as reported in SSBCI annual reports;
• amount, in dollars, of private-sector leverage in SSBCI annual reports;
and
• estimated number of jobs created or retained in SSBCI annual
reports.
As of September 30, 2022, Treasury had issued capital program reporting
guidance for jurisdictions and was developing performance measures for
that component of the current SSBCI and an online portal for jurisdictions
to submit reporting data. 29 Treasury had not yet developed performance
measures or reporting guidance for the technical assistance component
29Treasury issued capital program reporting guidance in May 2022 and updated guidance
in September 2022.
Page 26 GAO-23-105293 State Small Business Credit Initiative
of SSBCI. The capital program reporting guidance requires jurisdictions to
submit quarterly and annual reports and report data on recipient business
and investment characteristics, the number of jobs expected to be
created and retained, and the amount of private financing obtained.
Jurisdictions must report on demographic-related characteristics of small
businesses participating in their programs, including the SEDI-owned
status of businesses and the race, ethnicity, gender, sexual orientation,
and veteran status of principal business owners, to the extent businesses
provide this information.
The reauthorized SSBCI provides critical funding to states, territories, and
Conclusions tribal governments to facilitate small business lending and investing in the
aftermath of the COVID-19 pandemic. SSBCI’s focus on very small and
SEDI-owned businesses in particular makes it an important program for
reaching businesses that historically have faced difficulties obtaining
access to finance. While Treasury has made progress in implementing a
large and complex program, it has taken longer than expected to disburse
funds to jurisdictions. And significant implementation steps remain, such
as continuing to review applications and implementing compliance
monitoring and performance measurement plans. As Treasury plans work
and manages time frames for remaining SSBCI implementation steps, its
planning efforts could benefit from fully incorporating best practices for
project scheduling, such as sequencing and assigning resources for
planned activities and updating the schedule to reflect actual progress.
Fully incorporating these practices could better position Treasury to
establish and communicate reliable time frames and reduce the potential
for additional delays.
Treasury’s Chief Recovery Officer should fully incorporate best practices
Recommendation for for project scheduling related to sequencing and establishing the duration
Executive Action of activities, assigning resources to activities, and updating the schedule
using actual progress into its planning processes for the SSBCI program.
(Recommendation 1)
We provided a draft of this report to Treasury for review and comment.
Agency Comments Treasury provided written comments, which are provided in appendix III.
and Our Evaluation Treasury also provided technical comments, which we incorporated as
appropriate.
In its written comments, Treasury stated that it agreed with the goal of
ensuring appropriate planning and scheduling for Treasury’s
implementation of the SSBCI program. Treasury stated it will study GAO’s
best practices for project scheduling and review options for incorporating
Page 27 GAO-23-105293 State Small Business Credit Initiative
additional functionality into its planning for the SSBCI program in line with
our recommendation.
Following this review of options, implementing the recommendation by
fully incorporating these practices would help better position Treasury to
set reliable time frames and limit additional delays for remaining SSBCI
implementation steps.
We are sending copies of this report to the appropriate congressional
committees and the Secretary of the Treasury. In addition, the report is
available at no charge on the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact
Michael Clements at 202-512-8678 or clementsm@gao.gov. Contact
points for our Offices of Congressional Relations and Public Affairs may
be found on the last page of this report. GAO staff who made key
contributions to this report are listed in appendix IV.
Michael E. Clements
Director, Financial Markets and Community Investment
Page 28 GAO-23-105293 State Small Business Credit Initiative
Congressional Addressees
Chair
Vice Chair
Committee on Appropriations
United States Senate
Chair
Ranking Member
Committee on Finance
United States Senate
Chair
Ranking Member
Committee on Health, Education, Labor, and Pensions
United States Senate
Chair
Ranking Member
Committee on Homeland Security and Governmental Affairs
United States Senate
The Honorable Kay Granger
Chair
The Honorable Rosa L. DeLauro
Ranking Member
Committee on Appropriations
House of Representatives
The Honorable Cathy McMorris Rodgers
Chair
The Honorable Frank Pallone, Jr.
Ranking Member
Committee on Energy and Commerce
House of Representatives
Page 29 GAO-23-105293 State Small Business Credit Initiative
The Honorable Mark E. Green, M.D.
Chairman
The Honorable Bennie G. Thompson
Ranking Member
Committee on Homeland Security
House of Representatives
The Honorable James Comer
Chairman
The Honorable Jamie Raskin
Ranking Member
Committee on Oversight and Accountability
House of Representatives
The Honorable Jason Smith
Chairman
The Honorable Richard Neal
Ranking Member
Committee on Ways and Means
House of Representatives
The Honorable Lisa Murkowski
United States Senate
Page 30 GAO-23-105293 State Small Business Credit Initiative
Appendix I: Objectives, Scope, and
Appendix I: Objectives, Scope, and
Methodology
Methodology
This report evaluates the Department of the Treasury’s implementation of
the State Small Business Credit Initiative (SSBCI), reauthorized by the
American Rescue Plan of 2021. Specifically, we examined (1)
jurisdictions’ planned use of SSBCI funds to meet program objectives, (2)
Treasury’s completion of key implementation steps for SSBCI, and (3)
Treasury’s efforts to manage program risks and measure program
performance.
To address the first objective, we reviewed and analyzed Treasury data
on total preliminary funding allocations for states, territories, and tribal
governments. These are allocations for the main capital program, very
small businesses, businesses owned by socially and economically
disadvantaged individuals (SEDI-owned businesses), and the SEDI-
owned business incentive fund. We reviewed and analyzed data on the
number of applications approved and the amount of funds disbursed to
states and territories as of September 30, 2022. We compared these data
to determine which states and territories had not yet received funds. We
assessed the reliability of these data by reviewing Treasury guidance and
methodologies for allocating funds to jurisdictions and interviewing
Treasury officials about their process for ensuring the accuracy of the
data. We found these data to be sufficiently reliable for describing
preliminary funding allocation amounts for states, territories, and tribal
governments and disbursement amounts for states and territories.
To describe how jurisdictions planned to use SSBCI funds, we reviewed
and analyzed Treasury data on states and territories’ planned programs,
which were obtained from Treasury’s ongoing reviews of applications for
the SSBCI capital program as of September 2, 2022. 1 We obtained data
on the types of programs implemented by states and territories during the
original SSBCI from Treasury’s 2016 SSBCI program evaluation. We
compared the number of programs implemented during the original
SSBCI to the number of planned programs for the current SSBCI. We
assessed the reliability of these data by obtaining written responses from
knowledgeable Treasury officials about their process for ensuring the
accuracy of the data. We found these data to be sufficiently reliable for
describing the planned programs.
1These data are subject to change as Treasury continues reviewing and approving
applications.
Page 31 GAO-23-105293 State Small Business Credit Initiative
Appendix I: Objectives, Scope, and
Methodology
We interviewed officials from four of the five permanently inhabited
territories and a nongeneralizable selection of 12 states and three tribal
governments. 2 We selected states with a range of (1) total preliminary
funding allocations for the current SSBCI, (2) preliminary funding
allocations for SEDI-owned businesses, and (3) geographic location; and
to include states that did and did not participate in the original SSBCI
program. We selected tribal governments that submitted a Notice of Intent
to apply for SSBCI and to represent a range of geographic regions and
sizes based on preliminary total funding allocations. We contacted 16
tribal governments and interviewed representatives of the three tribal
governments that responded, which represented three different
geographic regions (Midwest, Northwest, and Southern Plains) and all
had preliminary allocation amounts greater than the median amount of
approximately $686,000. 3
Our interviews focused on the types of programs jurisdictions planned to
implement, perspectives on Treasury’s implementation of SSBCI, and any
challenges faced or areas in which Treasury could provide additional
guidance or support. For the states and territories we interviewed, we
obtained and analyzed information on the types of programs they planned
to implement and whether they would restart programs from the original
SSBCI or develop new ones. We obtained this information through a pre-
interview questionnaire that asked jurisdictions about the status of their
application for the SSBCI capital programs, the types of programs they
were planning to implement, and whether they were planning to
implement new programs, restart programs, or fund ongoing programs.
To address the second objective, we reviewed relevant legislation and
SSBCI documentation, including program guidelines and application
materials for the capital and technical assistance programs, guidance in
the form of frequently asked questions, and Treasury notices. We
assessed Treasury’s efforts to implement its 2015 Tribal Consultation
2We interviewed representative from the following states: Alabama, Alaska, Arizona,
California, Florida, Illinois, Massachusetts, Missouri, New Hampshire, New Jersey, North
Carolina, and North Dakota. We also interviewed representatives of four of the five
permanently inhabited U.S. territories: American Samoa, the Commonwealth of the
Northern Mariana Islands, Guam, and Puerto Rico. We requested interviews with all five
territories; one did not respond to our request. We interviewed representatives of three
tribal governments: the Confederated Tribes of the Umatilla Indian Reservation, Little
Traverse Bay Bands of Odawa Indians, and Wichita and Affiliated Tribes.
3We categorized tribal governments by geographic region based on the 12 regions used
by the Bureau of Indian Affairs in the Department of the Interior.
Page 32 GAO-23-105293 State Small Business Credit Initiative
Appendix I: Objectives, Scope, and
Methodology
Policy for SSBCI by reviewing tribal consultation agendas and meeting
notes. We reviewed and analyzed Treasury’s time frames for developing
and updating program guidelines and application deadlines for the capital
and technical assistance programs using program guidelines, notices,
and information on SSBCI’s public website. We reviewed Treasury’s work
plan and other planning efforts for SSBCI and compared them to our best
practices for project scheduling. 4 Specifically, we compared Treasury’s
work plan and planning efforts to best practices related to sequencing and
establishing the duration of activities, assigning resources to activities,
and updating the schedule using actual progress. We interviewed
Treasury officials on the steps they took to implement SSBCI, including
hiring staff, and about implementation time frames and any planning
efforts.
To address the third objective, we reviewed prior GAO and Treasury
Office of Inspector General reports, Treasury’s national compliance and
oversight standards for the original and current SSBCI, and Treasury’s
reporting guidance for the current SSBCI capital program. Treasury’s
compliance monitoring procedures and performance monitoring
documents for SSBCI were under development at the time of our review.
We interviewed Treasury officials on their approaches to risk
management, including compliance monitoring and performance
measurement plans.
For all our objectives, we interviewed experts from three business
organizations (America’s Small Business Development Network, Council
of Development Finance Agencies, and State Science and Technology
Institute); two lender organizations (National Venture Capital Association
and Opportunity Finance Network); and six tribal organizations (Affiliated
Tribes of Northwest Indians Economic Development Corporation,
Midwest Alliance of Sovereign Tribes, NAFOA, Native American
Development Corporation, Native CDFI Network, and United South and
Eastern Tribes Sovereignty Protection Fund). We discussed their
perspectives on how states, territories, and tribal governments planned to
use SSBCI funding, Treasury’s implementation of the program, and any
challenges faced.
We conducted this performance audit from August 2021 to February 2023
in accordance with generally accepted government auditing standards.
4See GAO, GAO Schedule Assessment Guide: Best Practices for Project Schedules,
GAO-16-89G (Washington, D.C.: Dec. 22, 2015).
Page 33 GAO-23-105293 State Small Business Credit Initiative
Appendix I: Objectives, Scope, and
Methodology
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
Page 34 GAO-23-105293 State Small Business Credit Initiative
Appendix II: Best Practices for Creating and Appendix II: Best Practices for Creating and
Maintaining Reliable Schedules
Maintaining Reliable Schedules
GAO’s Schedule Assessment Guide outlines best practices for creating
and maintaining a high-quality and reliable project schedule. 1 The 10 best
practices described below represent key concepts and activities for
developing such schedules. They help integrate the planned work, the
resources necessary to accomplish that work, and the associated budget.
These best practices are in no particular order and are not intended as a
series of steps for developing a schedule.
Table 3: GAO’s Best Practices for Project Schedules
Best practice Description
Capturing all activities The schedule should reflect all activities as defined in the program’s work breakdown structure, which
defines in detail the work necessary to accomplish a project’s objectives.
Sequencing all activities The schedule should be planned so that critical program dates can be met. To do this, activities must be
logically sequenced and linked—that is, listed in the order in which they are to be carried out and joined
with logic. In particular, a predecessor activity must start or finish before its successor. Date constraints
and lags should be minimized and justified. This helps ensure that the interdependence of activities that
collectively lead to the completion of activities or milestones can be established and used to guide work
and measure progress.
Assigning resources to all The schedule should reflect the resources (labor, materials, travel, facilities, equipment, and the like)
activities needed to do the work, whether they will be available when needed, and any constraints on funding or
time.
Establishing the duration The schedule should realistically reflect how long each activity will take. Durations should be reasonably
of all activities short and meaningful and should allow for discrete progress measurement. Schedules that contain
planning and summary planning packages as activities will normally reflect longer durations until broken
into work packages or specific activities.
Verifying that the The schedule should be horizontally traceable, meaning that it should link products and outcomes
schedule can be traced associated with other sequenced activities. Such links are commonly referred to as “hand-offs” and
horizontally and vertically serve to verify that activities are arranged in the right order for achieving aggregated products or
outcomes. The schedule should also be vertically traceable—that is, data are consistent between
different levels of a schedule. When schedules are vertically traceable, lower-level schedules are clearly
consistent with upper-level schedule milestones, allowing for total schedule integrity and enabling
different teams to work to the same schedule expectations.
Confirming that the critical The schedule should identify the program’s critical path—the path of longest duration through the
path is valid sequence of activities. Establishing a valid critical path is necessary for examining the effects of any
activity’s slipping along this path. The program’s critical path determines the program’s earliest
completion date and focuses the team’s energy and management’s attention on the activities that will
lead to the project’s success.
Ensuring reasonable total The schedule should identify reasonable total float (or slack)—the amount of time a predecessor activity
float can slip before the delay affects the program’s estimated finish date—so that the schedule’s flexibility
can be determined. The length of delay that can be accommodated without the finish date’s slipping
depends on the number of date constraints within the schedule and the degree of uncertainty in the
duration estimates, among other factors, but the activity’s total float provides a reasonable estimate of
this value. As a general rule, activities along the critical path have the least total float. Unreasonably
high total float on an activity or path indicates that schedule logic might be missing or invalid.
1See GAO, GAO Schedule Assessment Guide: Best Practices for Project Schedules,
GAO-16-89G (Washington, D.C.: Dec. 22, 2015).
Page 35 GAO-23-105293 State Small Business Credit Initiative
Appendix II: Best Practices for Creating and
Maintaining Reliable Schedules
Best practice Description
Conducting a schedule A schedule risk analysis starts with a good critical path method schedule. Data about program schedule
risk analysis risks are incorporated into a statistical simulation to predict the level of confidence in meeting a
program’s completion date; to determine the contingency, or reserve of time, needed for a level of
confidence; and to identify high-priority risks. Programs should include the results of the schedule risk
analysis in constructing an executable baseline schedule.
Updating the schedule Progress updates and logic provide a realistic forecast of start and completion dates for program
using actual progress activities. Maintaining the integrity of the schedule logic is necessary to reflect the true status of the
and logic program. To ensure that the schedule is properly updated, people responsible for the updating should
be trained in critical path method scheduling.
Maintaining a baseline A baseline schedule is the basis for managing the program scope, the time period for accomplishing it,
schedule and the required resources. The baseline schedule is designated the target schedule and is subjected to
a configuration management control process. Program performance is measured, monitored, and
reported against the baseline schedule. The schedule should be continually monitored so as to reveal
when forecasted completion dates differ from baseline dates and whether schedule variances affect
downstream work.
Source: GAO. | GAO-23-105293
Page 36 GAO-23-105293 State Small Business Credit Initiative
Appendix III: Comments from the
Appendix III: Comments from the Department
of the Treasury
Department of the Treasury
Page 37 GAO-23-105293 State Small Business Credit Initiative
Appendix III: Comments from the Department
of the Treasury
Page 38 GAO-23-105293 State Small Business Credit Initiative
Appendix IV: GAO Contact and Staff
Appendix IV: GAO Contact and Staff
Acknowledgments
Acknowledgments
Michael E. Clements at 202-512-8678 or clementsm@gao.gov.
GAO Contact
In addition to the contact named above, John Fisher (Assistant Director),
Staff Charlene Calhoon (Analyst in Charge), Ryder Buttry, Cathleen Carr, Gita
Acknowledgments DeVaney, John Karikari, Kevin Lyman, Marc Molino, Sabrina Riddick,
Barbara Roesmann, and Farrah Stone made key contributions to this
report.
(105293)
Page 39 GAO-23-105293 State Small Business Credit Initiative
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