GAO-24-106671: State Small Business Credit Initiative: Treasury Made Progress on Disbursements and Improvements to Project Scheduling
Summary
GAO-24-106671, State Small Business Credit Initiative: Treasury Made Progress on Disbursements and Improvements to Project Scheduling, a June 2024 Government Accountability Office report to congressional committees. It states that SSBCI was reauthorized by the American Rescue Plan Act of 2021 and that Congress appropriated $10 billion for the program. The Department of the Treasury obligated $8.4 billion and disbursed $2.6 billion in SSBCI capital program funds as of December 31, 2023. The Department of Commerce awarded $117 million in SSBCI technical assistance funds to 43 organizations. ARPA requires Treasury to complete all disbursements and remaining obligations before September 30, 2030.
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“GAO-24-106671: State Small Business Credit Initiative: Treasury Made Progress on Disbursements and Improvements to Project Scheduling.”
Original at www.gao.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/gao-24-106671-state-small-business-credit-initiative-treasury-made-pro-b8267a628e/
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United States Government Accountability Office
Report to Congressional Committees
STATE SMALL
June 2024
BUSINESS CREDIT
INITIATIVE
Treasury Made
Progress on
Disbursements and
Improvements to
Project Scheduling
GAO-24-106671
June 2024
STATE SMALL BUSINESS CREDIT INITIATIVE
Treasury Made Progress on Disbursements and
Improvements to Project Scheduling
Highlights of GAO-24-106671, a report to
congressional committees
Why GAO Did This Study What GAO Found
SSBCI was reauthorized by the The State Small Business Credit Initiative (SSBCI) provides funds to participating
American Rescue Plan Act of 2021 jurisdictions to support small business lending and investment programs through
(ARPA) to support small businesses its capital program. The program also includes technical assistance funds that
recovering from the economic effects jurisdictions can use to provide legal, accounting, and financial advisory services
of the COVID-19 pandemic. Congress to support certain businesses applying for SSBCI or another government small
appropriated $10 billion for the business program.
program. ARPA requires Treasury to
complete all disbursements and The Department of the Treasury, which administers most SSBCI funding,
remaining obligations before obligated $8.4 billion and disbursed $2.6 billion in SSBCI capital program funds
September 30, 2030. Any remaining as of December 31, 2023. (See figure.) As of that date, nearly all states and
funds unexpended by Treasury are to territories and about one-third of tribal applicants had been approved to
be rescinded and deposited in participate in the capital program and received funds. Treasury continued to
Treasury’s general fund. review the remaining applications, which primarily included tribal applicants for
The CARES Act and ARPA include which there was a later deadline. The Department of Commerce awarded $117
provisions for GAO to monitor and million in SSBCI technical assistance funds to 43 organizations in September
oversee federal efforts to respond to 2023.
the COVID-19 pandemic. GAO
Capital Program Funding for the State Small Business Credit Initiative, as of December 31,
previously examined jurisdictions’ 2023
planned use of SSBCI funds and
Treasury’s implementation of the
program (GAO-23-105293). This report
examines the disbursement of SSBCI
funds and Treasury’s continuing efforts
to manage time frames and measure
and report on program performance,
among other objectives.
GAO analyzed Treasury data on
amounts disbursed to participating
jurisdictions and interviewed Treasury
and Commerce officials. GAO also Note: Numbers may not sum to the totals due to rounding.
reviewed Treasury’s planning tools and
Treasury incorporated additional best practices for project scheduling for SSBCI
program guidelines and interviewed
representatives of four territories and a in line with GAO’s 2023 recommendation (GAO-23-105293). For example,
nongeneralizable sample of 12 states Treasury began to use a project management tool that helps track, manage, and
and 13 tribal applicants. They were report on projects. However, GAO’s recommendation remains open until
selected to represent a range of Treasury demonstrates further progress fully incorporating these best practices.
geographic regions and other For example, Treasury could better analyze staff availability and workloads to
characteristics. help the SSBCI program team efficiently implement the program. By fully
addressing GAO’s recommendation, Treasury could help ensure timely
disbursement of the remaining $6.5 billion of allocated funds.
In December 2023, Treasury finalized performance metrics for SSBCI that track
deployment of SSBCI funds to eligible small businesses and the amount of
private capital leveraged. These metrics are consistent with key attributes of
successful performance metrics GAO identified, such as including measurable
View GAO-24-106671. For more information,
targets. Treasury provided templates and training to help jurisdictions meet
contact Michael Clements at (202) 512-8678 reporting requirements. Treasury published the first quarterly report on SSBCI
or clementsm@gao.gov. (based on data jurisdictions submitted) in December 2023 and plans to issue the
first annual report in September 2024.
United States Government Accountability Office
Contents
Letter 1
Background 5
Treasury Disbursed Initial Funds to Most States and Some Tribes,
and MBDA Made Grant Awards 9
Treasury Incorporated Additional Best Practices for Project
Scheduling 16
Treasury Took Steps to Address Compliance Risks and
Jurisdictions’ Concerns with Program Requirements 18
Treasury Finalized Performance Measures and Issued the First
Two Quarterly Reports of SSBCI Program Data 24
Agency Comments 26
Appendix I Objectives, Scope, and Methodology 30
Appendix II Jurisdictions’ Uses of Various Program Types to Deploy SSBCI
Capital Program Funds 34
Appendix III Characteristics of Capital Readiness Program Grantees 35
Appendix IV GAO Contact and Staff Acknowledgments 38
Tables
Table 1: Program Types for Capital Program of the State Small
Business Credit Initiative (SSBCI) 5
Table 2: Examples of SSBCI Program Requirements and
Treasury’s Approach to Ensuring Compliance 19
Table 3: Performance Measures for the State Small Business
Credit Initiative (SSBCI) Capital Program 24
Table 4: Number of Implemented or Planned State Small
Business Credit Initiative (SSBCI) Capital Programs,
by Program Type 34
Table 5: Capital Readiness Program Grantees, by Type of
Organization 35
Page i GAO-24-106671 State Small Business Credit Initiative
Table 6: Number of Capital Readiness Program Grantees
Serving Target Groups of Small Business Owners,
by Target Group 36
Table 7: Number of Capital Readiness Program Grantees
Targeting or Expecting to Serve Businesses in Particular
Industries, by Industry 37
Figures
Figure 1: Funding Allocations for State Small Business Credit
Initiative (SSBCI), 2010 and 2021 7
Figure 2: State Small Business Credit Initiative (SSBCI) Funding,
as of December 31, 2023, by Program Component
Administered by Department of the Treasury 10
Figure 3: Capital Program Disbursements for State Small
Business Credit Initiative to States, Territories, and the
District of Columbia, as of December 31, 2023 12
Figure 4: State Small Business Credit Initiative Capital Program
Application Deadlines and Approval Dates, for
Participating Jurisdictions Approved as of December 31,
2023 14
Abbreviations
ARPA American Rescue Plan Act of 2021
FAQ frequently asked question
MBDA Minority Business Development Agency
SEDI socially and economically disadvantaged individual
SSBCI State Small Business Credit Initiative
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Page ii GAO-24-106671 State Small Business Credit Initiative
Letter
441 G St. N.W.
Washington, DC 20548
June 11, 2024
Congressional Committees
To help small businesses recover from the COVID-19 pandemic,
Congress provided more than $1 trillion in relief funds through various
programs. One such program is the State Small Business Credit Initiative
(SSBCI), which supports lending and investment in small businesses.
The American Rescue Plan Act of 2021 (ARPA) reauthorized SSBCI,
which originally operated from 2010 through 2017. 1 ARPA authorizes the
Department of the Treasury to allocate approximately $10 billion to
participating jurisdictions—states, the District of Columbia, territories, and
tribal governments. 2 The funding provides support to small businesses
responding to and recovering from the economic effects of the COVID-19
pandemic and to ensure that underserved businesses have access to
1Congress first authorized SSBCI in the Small Business Jobs Act of 2010, appropriating
$1.5 billion in funding following the 2007–2009 financial crisis. The original SSBCI
program ended in September 2017. GAO issued four annual 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).
2In this report, we use “tribal governments” or “Tribes” to refer to federally recognized
tribal governments eligible for the SSBCI program. According to Treasury officials,
Treasury identified 582 tribal governments as eligible to apply to the program. This
included 574 federally recognized tribal governments and eight component bands of those
tribal governments that had submitted tribal enrollment data to the Bureau of Indian
Affairs.
Page 1 GAO-24-106671 State Small Business Credit Initiative
credit and investments. 3 ARPA requires Treasury to complete all
disbursements and remaining obligations before September 30, 2030. 4
The current SSBCI retains key features of the original program but
received a larger appropriation ($10 billion compared to $1.5 billion). The
current program also includes an allocation for tribal governments, very
small businesses, and businesses owned and controlled by socially and
economically disadvantaged individuals (SEDI-owned businesses). 5 In
addition, it provides technical assistance funds that jurisdictions or
Treasury can use to provide legal, accounting, and financial advisory
services to support certain businesses applying for SSBCI or another
government small business program. The Minority Business Development
3ARPA appropriated $10 billion for the current SSBCI for these and other purposes.
Subsequently, the Fiscal Responsibility Act of 2023 rescinded $150 million of unobligated
SSBCI funds and the Further Consolidated Appropriations Act, 2024 rescinds $283 million
from unobligated SSBCI funds by September 30, 2024. Other entities, including
municipalities, may be eligible for participation as a “state” consistent with 12 U.S.C. §§
5702(a), 5701. Only municipalities in states that did not submit complete applications were
eligible to receive funding. All 50 states submitted applications for the current SSBCI;
therefore, no municipalities were eligible to apply.
4Any remaining funds unexpended by Treasury are to be rescinded and deposited in
Treasury’s general fund.
5Very 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 Investment Areas, as defined in 12 C.F.R. § 1805.201(b)(3)(ii); (3) certify they
will operate a location in a Community Development Financial Institution Investment Area,
as defined in 12 C.F.R. § 1805.201(b)(3)(ii); or (4) are located in Community Development
Financial Institution 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
that the community the institution services predominantly consists of such individuals.
Page 2 GAO-24-106671 State Small Business Credit Initiative
Agency (MBDA) in the Department of Commerce administers $125 million
of the technical assistance funding. 6
The CARES Act and ARPA include provisions for GAO to monitor and
oversee federal efforts to prepare for, respond to, and recover from the
COVID-19 pandemic. In January 2022, we reported on Treasury’s initial
steps to implement SSBCI and potential challenges facing Treasury and
program participants. 7 In February 2023, we reported on jurisdictions’
planned use of SSBCI funds and Treasury’s completion of key
implementation steps for SSBCI. 8 Our current report examines (1)
Treasury’s disbursement of program funds and the status of MBDA’s
grant awards; (2) Treasury’s management of time frames for remaining
implementation steps; (3) Treasury’s efforts to ensure compliance with
program requirements; and (4) Treasury’s efforts to measure and report
on program performance.
For the first objective, we reviewed and analyzed Treasury data on
amounts allocated, obligated, and disbursed to participating jurisdictions
and the status of jurisdictions’ applications. 9 We reviewed written
information from MBDA officials on the status of grant awards and
analyzed data on grantee characteristics that were self-reported by the
grantees. We also interviewed Treasury and MBDA officials on the status
of the program.
For the second objective, we reviewed Treasury’s planning tools and
processes, interviewed Treasury officials, and observed their project
scheduling tools and practices through a virtual demonstration. We
6ARPA authorizes Treasury to transfer SSBCI technical assistance funding to MBDA.
7GAO, 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).
8GAO, State Small Business Credit Initiative: Improved Planning Could Help Treasury
Limit Additional Delays, GAO-23-105293 (Washington, D.C.: Feb. 2, 2023).
9We assessed the reliability of these data by obtaining written responses from Treasury
officials about their processes for ensuring the accuracy of the data. We found these data
to be sufficiently reliable for describing the amounts allocated, obligated, and disbursed to
participating jurisdictions and the status and time frames for Treasury’s application
reviews.
Page 3 GAO-24-106671 State Small Business Credit Initiative
compared Treasury’s tools and planning efforts for SSBCI against best
practices for project scheduling we identified in prior work. 10
For the third objective, we reviewed Treasury’s program guidelines, online
program resources, and training materials and interviewed Treasury
officials about support and guidance provided to participating jurisdictions.
We also interviewed representatives of four of the five permanently
inhabited territories and representatives of nongeneralizable selections of
12 states and 13 tribal applicants. 11 We selected states to reflect variation
in funding allocation amounts, geographic region, and initial funding
dates, among other criteria. We selected tribal applicants to reflect a
range of funding amounts requested in their capital program applications,
geographic diversity, and proposed program types, and to include
applicants that applied individually and jointly.
For the fourth objective, we reviewed documentation of Treasury’s
performance measures and indicators for SSBCI, guidance for
jurisdictions, quarterly reports of SSBCI data, and plans for evaluating
SSBCI. We compared Treasury’s performance measures and indicators
against key attributes of successful performance measures identified in
prior GAO work. 12 We also interviewed Treasury officials about these
efforts. For more detailed information about our objectives, scope, and
methodology, see appendix I.
We conducted this performance audit from February 2023 to June 2024
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
10See GAO, GAO Schedule Assessment Guide: Best Practices for Project Schedules,
GAO-16-89G (Washington, D.C.: Dec. 22, 2015).
11The five permanently inhabited U.S. territories are American Samoa, the
Commonwealth of the Northern Mariana Island, Guam, Puerto Rico, and the U.S. Virgin
Islands. We requested interviews with all five territories; one did not respond to our
request. Tribal applicants refer either to tribal governments that applied individually or to
an application submitted by a consortium of tribal governments that applied jointly. Tribal
governments can operate programs themselves or contract with third parties. In some
cases, representatives of the 13 tribal applicants directed us to interview representatives
of such third parties or representatives of organizations connected to the tribal applicants
that are helping administer their programs.
12See GAO, Tax Administration: IRS Needs to Further Refine Its Tax Filing Season
Performance Measures, GAO-03-143 (Washington, D.C.: Nov. 22, 2002).
Page 4 GAO-24-106671 State Small Business Credit Initiative
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
The SSBCI capital program, administered by Treasury, is the largest
Background program component of the current SSBCI and received approximately
$9.5 billion of the nearly $10 billion in total funding. Participating
jurisdictions can use funds from the capital program to fund lending
programs that facilitate loans to small businesses, as well as venture
capital and other equity investment programs (see table 1). The types of
lending programs established by Treasury include capital access, loan
guarantee, collateral support, and loan participation programs. Each type
of program shares lending or equity financing risks with lenders or
investors, facilitating transactions that otherwise might not have occurred.
Table 1: Program Types for Capital Program of the State Small Business Credit Initiative (SSBCI)
Type of 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 SSBCI funds to provide assurance to lenders that they will be partially repaid
in the event of default. 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 Allows jurisdictions to set up public-private partnerships for equity investing or investment in venture
equity investment capital funds. These investments may focus 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-24-106671
The current SSBCI capital program retains the original program’s formula
for allocating main capital funds to states, territories, and the District of
Columbia. 13 It requires participating jurisdictions to 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. In addition, as with the original program, the
13Although the formula for the main capital distribution for these entities remained
structurally the same, ARPA also required Treasury to determine how to allocate
additional funds to tribal governments.
Page 5 GAO-24-106671 State Small Business Credit Initiative
current program expects jurisdictions to catalyze $10 of private lending or
investing for every $1 of SSBCI funding (achieve a 10:1 leverage ratio).
Eligible jurisdictions can administer funds directly or can contract with a
third party that serves as the program administrator with jurisdiction
oversight. These third parties may include entities such as economic
development corporations or business development centers.
For the purposes of the SSBCI capital program, Treasury determines
allocation amounts for each eligible jurisdiction―the amount of funding
potentially available―prior to the program application deadlines. Once
Treasury approves a jurisdiction’s capital program application, it obligates
funds (typically equal to the allocated amount). Treasury and the
jurisdiction then execute an allocation agreement, which establishes the
terms and conditions for the jurisdiction to receive capital funds.
Participating jurisdictions receive up to three tranches (disbursements) of
funding over the life of the program. After receiving the first tranche of
funding, the jurisdiction must certify it has appropriately expended,
transferred, or obligated at least 80 percent of the previous tranche before
it can receive the next tranche. 14
As we reported in February 2023, all 50 states, five territories, and the
District of Columbia applied to participate in the SSBCI capital program.
Treasury began disbursing funds through the capital program in May
2022. Treasury also received 108 applications from tribal applicants for
the capital program, of which 101 were submitted by individual tribal
governments. The remaining seven applications were from consortiums
that collectively represented 182 different tribal governments.
As previously noted, the current program received a larger appropriation
than the original and includes allocations for tribal governments, certain
types of small businesses, and technical assistance (see fig. 1). Following
14According to Treasury’s SSBCI guidance, funds generally are considered “expended” if
the expenses were paid by or are for an approved state program. They are considered
“transferred” if they have been transferred by the jurisdiction receiving funds 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. They are considered “obligated” if they have been
committed in writing to pay for orders placed, contracts awarded, goods and services
received, and similar transactions during a given period that will require payment by the
approved state program during the same or future period.
Page 6 GAO-24-106671 State Small Business Credit Initiative
the initial reauthorization, the Fiscal Responsibility Act of 2023 rescinded
$150 million of unobligated SSBCI funds. 15 According to Treasury, it
applied the recission to $100 million in technical assistance funds and
$50 million in capital program funds. 16 Treasury also allocated $212
million for administrative expenses for fiscal years 2021–2030. These
expenses include personnel costs and contracts to provide program
support and technical assistance to states and businesses. On March 23,
2024, the Further Consolidated Appropriations Act, 2024 was enacted,
which rescinds $283 million from unobligated SSBCI funds by September
30, 2024. 17
Figure 1: Funding Allocations for State Small Business Credit Initiative (SSBCI), 2010 and 2021
Notes: Following the initial reauthorization, the Fiscal Responsibility Act of 2023 rescinded $150
million of unobligated SSBCI funds. According to Treasury, it applied the recission to $100 million in
technical assistance funds and $50 million in capital program funds. On March 23, 2024, the Further
Consolidated Appropriations Act, 2024 was enacted, which rescinds $283 million from unobligated
15The Fiscal Responsibility Act of 2023, Pub. L. No. 118-5, Div. B, Title I, Sec. 14, 137
Stat. 26.
16ARPA requires Treasury to complete all disbursements and remaining obligations before
September 30, 2030. Any remaining funds unexpended by Treasury are to be rescinded
and deposited in Treasury’s general fund.
17Further Consolidated Appropriations Act, 2024, Pub. L. No. 118-47, Div. B, Title VI, Sec.
638.
Page 7 GAO-24-106671 State Small Business Credit Initiative
SSBCI funds by September 30, 2024. The $6.0 billion allocated to the states, territories, the District of
Columbia, and participating municipalities includes administrative expenses.
In addition to the capital program, Treasury administers two components
of technical assistance funding totaling approximately $275 million:
• Noncompetitive grants to eligible jurisdictions. Treasury allocated
a total of approximately $200 million for these grants. Allocations for
each state, territory, and the District of Columbia were based on the
jurisdiction’s allocations for very small businesses and SEDI-owned
businesses. 18 Allocations for tribal governments were based on tribal
enrollment data, subject to certain minimum and maximum levels. 19
Noncompetitive technical assistance applications were due in October
2022 for the states, territories, and the District of Columbia and in
October 2023 for tribal governments.
• Competitive grants to eligible jurisdictions. Treasury allocated $75
million for these grants, which it will provide through its SSBCI
Investing in America Small Business Opportunity Program.
Jurisdictions that participate in the capital program are eligible to
apply for funds, which may be used to provide legal, accounting, and
financial advisory services to eligible very small businesses and SEDI-
owned businesses.
Treasury’s SSBCI program office operates in Treasury’s Office of Capital
Access (formerly the Office of Recovery Programs) and is responsible for
administration and oversight of SSBCI. The program office includes
teams responsible for policy, compliance, outreach, operations, and
technical assistance. For instance, according to Treasury officials the
compliance team trains jurisdictions on compliance rules and answers
questions about types of transactions. Officials said the program office is
supported by Treasury’s Office of Tribal and Native Affairs and has a
contract to hire additional support as needed.
MBDA is administering $125 million of the SSBCI technical assistance
funding through the Capital Readiness Program. This competitive grant
program provides technical assistance funding to nonprofit organizations,
private-sector entities, institutions of higher education, or consortiums of
18Noncompetitive technical assistance allocations for states, territories, and the District of
Columbia ranged from $469,000 to $25.4 million.
19Noncompetitive technical assistance allocations for individual tribal governments ranged
from the minimum of approximately $64,000 to the maximum of $1 million.
Page 8 GAO-24-106671 State Small Business Credit Initiative
these organizations. The program supports SEDI-owned businesses that
are applying, have previously applied, or plan to apply to an SSBCI
capital program or other government program that supports small
businesses. Organizations that receive Capital Readiness Program
grants must provide a nonfederal match of 10–25 percent of the award,
depending on the award amount.
Treasury Disbursed
Initial Funds to Most
States and Some
Tribes, and MBDA
Made Grant Awards
Nearly All States and Treasury obligated $8.5 billion and disbursed $2.6 billion of SSBCI
Territories and About One- funding as of December 31, 2023 (see fig. 2). 20 These amounts largely
Third of Tribal Applicants reflect progress obligating and disbursing capital program funds to
jurisdictions. Treasury also obligated and disbursed funding for
Received Initial SSBCI noncompetitive technical assistance grants, and started accepting
Disbursements applications in April 2024 for the competitive technical assistance
program it administers.
20For the purposes of the SSBCI capital program, Treasury determines allocation amounts
for each eligible jurisdiction―the amount of funding potentially available―prior to the
program application deadlines. Once Treasury approves a jurisdiction’s capital program
application, it obligates funds (typically equal to the allocated amount) and notifies the
jurisdiction of the full amount of obligated funds. Treasury and the jurisdiction then execute
an allocation agreement, which establishes the terms and conditions for the jurisdiction to
receive capital funds. Participating jurisdictions receive up to three tranches
(disbursements) of funding over the life of the program.
Page 9 GAO-24-106671 State Small Business Credit Initiative
Figure 2: State Small Business Credit Initiative (SSBCI) Funding, as of December 31, 2023, by Program Component
Administered by Department of the Treasury
Note: For the purposes of the SSBCI capital program, Treasury determines allocation amounts for
each eligible jurisdiction―the amount of funding potentially available―prior to the program
application deadlines. Once Treasury approves a jurisdiction’s capital program application, it
obligates funds (typically equal to the allocated amount) and notifies the jurisdiction of the full amount
of obligated funds. Treasury and the jurisdiction then execute an allocation agreement, which
establishes the terms and conditions for the jurisdiction to receive capital funds. Participating
jurisdictions receive up to three tranches (disbursements) of funding over the life of the program.
While Treasury is in the process of approving applications, the total amount obligated will be less than
the total amount allocated.
Page 10 GAO-24-106671 State Small Business Credit Initiative
For fiscal years 2021–2023, Treasury spent $47 million for administrative
expenses for SSBCI. Over this period, Treasury’s program expenses
were less than the amount of funds budgeted for administrative
expenses. 21
As previously discussed, MBDA also administers an SSBCI component,
the Capital Readiness Program. MBDA officials said the agency made
awards for this program totaling $117 million available for use by grantees
in September 2023. 22
Nearly All States and As of December 31, 2023, Treasury obligated $8.3 billion and disbursed
Territories Received Funding $2.5 billion (30 percent) of the $8.4 billion of capital program funds
allocated to states, territories, and the District of Columbia. This included
first-tranche disbursements to 49 states, three territories, and the District
of Columbia, and second-tranche disbursements to four states (see fig.
3). 23 As of December 31, 2023, 59 jurisdictions had deployed $1.1 billion
in SSBCI capital program funds, according to Treasury’s second SSBCI
quarterly report. Appendix II provides more information on jurisdictions’
uses of capital program funds.
21Treasury originally budgeted a total of $55 million for administrative expenses for fiscal
years 2021–2023.
22The remaining funds administered by MBDA have been budgeted for administrative
expenses for fiscal years 2023–2028. These expenses include personnel costs, advisory
and assistance services, other services from federal and nonfederal sources, and
supplies, materials, and equipment.
23As of December 31, 2023, Alabama had been approved and received its first tranche of
funds. However, according to Treasury, Alabama chose to return these funds pending
resolution of a question of state law regarding the acceptance of the funds. Treasury
officials said the issue was resolved in April 2024 and the first tranche of funds was
reissued to Alabama in May 2024. Additionally, capital program applications for two
territories (American Samoa and the Commonwealth of the Northern Mariana Islands)
were under review as of December 31, 2023.
Page 11 GAO-24-106671 State Small Business Credit Initiative
Figure 3: Capital Program Disbursements for State Small Business Credit Initiative to States, Territories, and the District of
Columbia, as of December 31, 2023
Note: As of December 31, 2023, Alabama had been approved and received its first tranche of funds.
However, according to Treasury, Alabama chose to return these funds pending resolution of a
question of state law regarding the acceptance of the funds. Treasury officials said the issue was
resolved in April 2024 and the first tranche of funds was reissued to Alabama in May 2024.
As of December 31, 2023, Treasury obligated $121 million and disbursed
$38 million (23 percent) of the $164 million of noncompetitive technical
assistance funds allocated to states, territories, and the District of
Columbia (see fig. 2). 24 Of the 45 states that applied for these funds,
Treasury had disbursed the first tranche to 32 and approved applications
for but had not disbursed funds to three. It had not approved applications
from 10 states, the District of Columbia, and five territories.
Some Tribal Applicants Treasury provided more time to tribal applicants to complete applications
Received First-Round Funds for both the capital program and noncompetitive technical assistance
24Forty-five states, all five territories, and the District of Columbia applied for
noncompetitive technical assistance funding by the October 14, 2022, deadline.
Page 12 GAO-24-106671 State Small Business Credit Initiative
funding. 25 As a result, Treasury began reviewing tribal applications and
disbursing funds to them later than it did for states and territories.
As of December 31, 2023, Treasury obligated $162 million and disbursed
$32 million (5 percent) of the $659 million of capital program funds initially
allocated to tribal governments (see fig. 2). This included disbursing first-
tranche funds to 29 tribal applicants (27 individual applicants and two
consortiums) and both second- and third-tranche funding to one
applicant. As of December 31, 2023, five additional applicants had been
approved for the capital program but had not yet received funding. The
remaining 74 tribal applicants (69 individual applicants and five
consortiums) had their applications under review as of December 31,
2023.
As of December 31, 2023, Treasury had not disbursed any of the $36
million allocated to tribal governments for noncompetitive technical
assistance. Treasury received 64 applications representing 234 tribal
governments, including five applications from consortiums, by the
October 27, 2023, deadline according to Treasury officials. As of
December 22, 2023, an additional 25 applications were in draft status.
Officials said they will provide these applicants guidance and time frames
to complete submissions and be eligible for review. 26
Treasury Is Implementing a Treasury is in the early stages of implementing the SSBCI Investing in
New Technical Assistance America Small Business Opportunity Program. This competitive grant
Grant Program program is designed to provide $75 million in additional technical
assistance to jurisdictions. 27 Treasury issued a Notice of Funding
Opportunity for the program on October 25, 2023. Treasury will score
grant applications based on the extent to which applicants demonstrate
(1) how their proposed goals and solutions align with the technical
25As we reported in February 2023, Treasury extended the capital program application
deadline four times for tribal applicants, from an initial deadline in December 2021 (which
was the same for states and territories) to a final deadline in October 2022. Treasury also
extended the technical assistance application deadline six times, from an initial deadline in
March 2022 to a final deadline in October 2023.
26As of December 22, 2023, Treasury officials said the agency may permit additional tribal
applicants to apply for noncompetitive technical assistance funding if they had
communicated with Treasury in writing in advance of the deadline to adequately
demonstrate technical or other issues that prevented a timely application.
27Through this program, jurisdictions participating in the capital program may apply for
technical assistance funds for legal, accounting, and financial advisory services to eligible
very small businesses and SEDI-owned businesses.
Page 13 GAO-24-106671 State Small Business Credit Initiative
assistance needs of small businesses in the project’s service area; (2) the
organizational capacity to succeed in connecting very small businesses
and SEDI-owned businesses to small business programs; (3) the
feasibility of their proposed budget; and (4) how the proposed project will
result in regional economic benefits.
Treasury anticipates making from eight to 15 grant awards under this
program, with individual awards ranging from $5 million to $10 million.
Treasury opened the application portal on April 5, 2024, and intends to
receive applications until June 3, 2024. Awards will be issued in summer
or fall of 2024.
Review Times for Capital As of December 31, 2023, Treasury’s application review times (from the
Program Applications application deadline date to approval date) ranged from about 2 to 20
months for the capital program (see fig. 4). The median review time for
Ranged from 2 to 20
jurisdictions whose capital program applications were approved was
Months about 7 months for states, territories, and the District of Columbia and 9
months for tribal applicants.
Figure 4: State Small Business Credit Initiative Capital Program Application Deadlines and Approval Dates, for Participating
Jurisdictions Approved as of December 31, 2023
Note: As of December 31, 2023, capital program applications for two of five territories and 74 of 108
tribal applicants remained under review. Applications for all 50 states and the District of Columbia
were approved.
Page 14 GAO-24-106671 State Small Business Credit Initiative
The time between the capital program approval date and the first-tranche
disbursement date ranged from 1 to 187 days for jurisdictions that had
received their first-tranche disbursement as of December 31, 2023. 28 The
median was 14 days for states, territories, and the District of Columbia
and 11 days for tribal applicants.
As we previously reported, the larger number and variety of SSBCI
program types proposed by participating jurisdictions increased the
resources Treasury needed to complete application reviews compared to
the original SSBCI. In preparation, Treasury obtained additional staff
resources from within the agency and hired contractors. Treasury also
provided training and conducted outreach to jurisdictions before
application deadlines to help them meet application requirements.
However, Treasury officials said that during the review process they
identified areas in which jurisdictions did not fully understand certain
program rules and requirements. According to officials, the need for
additional training and outreach added to the resources and time needed
to complete application reviews.
Treasury officials cited two additional factors that contributed to some
application review times taking longer than expected:
• Resolving issues or questions. Application review times were
longer when Treasury needed to obtain clarification or resolve issues
with a jurisdiction. For example, Treasury officials noted that some
jurisdictions submitted applications for multiple SSBCI program types
under a single program name. Treasury then had to work with these
jurisdictions to ensure applications fully addressed each program
type. Some jurisdictions noted that the back-and-forth to resolve
Treasury’s questions could take several weeks.
• Designating administrative responsibility. In order to meet
statutory requirements, SSBCI applicants must demonstrate they
have delegated administrative responsibility to the entity implementing
SSBCI capital programs (typically, a state agency or department) and
that all necessary legal actions have been completed to enable the
28According to Treasury officials, after jurisdictions’ applications are approved the
jurisdiction signs the allocation agreement and returns it to Treasury to be countersigned,
at which point the first-tranche funds are disbursed. Officials said that were delays in the
execution of agreements by some jurisdictions—for example, jurisdictions may have
conducted internal reviews before signing the allocation agreement—which could increase
the time between approval and disbursement dates.
Page 15 GAO-24-106671 State Small Business Credit Initiative
implementing entity to implement the proposed programs. 29 According
to Treasury, this sometimes required a lengthy communication
process between Treasury and applicant jurisdictions.
As of December 31, 2023, review times (application deadline date to
approval date) ranged from about 8 to 14 months for noncompetitive
technical assistance funding for states, territories, and the District of
Columbia. The median review time was 12 months. The time from
approval to first-tranche disbursement for jurisdictions that had received
their first-tranche disbursement as of December 31, 2023, ranged from 4
to 55 days, with a median of 19 days.
MBDA Awarded Its In September 2023, MBDA awarded grants totaling $117 million to 43
Technical Assistance organizations under the Capital Readiness Program. 30 Under the
Grants in September 2023 program, grantees provide technical assistance to SEDI-owned
businesses that are starting or scaling their businesses and have either
applied, are applying, or plan to apply to an SSBCI capital program or
another government program that supports small businesses. Award
amounts ranged from $1.9 to $3 million, with an average of $2.7 million.
Most (34) of the 43 grantees are nonprofit organizations. Remaining
grantees are institutions of higher education, private entities, or both of
these types. See appendix III for more information on the characteristics
of program grantees.
In February 2023, we reported that Treasury faced challenges setting and
Treasury Incorporated maintaining a reliable schedule for key SSBCI program implementation
Additional Best steps, as indicated by multiple deadline extensions and later-than-
Practices for Project
Scheduling
2912 U.S.C. § 5703(b)(1), (2). This process requires submission of a letter of designation
signed by the appropriate governing official. Furthermore, Treasury requires the applicant
submit a narrative describing the legal actions they took to appropriately enable the
designated implementing entity to implement SSBCI programs, along with any supporting
documentation. See also Treasury’s SSBCI Capital Program Policy Guidelines (rev. Dec.
4, 2023), Section VI.
30According to MBDA officials, the agency received more than 1,000 applications for the
program by the March 10, 2023, deadline. After accounting for duplicate and ineligible
applications, 808 applications were scored based on criteria focused on proposed project
goals and proposed solutions, organizational capacity, and budget and timeline.
Applications also received bonus points for addressing MBDA’s strategic priorities, such
as providing services in rural areas. MBDA announced the 43 grant winners in August
2023.
Page 16 GAO-24-106671 State Small Business Credit Initiative
expected disbursements. 31 We recommended that Treasury fully
incorporate best practices for project scheduling related to sequencing
and establishing the duration of activities, assigning resources to
activities, and updating schedules using actual progress into planning
processes. In response, Treasury agreed to review options for
incorporating such practices in line with the recommendation.
Since February 2023, Treasury has taken steps to incorporate additional
best practices for project scheduling:
• Enhancing work plans. Two best practices for project scheduling are
to assign resources to all activities and update the schedule using
actual progress and logic. 32 Consistent with this, Treasury made
changes to the high-level SSBCI work plan to better indicate the staff
resources assigned to each activity and track actual progress for
ongoing activities. At the time of our last report, Treasury’s most
recent work plan from September 2022 did not indicate which staff or
contractor would be responsible for each activity. Treasury’s work
plan as of May 2023 indicated the teams and team leads responsible
for each activity and the status of activities. Treasury updated the
status of these activities in September 2023 and again updated the
plan in December 2023 to reflect priorities for 2024.
• Developing a project management module. Other best practices for
project scheduling are to sequence activities and establish the
duration of activities. 33 Treasury has begun to take actions that align
with this practice. Beginning in April 2023, Treasury tasked a
31GAO-23-105293.
32The schedule should reflect the resources needed to do the work, whether they will be
available when needed, and any constraints on funding or time. Progress updates and
logic provide a realistic forecast of start and completion dates for program activities.
Maintaining the integrity of the schedule logic is necessary to reflect the true status of the
program. To ensure that the schedule is properly updated, people responsible for the
updating should be trained in critical path method scheduling. See GAO-16-89G.
33The 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. The schedule should also realistically reflect how long each activity will
take. Durations should be reasonably 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. See GAO-16-89G.
Page 17 GAO-24-106671 State Small Business Credit Initiative
contractor to add a module to its existing program management
software to track, manage, and report on projects for SSBCI. Treasury
made the tool available to staff in late July 2023. The module allows
Treasury to assign resources to and track activities at a granular level.
It is designed to logically group activities into wider initiatives and
track and report on the status of initiatives within high-level program
objectives. This may provide Treasury with better insight into the
relationships between activities. According to Treasury officials, the
module has helped identify activities that are delayed or may need
additional resources.
Although Treasury made improvements, our recommendation remains
open until Treasury demonstrates additional progress to fully incorporate
these best practices. For example, Treasury could better sequence
activities within higher-level program initiatives by linking activities that
must occur in a certain order. The agency also could improve how it
establishes durations for activities so that they are based on available
resources and experience with similar activities, which would help it more
accurately estimate reasonable completion dates. Finally, Treasury could
better analyze staff availability and workloads to help the SSBCI program
team efficiently manage its implementation of the program. Fully
incorporating these practices could better position Treasury to establish
and communicate reliable time frames and reduce the potential for
additional delays as it disburses the remaining $6.5 billion of allocated
funds, monitors jurisdictions’ programs, and reports on SSBCI funds.
Treasury Took Steps
to Address
Compliance Risks
and Jurisdictions’
Concerns with
Program
Requirements
Treasury Implemented a Treasury implemented the following key components of its framework to
Framework for Addressing support and monitor jurisdictions’ compliance with SSBCI capital program
requirements:
Compliance and Oversight
Risks • Compliance risk matrix. By August 2023, Treasury finalized a
compliance risk matrix in which it identified compliance and oversight
Page 18 GAO-24-106671 State Small Business Credit Initiative
risks for SSBCI and indicated its approach to mitigate each risk (see
table 2). In October 2023, Treasury officials said they planned to
review the compliance risk matrix twice a year to identify additional
risks.
• National compliance and oversight standards. Published in 2022,
these standards describe best practices and Treasury’s
recommended approach for jurisdictions to ensure compliance and
provide adequate oversight. The standards are intended to
complement SSBCI compliance requirements. Treasury’s compliance
risk matrix groups risks into three categories (program operations,
reporting, and financial management) that align with sections of these
standards.
Table 2: Examples of SSBCI Program Requirements and Treasury’s Approach to Ensuring Compliance
Risk category Examples of program requirements Treasury’s approach to ensuring compliance
Program Jurisdictions must require lenders and investors to Treasury tests sample transactions annually and before
operations obtain assurances from borrowers or investees second- and third-tranche disbursements.
that proceeds will not be used for impermissible Treasury compares language from the jurisdictions’
purposes, as defined in Treasury’s capital certifications to the sample certifications published on the
program policy guidelines for the State Small SSBCI website.
Business Credit Initiative (SSBCI).
A loan may not be enrolled in more than one Treasury tests sample transactions annually and before
approved program at the same time. A lender also second- and third-tranche disbursements.
may not divide one loan into multiple agreements
or notes, each enrolled in an approved program,
when the loan is to be used for the same purpose.
Reporting Jurisdictions must certify that 80 percent or more Jurisdictions self-certify that they met the program
of the previous disbursements were appropriately requirement.
expended, transferred, or obligated before Treasury tests sample transactions before second- and
receiving second or third disbursements. third-tranche disbursements.
Treasury reviews data on cumulative transactions at the
time of the disbursement request.
The funds that a jurisdiction receives from the Treasury tracks SEDI-owned business transactions and
allocation for businesses owned by socially and tests sample SEDI-owned business transactions annually
economically disadvantaged individuals (SEDI- and before second- and third-tranche disbursements.
owned businesses) must be expended for such Treasury reviews data on cumulative SEDI-owned business
businesses, consistent with SSBCI capital transactions at the time of the disbursement request.
program policy guidelines.
Financial Jurisdictions must establish controls for the Treasury monitors and reviews jurisdictions’ controls
management prevention of fraud, waste, and abuse. annually and before second- and third-tranche
disbursements.
Jurisdictions may have funding withheld by Treasury monitors jurisdictions’ programs and tests sample
Treasury pending results of a financial audit. transactions before second- and third-tranche
disbursements.
Source: GAO analysis of Department of the Treasury documents. | GAO-24-106671
Page 19 GAO-24-106671 State Small Business Credit Initiative
Since our February 2023 report, Treasury has made additional progress
in applying its framework for addressing compliance and oversight risks in
SSBCI:
• Compliance training. Since August 2022, Treasury has held training
sessions for jurisdictions that addressed topics related to compliance
with SSBCI program requirements. 34 These included 20 training
sessions in 2023, according to Treasury officials.
• Pre-disbursement compliance reviews and transaction testing. In
March 2023, Treasury finalized a framework for assessing
jurisdictions’ compliance with key program requirements before
second- and third-tranche disbursements. According to the
framework, Treasury is to test documentation submitted by
jurisdictions to verify that at least 80 percent of their previous
disbursements were appropriately expended, obligated, or transferred
to or for the account of programs that have delivered loans or
investments to eligible businesses. It is also to verify the total amount
expended for very small businesses and SEDI-owned businesses. We
examined documentation for one such pre-disbursement review
performed in September 2023 that Treasury provided us. For this
review, Treasury obtained transaction-level data to verify the total
amount expended, obligated, or transferred (including the amount to
SEDI-owned businesses) and reviewed the jurisdiction’s
administrative expenses, among other things.
Treasury also selects a sample of loans or investments to test
transaction-level compliance, such as with certification and eligibility
requirements. 35 We examined documentation related to three
transaction sample reviews performed from September to December
2023 that Treasury provided us. For these reviews, Treasury
requested documentation of borrower and lender certifications, private
financing supporting the transaction, and the number of employees of
the business, among other things, from the jurisdictions.
• Annual compliance reviews. According to Treasury officials,
Treasury also conducts compliance reviews of a sample of
transactions identified using data submitted in jurisdictions’ annual
34These requirements are outlined in the SSBCI statute, policy guidelines, reporting
guidance, FAQs, and each jurisdiction’s respective allocation agreement with Treasury.
35According to the capital program disbursement framework, the SSBCI compliance team
samples transactions based on the number of total transactions and programs and any
indication of risk of potential noncompliance as appropriate based on the individualized
review of documentation provided by participating jurisdictions.
Page 20 GAO-24-106671 State Small Business Credit Initiative
reports. In the documentation for one such review that we examined,
Treasury requested documentation of private capital supporting the
transaction, borrower eligibility, and required certifications.
As with the original SSBCI, participating jurisdictions’ use of SSBCI funds
will undergo audit by Treasury’s Office of Inspector General. By statute,
the office must conduct audits of participating jurisdictions’ use of SSBCI
funds for the current program. 36 Pursuant to its allocation agreement with
the participating jurisdiction, Treasury is to recoup any allocated funds
transferred to the participating jurisdiction if the results of the audit include
a finding of intentional or reckless misuse of funds by the jurisdiction.
Treasury also may withhold the transfer of any successive tranche of
funding pending results of a financial audit. 37
Treasury Updated To help address concerns some jurisdictions raised about meeting
Program Guidelines and program requirements while deploying funds, Treasury published five
updates to the capital program guidelines after they were first released in
Frequently Asked November 2021. 38 Examples of these updates include the following:
Questions to Help Address
Jurisdictions’ Concerns • In June 2023, Treasury revised refinancing guidelines to ease
About Certain requirements for new lenders using SSBCI funds to refinance loans
previously made by another, unaffiliated lender. These revisions
Requirements
addressed concerns some jurisdictions raised about meeting small
business needs in the current lending or interest rate environment.
• In December 2023, Treasury began allowing prepayment fees for
certain SSBCI-supported transactions to accommodate transactions
for which such fees may be customary (such as larger commercial
loans) and to potentially help enable lenders to charge lower interest
36According to Treasury’s Office of Inspector General officials, as of November 2023 the
office had not begun any audits related to the current SSBCI.
37Although SSBCI capital program funds are not subject to single audit act requirements,
noncompetitive and competitive technical assistance funds are subject to these
requirements for all recipients who expend $750,000 or more in aggregate federal
financial assistance within their fiscal year. As of March 2024, Treasury officials said they
would evaluate whether it was necessary to provide a compliance supplement for SSBCI
technical assistance funds for 2025. Compliance supplements document compliance
requirements for each program subject to single audit act requirements. In the absence of
a compliance supplement, recipients are audited based on Part 7 of the annual Office of
Management and Budget compliance supplement.
38Treasury published updates to the capital program guidelines in October 2022,
December 2022, June 2023, August 2023, and December 2023.
Page 21 GAO-24-106671 State Small Business Credit Initiative
rates that benefit borrowers. 39 For example, one state said that
commercial real estate loans often include prepayment fees, and the
prohibition of these fees limited their ability to support such loans.
To help address concerns with program requirements that Treasury did
not revise, officials updated online frequently asked questions (FAQs) to
highlight information helpful in mitigating challenges related to meeting
the requirements. For example:
• Some of the 29 jurisdictions we interviewed noted that the amount of
allowable administrative expenses was insufficient to account for the
time and effort required to administer their programs. 40 Treasury
published an FAQ to clarify that jurisdictions can use program income
to pay for administrative costs in addition to the allocated funds.
• Some jurisdictions we interviewed raised concerns regarding the cap
on the amount of funds from the federal contribution to a venture
capital fund that may be used to pay for venture capital fund
services. 41 For example, representatives of one state said Treasury
did not provide a standard management fee for venture capital fund
services. As a result, they had to pay for management services out of
venture capital funds. This could affect jurisdictions’ ability to partner
with funds. Treasury officials said they believed the policy was
appropriate and were monitoring jurisdictions’ implementation of their
programs for any challenges. Treasury published FAQs to clarify this
cap and answered specific questions from jurisdictions.
According to Treasury officials, they may issue additional clarifications or
provide training in the future to help address other concerns. In particular,
some jurisdictions we interviewed noted challenges in meeting the
39The original capital program guidelines for the current SSBCI stated that SSBCI-
supported transactions could not include prepayment fees, which lenders may charge for
full or partial payment of a loan prior to maturity. In December 2023, Treasury revised the
guidelines to allow prepayment penalties for SSBCI-supported loans with an original
principal amount of $100,000 or more, so long as any such fees were reasonable,
customary, and clearly disclosed to the borrower in accordance with SSBCI guidelines.
40By statute, the cap on administrative expenses is 5 percent of the first tranche of funding
and 3 percent of each successive tranche. 12 U.S.C. § 5702(c)(3)(C), (D). See also
Treasury’s SSBCI Capital Program Policy Guidelines (rev. Dec. 4, 2023), Section XI.
41According to Treasury’s capital program policy guidelines, SSBCI funds may be used to
pay for services provided by venture capital funds (such as financial management,
operational guidance, and IT consulting), up to an annual average of 1.71 percent of the
federal contribution to a venture capital fund over the life of the jurisdiction’s venture
capital program.
Page 22 GAO-24-106671 State Small Business Credit Initiative
conflict-of-interest requirements for venture capital programs in the capital
program guidelines. 42 Some representatives of smaller states noted that
they have a limited network of venture capital fund managers, which
increases the likelihood that board members who approve SSBCI
transactions will have connections to these fund managers.
In October 2023, Treasury officials said they did not plan to revise these
requirements because they are intended to preserve program integrity
and prevent SSBCI funds from supporting businesses or investments in
which an investor had a previous interest. However, Treasury published
an FAQ that provided additional guidance to help jurisdictions meet this
requirement.
Treasury also took steps to help tribal applicants meet statutory
requirements they might find challenging, such as the 10:1 leverage ratio
and the private capital matching requirement. For example, as we
reported in February 2023, Treasury officials said they facilitated
connections among tribal governments to form consortiums. 43 These
consortiums may be better equipped than individual tribal governments to
meet the leverage ratio target because they can pool funding. One
representative of a tribal economic development corporation told us
Treasury also provided lists of community development financial
institutions with which they might partner, which could help tribal
applicants meet private capital matching requirements. Treasury also
allows participating jurisdictions to reallocate funds across approved
programs, which could in some cases help jurisdictions achieve better
leverage.
42Capital program guidelines state that funds from an SSBCI equity/venture capital
program must not be used to make an investment in a business or venture capital fund in
which an “SSBCI insider” or their family members or business partners have a personal
financial interest.
43GAO-23-105293.
Page 23 GAO-24-106671 State Small Business Credit Initiative
Treasury Finalized
Performance
Measures and Issued
the First Two
Quarterly Reports of
SSBCI Program Data
Performance Measures In December 2023, the SSBCI program office finalized four performance
and Indicators measures to track and report performance for the current SSBCI. The
measures are related to the deployment of program funds, including
funds deployed for SEDI-owned businesses and very small businesses,
and the amount of private capital leveraged (see table 3).
Table 3: Performance Measures for the State Small Business Credit Initiative (SSBCI) Capital Program
Measure Target
Cumulative new small business lending, as reported annually 10:1 leverage ratio reached by the end of the SSBCI program
Cumulative disbursement of funds available to jurisdictions, as 98 percent disbursed by the end of the SSBCI program
reported in jurisdiction disbursement requests
Cumulative percent of expended funds that support businesses 35 percent of funding expended for SEDI-owned businesses
owned by socially and economically disadvantaged individuals annually
(SEDI-owned businesses), as reported annually
Cumulative percent of expended funds that support very small 30 percent of funding expended for very small businesses
businesses, as reported annually annually
Source: GAO analysis of Department of the Treasury documents. | GAO-24-106671
These performance measures are consistent with key attributes of
successful performance measures we identified in prior work. 44 For
example, the measures are clearly stated, include measurable targets,
and are aligned with program goals.
Treasury also tracks three indicators for SSBCI, which are additional
metrics Treasury uses to monitor progress but for which it will not set
specific goals or targets because of how they are influenced by external
factors. 45 These indicators are (1) the cumulative amount of SSBCI
44See GAO, Tax Administration: IRS Needs to Further Refine Its Tax Filing Season
Performance Measures, GAO-03-143 (Washington, D.C.: Nov. 22, 2002).
45As defined by Treasury, a measure is a value Treasury uses to track its progress toward
a goal or target.
Page 24 GAO-24-106671 State Small Business Credit Initiative
capital program funds deployed by jurisdictions, (2) the cumulative
volume and dollar amount of loans or investments supported by SSBCI
funds, and (3) the cumulative volume and number of loans or investments
to SEDI-owned businesses.
In addition, in November 2023 the Office of Capital Access published a
plan for evaluating the economic impact of programs under its purview.
This plan includes five research questions to evaluate the economic
impact of the current SSBCI, including the extent to which SSBCI creates
jobs, increases capital access, and provides other measurable community
and economic development benefits. 46
Data Reporting As with the original SSBCI, Treasury will produce quarterly and annual
reports for the current program using data submitted by participating
jurisdictions. 47
• Quarterly reporting. Treasury published the first quarterly report in
December 2023 and the second in March 2024. The first report
covered data for the first five quarters for which jurisdictions had
submitted data. 48 These quarterly reports present program-level data
on the cumulative amount of funds allocated by program type,
46The five questions related to the current SSBCI are (1) How does SSBCI technical
assistance impact the ability of underserved businesses to access funds? (2) To what
extent does capital from SSBCI create jobs, increase capital access, and provide other
measurable community and economic development benefits? (3) To what extent did
SSBCI strengthen the resilience and growth of recipient businesses and in particular,
minority-owned, women-owned, and otherwise underserved businesses? (4) SSBCI has
six common program formats, does one particular program format better reach small
businesses, including small businesses in underserved communities? (5) How did
jurisdictions use SSBCI funds to support emerging venture capital ecosystems, and to
what extent were those efforts successful?
47Per statute and Treasury’s reporting guidance, participating jurisdictions must provide
quarterly and annual reports. Treasury’s reporting guidance delineates the data points to
be included in such reports. On a quarterly basis, participating jurisdictions must provide,
among other things, program-level data, such as the total amount of funds expended and
the amount of recycled funds (which can include program income or funds the jurisdiction
receives from loan repayment). On an annual basis, they must provide transaction-level
data, including on sources of private capital, purposes of loans or investments, expected
jobs created or retained as a result of the loans or investments, and whether the
borrowers or investees certified as SEDI-owned businesses, among other data points.
48Officials said they published a cumulative report covering the first five quarters because
during those quarters, jurisdictions had just started the programs and transaction volume
was low.
Page 25 GAO-24-106671 State Small Business Credit Initiative
cumulative amount of funds deployed by quarter, and cumulative
amount of funds deployed as a percentage of total allocation.
• Annual reporting. In December 2023, Treasury officials said they
anticipated publishing the first annual report by September 2024. 49
The annual report is expected to present information from transaction-
level data on sources of private capital, purposes of loans or
investments, expected jobs created or retained as a result of SSBCI
loans or investments, and whether borrowers or investees certified as
SEDI-owned businesses.
To assist jurisdictions with meeting the requirements to report quarterly
and annual data, Treasury published reporting guidance in May 2022. It
also has provided training on the reporting requirements since August
2022. In addition, Treasury officials said they provided templates to
jurisdictions tailored to their specific program types.
Several of the 12 state officials we interviewed found Treasury’s reporting
templates, webinars, and communication helpful in understanding
reporting obligations. For example, some state officials said the reporting
templates and use of demonstrations during webinars were helpful to
understand how to fill out reports effectively.
We provided a draft of this report to Treasury and Commerce for review
Agency Comments and comment. Treasury and Commerce provided technical comments,
which we incorporated as appropriate.
We are sending copies of this report to the appropriate congressional
committees, the Secretary of the Treasury, and the Secretary of
Commerce. In addition, the report is available at no charge on the GAO
website at http://www.gao.gov.
49Officials said they collected annual data for 2022, but that the first annual report would
be published reflecting data from 2023 when transaction volume was higher.
Page 26 GAO-24-106671 State Small Business Credit Initiative
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 27 GAO-24-106671 State Small Business Credit Initiative
List of Committees
The Honorable Patty Murray
Chair
The Honorable Susan Collins
Vice Chair
Committee on Appropriations
United States Senate
The Honorable Ron Wyden
Chairman
The Honorable Mike Crapo
Ranking Member
Committee on Finance
United States Senate
The Honorable Bernard Sanders
Chair
The Honorable Bill Cassidy, M.D.
Ranking Member
Committee on Health, Education, Labor and Pensions
United States Senate
The Honorable Gary C. Peters
Chairman
The Honorable Rand Paul, M.D.
Ranking Member
Committee on Homeland Security and Governmental Affairs
United States Senate
The Honorable Tom Cole
Chairman
The Honorable Rosa L. DeLauro
Ranking Member
Committee on Appropriations
House of Representatives
Page 28 GAO-24-106671 State Small Business Credit Initiative
The Honorable Cathy McMorris Rodgers
Chair
The Honorable Frank Pallone, Jr.
Ranking Member
Committee on Energy and Commerce
House of Representatives
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
Page 29 GAO-24-106671 State Small Business Credit Initiative
Appendix I: Objectives, Scope, and
Appendix I: Objectives, Scope, and
Methodology
Methodology
This report examines (1) the Department of the Treasury’s disbursement
of State Small Business Credit Initiative (SSBCI) funds and the status of
the Minority Business Development Agency’s (MBDA) grant awards; (2)
Treasury’s management of time frames for remaining implementation
steps; (3) Treasury’s efforts to ensure compliance with program
requirements; and (4) Treasury’s efforts to measure and report on
program performance.
To address the first objective, we reviewed and analyzed Treasury data
on SSBCI amounts allocated, obligated, and disbursed to participating
jurisdictions as of December 31, 2023. We also reviewed the status of
jurisdictions’ applications for the SSBCI capital program and
noncompetitive technical assistance funding. We analyzed these data to
determine which states, territories, and tribal applicants had received
each of three tranches of funding for both the capital program and
noncompetitive technical assistance funding. We also reviewed
Treasury’s guidance and notices on application deadlines. We analyzed
these together with Treasury data on disbursement dates to determine
the length of review time between application deadlines and approval and
disbursement dates.
We assessed the reliability of these data by obtaining written responses
from Treasury officials about their processes for ensuring the accuracy of
the data. We found these data to be sufficiently reliable for describing the
amounts allocated, obligated, and disbursed to participating jurisdictions
and the status and time frames for Treasury’s application reviews.
We also interviewed Treasury officials on the status of program
components and their efforts to implement remaining components. We
reviewed Treasury’s guidance and notices related to the SSBCI Investing
in America Small Business Opportunity Program. To examine the status
of MBDA’s grant awards for the Capital Readiness Program, we reviewed
written information from MBDA officials and interviewed MBDA officials on
the status of funds disbursed to grantees. We also analyzed data on
grantee characteristics that were self-reported by the grantees in their
application package.
To address the second objective, we reviewed Treasury’s planning tools
and processes, including its updated work plans as of May 2023 and
December 2023 and a user guide of its project management software
(Project Investment Manager). We also reviewed written documentation
and screenshots of Treasury’s Project Investment Manager platform for
SSBCI and observed the platform through a virtual demonstration. We
Page 30 GAO-24-106671 State Small Business Credit Initiative
Appendix I: Objectives, Scope, and
Methodology
interviewed Treasury officials about steps taken or planned to improve
project scheduling.
To examine the extent to which Treasury met best practices for project
scheduling for SSBCI, we reviewed the GAO Schedule Guide that
identified 10 best practices for scheduling. 1 We previously recommended
that Treasury implement four of these practices to improve SSBCI
schedules: sequencing all activities, establishing the duration of activities,
assigning resources to activities, and updating schedules using actual
progress. 2 To assess Treasury against these four best practices, we
analyzed the information described above to identify the extent to which
Treasury had incorporated these practices.
To address the third objective, we reviewed Treasury’s capital program
guidelines, online program resources (such as frequently asked
questions), and compliance training materials. We also reviewed
documentation of Treasury’s compliance monitoring procedures, including
the SSBCI compliance risk matrix, Treasury’s internal pre-disbursement
review procedures, and written information provided by Treasury. We
reviewed sample document and data requests Treasury made to
participating jurisdictions as part of its pre-disbursement review and
annual review procedures. We interviewed Treasury officials about
support and guidance they provided to participating jurisdictions and their
approaches to risk management.
We interviewed officials from a nongeneralizable selection of 12
jurisdictions from among the 50 states and the District of Columbia,
representatives of 13 of 108 tribal applicants, and officials from four of the
five permanently inhabited territories. 3
• We selected states to have (1) a range of total funding obligation
amounts and (2) geographic diversity across U.S. regions. We also
selected states to include (1) a mix of those that did or did not
1See GAO, GAO Schedule Assessment Guide: Best Practices for Project Schedules,
GAO-16-89G (Washington, D.C.: Dec. 22, 2015).
2GAO-23-105293.
3We interviewed representatives from the following states: Arkansas, California, Florida,
Massachusetts, New Hampshire, New York, Ohio, Oregon, South Dakota, Tennessee,
Wisconsin, and Wyoming. 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.
Page 31 GAO-24-106671 State Small Business Credit Initiative
Appendix I: Objectives, Scope, and
Methodology
introduce new program types compared to the original SSBCI; (2) a
mix of those that received their first capital program disbursement
before and after September 30, 2022; and (3) at least one state that
did not apply for technical assistance funding.
• We selected tribal applicants to have (1) a range of funding amounts
requested in their capital program applications, (2) geographic
diversity across U.S. regions, and (3) a variety of proposed program
types. We spoke with representatives of 13 tribal applicants—11 that
applied as individual tribal governments and two that applied as
consortiums. 4 In several instances, tribal applicants directed us to
speak with third-party organizations or organizations connected to the
tribal applicant, such as economic development corporations, that
help administer their SSBCI programs or asked representatives of
these organizations to participate in the interviews. 5 The tribal
applicants whose representatives we interviewed are from at least 11
of the 12 regions used by the Bureau of Indian Affairs and requested
funding capital program amounts ranging from $518,000 to $93
million. 6
Our interviews focused on jurisdictions’ actual or planned uses of SSBCI
funds, their perspectives on Treasury’s administration of SSBCI, and any
challenges faced or areas in which Treasury could provide additional
guidance or support.
4We contacted 23 tribal applicants (including 20 that applied individually and three that
applied as part of consortiums) and interviewed representatives of the 13 that responded.
The 11 tribal applicants whose representatives (tribal government and/or third party) we
spoke to included the Alabama-Coushatta Tribe of Texas, Blackfeet Nation, Cheyenne
River Sioux Tribe, Confederated Tribes of the Umatilla Indian Reservation, Delaware Tribe
of Indians, Mashantucket Pequot Tribal Nation, Navajo Nation, Ponca Tribe of Nebraska,
Santa Clara Pueblo, Washoe Tribe of Nevada and California, and Yurok Tribe. We also
interviewed representatives of the following third-party organizations that are helping to
administer SSBCI programs on behalf of tribal consortiums: the Alaska Small Business
Development Center and Apis Holdings.
5Third-party organizations and organizations connected to tribal applicants were the
Alaska Small Business Development Center, Apis Holdings, Cheyenne River Economic
Development Corporation, Civicus Group, Four Bands Community Fund, NACDC
Financial Services, Nixyáawii Community Financial Services, Ochana Industries, Ponca
Economic Development Corporation, Santa Clara Development Corporation, The Alliance
Community Development Financial Institution, Washoe Development Corporation, and
Yurok Economic Development Corporation.
6Five tribal applicants whose representatives we interviewed requested less than $1
million, five requested between $1 million and $5 million, and three requested more than
$5 million.
Page 32 GAO-24-106671 State Small Business Credit Initiative
Appendix I: Objectives, Scope, and
Methodology
For the fourth objective, we reviewed a memorandum documenting
Treasury’s performance measures and indicators for SSBCI, Treasury’s
guidance for jurisdictions on how to meet SSBCI program reporting
requirements, and quarterly SSBCI reports published in December 2023
and March 2024. We also reviewed the Office of Capital Access’
November 2023 Economic Recovery Learning Agenda, which includes its
plans for evaluating SSBCI. We interviewed Treasury officials about their
efforts to collect and verify the accuracy of data to track program
performance. We also interviewed officials from the nongeneralizable
selection of states, territories, and tribal applicants described above about
their perspectives on Treasury’s reporting and data collection guidance.
We compared Treasury’s performance measures and indicators against
key attributes of successful performance measures identified in prior GAO
work. 7
We conducted this performance audit from February 2023 to June 2024
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.
7See GAO, Tax Administration: IRS Needs to Further Refine Its Tax Filing Season
Performance Measures, GAO-03-143 (Washington, D.C.: Nov. 22, 2002).
Page 33 GAO-24-106671 State Small Business Credit Initiative
Appendix II: Jurisdictions’ Uses of Various Appendix II: Jurisdictions’ Uses of Various
Program Types to Deploy SSBCI Capital
Program Types to Deploy SSBCI Capital
Program Funds
Program Funds
As we reported in February 2023, most states and territories planned to
use State Small Business Credit Initiative (SSBCI) funding for a mix of
lending and equity investment programs. 1 This appendix contains
updated information on planned or implemented programs for states,
territories, and tribal applicants.
Loan participation and venture capital programs are the most common
program types and capital access programs are the least common among
participating jurisdictions (see table 4).
Table 4: Number of Implemented or Planned State Small Business Credit Initiative (SSBCI) Capital Programs, by Program
Type
States, territories, and the District of Tribal applicants, as of
Columbia, as of November 22, 2023a December 22, 2023b
Program type Number of programs Percent Number of programs Percent
Capital access (loan loss reserve) 12 6% 3 2%
Loan guarantee 27 13% 17 11%
Collateral support 23 11% 24 16%
Loan participation 64 30% 68 45%
Venture capital and other equity 74 35% 36 24%
investment
Other program types 14 7% 4 3%
Total number of programs 214 100% 152 100%
Source: GAO analysis of Department of the Treasury data. | GAO-24-106671
a
As of November 22, 2023, applications from American Samoa and the Commonwealth of the
Northern Mariana Islands were still under review by Treasury. Applications for all 50 states, the
District of Columbia, and the remaining three territories (Guam, Puerto Rico, and the U.S. Virgin
Island) were approved.
b
Tribal applicants refer to both individual and joint applications from tribal governments. As of
December 22, 2023, Treasury was in the process of reviewing and approving tribal applications.
1GAO, State Small Business Credit Initiative: Improved Planning Could Help Treasury
Limit Additional Delays, GAO-23-105293 (Washington, D.C.: Feb. 2, 2023).
Page 34 GAO-24-106671 State Small Business Credit Initiative
Appendix III: Characteristics of Capital
Appendix III: Characteristics of Capital
Readiness Program Grantees
Readiness Program Grantees
The Minority Business Development Agency (MBDA) is administering
$125 million in State Small Business Credit Initiative (SSBCI) technical
assistance funds through the Capital Readiness Program. This
competitive grant program provides technical assistance funding to
nonprofit organizations, private-sector entities, institutions of higher
education, or consortiums of these organizations. The program is aimed
at serving businesses owned and controlled by socially and economically
disadvantaged individuals (SEDI-owned businesses) that are applying,
have previously applied, or plan to apply to an SSBCI capital program or
other government program that supports small businesses. Organizations
that receive the grants must provide a nonfederal match of 10–25 percent
of the award, depending on the award amount.
In September 2023, MBDA awarded grants totaling $117 million to 43
organizations. 1 This appendix contains summary information on grantee
types, areas of operation, and other characteristics based on data self-
reported by Capital Readiness Program grantees.
The majority of grantees (34 of 43) are nonprofit organizations, including
those that self-reported as a combination of organizational types (see
table 5).
Table 5: Capital Readiness Program Grantees, by Type of Organization
Type of organization Number of grantees
Nonprofit organization 30
Institution of higher education 5
Private-sector entity 3
Nonprofit organization and institution of higher education 3
Nonprofit organization and private-sector entity 1
Institution of higher education and private-sector entity 1
Source: GAO analysis of Minority Business Development Agency data. | GAO-24-106671
Note: This analysis is based on data self-reported by Capital Readiness Program grantees.
1The remaining funds administered by MBDA have been budgeted for administrative
expenses from fiscal years 2023 through 2028, including personnel costs, advisory and
assistance services, other services from federal and nonfederal sources, and supplies,
materials, and equipment.
Page 35 GAO-24-106671 State Small Business Credit Initiative
Appendix III: Characteristics of Capital
Readiness Program Grantees
• Twenty-eight of 43 grantees support initiatives in a single state or
territory. Collectively, these are focused on 24 states and one territory.
Eight grantees support initiatives regionally or across multiple states,
territories, or both states and territories. Seven grantees have a
national scope.
• Most grantees (32 of 43) are both an incubator, which focuses on
early-stage technical assistance for new entrepreneurs, and an
accelerator, which provides emerging-stage technical assistance to
businesses ready to expand. Seven grantees are incubators but not
accelerators and four are accelerators but not incubators.
Nearly all grantees (40 of 43) are focused on serving borrowers in
underserved racial, ethnic, or cultural groups. Table 6 provides the
number of Capital Readiness Program grantees serving target groups of
small business owners.
Table 6: Number of Capital Readiness Program Grantees Serving Target Groups of
Small Business Owners, by Target Group
Target group of small business owners Number of grantees
Borrowers in underserved racial, ethnic, or cultural groups 40
Women business owners 27
Borrowers located in economically challenged geographic areas 18
Borrowers in rural areas 17
Veteran business owners 16
Borrowers with limited English proficiency 12
Tribal borrowers 12
Borrowers with a disability 6
Borrowers in U.S. territories 2
Source: GAO analysis of Minority Business Development Agency data. | GAO-24-106671
Notes: This analysis is based on data self-reported by Capital Readiness Program grantees.
Grantees may serve more than one target group of small business owners. Borrowers located in
economically challenged geographic areas include borrowers in communities undergoing economic
transitions, borrowers in underserved communities, borrowers with a long-term residence in an
environment isolated from the mainstream of American society, and grantees that self-reported as
community development financial institutions, which primarily serve low-income communities. Four
grantees self-reported as serving “other” target groups in addition to one or more groups identified
above.
Approximately one-third of grantees (14 of 43) are not targeting or
expecting to serve businesses in a particular industry (see table 7).
Page 36 GAO-24-106671 State Small Business Credit Initiative
Appendix III: Characteristics of Capital
Readiness Program Grantees
Table 7: Number of Capital Readiness Program Grantees Targeting or Expecting to
Serve Businesses in Particular Industries, by Industry
Industry targeted or served Number of grantees
Not industry-specific 14
Agriculture/food security 8
Hospitality, tourism, and recreation 8
Manufacturing, defense, supply chain, and product development 8
Building, construction, and housing 7
Healthcare services 6
Energy, environment, utilities, and climate 5
Information technology 5
Business, finance, and asset management 4
Emerging technologies (e.g., artificial intelligence) 4
Biotechnology/medical technology 3
Source: GAO analysis of Minority Business Development Agency data. | GAO-24-106671
Notes: This analysis is based on data self-reported by Capital Readiness Program grantees.
Grantees may represent more than one industry. This analysis excludes five grantees that had blank
values in this category.
Page 37 GAO-24-106671 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 name above, John Fisher (Assistant Director),
Staff Gita DeVaney (Analyst in Charge), Lauren Capitini, LaToya Jeanita
Acknowledgments Coleman, Carl Ramirez, Barbara Roesmann, Jena Sinkfield, and Aida
Woldu made key contributions to this report.
Page 38 GAO-24-106671 State Small Business Credit Initiative
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