Moving USDA Programs to the Small Business Administration: Authorities and Considerations (July 15, 2025)

Summary

A Congressional Research Service In Focus, IF13062, dated July 15, 2025, titled "Moving USDA Programs to the Small Business Administration: Authorities and Considerations," by Lisa S. Benson, Matthew D. Trout and Anthony A. Cilluffo. It responds to a June 2025 news report that SBA staff were drafting an executive order to transfer three USDA rural business programs to the SBA. It describes the President's transfer authority under 15 U.S.C. §641 and its use in 1953 and 1975, and limits including Section 716 of the Consolidated Appropriations Act, 2024 (P.L. 118-42). It reports FY2025 budget authority of $38 million for the Business and Industry Loan Guarantee Program and lists options such as directly transferring the programs.

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“Moving USDA Programs to the Small Business Administration: Authorities and Considerations (July 15, 2025).” Original at www.congress.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/if13062-2-2591f67456/, SHA-256 93066572e41b09676c1d63549ba77593a8496336a4f46b10fcd6850a543b40a2.

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July 15, 2025
Moving USDA Programs to the Small Business Administration:
Authorities and Considerations
A June 2025 news story reported that Small Business to “provide for appropriate transfers of records, property,
Administration (SBA) staff were drafting an executive necessary personnel, and unexpended balances of
order that would transfer administration of three U.S. appropriations and other funds available to the department
Department of Agriculture (USDA) rural business programs or agency from which the transfer is made.”
to the SBA: the Business and Industry Loan Guarantee
Program, Rural Microentrepreneur Assistance Program, and Historical Use of Authority
Rural Business Investment Program (the programs are The President has used the transfer authority provided by
listed in order of the magnitude of budget authority). These 15 U.S.C. §641 and its predecessor provisions at least two
programs support business development through direct separate times. Both transfers were precipitated by
loans, grants, licensing of rural business investment executive orders.
companies in rural areas, and loan guarantees.
The authority’s first use was in 1953, when the SBA was
This In Focus provides an overview of existing statutory created by the Small Business Act of 1953 (P.L. 83-163,
authority that may provide the President with the authority Title II; enacted July 30, 1953). At that time, the SBA
to move USDA programs to the SBA, potential limitations assumed several small-business-related duties from the
of the authority, and policy issues for Congress to consider Reconstruction Finance Corporation (RFC). The law left
concerning the transfer. the decision of whether to transfer the RFC’s Small
Defense Plants Administration (SDPA) to the President.
Background Section 218 of the law included the transfer authority (15
In FY2025, Congress appropriated $38 million in budget U.S.C. §641) and an additional provision that specifically
authority to support $1.6 billion in loan authority for the authorized the President to transfer SDPA to the SBA.
USDA Business and Industry Loan Guarantee Program and
$5 million in budget authority to support $20 million in On December 3, 1953, President Eisenhower issued
loan authority to the Rural Microentrepreneur Assistance Executive Order 10504 to transfer SDPA to the SBA. The
Program. Congress does not appropriate funding for the Executive Order cited Section 218 of the Small Business
Rural Business Investment Program; the program can Act of 1953 as an authority for the transfer. The separate
operate with Rural Development staff without annual provision that specifically authorized the President to
appropriations. transfer SDPA to the SBA was later omitted from the
revised transfer authority after the SDPA transfer was
The FY2026 President’s Budget Request did not request completed.
funding for the Business and Industry Loan Guarantee
Program and recommended that it be terminated because The authority’s second use was in 1975 and involved the
borrowers could obtain loans through the private market. Service Corps of Retired Executives (SCORE) and the
Program regulations require that borrowers be unable to Active Corps of Executives (ACE). In both programs,
finance their projects through their own resources or business executives volunteer to provide training and
commercial credit at reasonable rates and terms without the mentoring to new business owners. In the 1960s, the SBA
loan guarantee. The Administration also did not request worked with these groups under the SBA’s general
funding for the Rural Microentrepreneur Assistance authority to cooperate with voluntary groups that assist
Program, stating that the program is “duplicative and small businesses. In 1971, President Nixon reorganized
overlaps with similar business development programs several volunteer programs across the federal government
operated by other Federal Agencies.” into a new agency, the ACTION Agency (not an acronym).
Congress later codified the creation of the agency and the
Existing Statutory Authority reorganization of the volunteer programs with the Domestic
When the SBA was created in 1953, Congress provided the Volunteer Service Act of 1973 (P.L. 93-113). Under this
President with authority to transfer certain activities to the division of authority, the ACTION Agency handled
SBA from other executive departments or agencies. The operations, volunteer recruitment, and all non-small-
most recent version of this authority was enacted in 1958, business-related activities of SCORE and ACE, while the
which remains current law. Section 12 of the Small SBA provided programmatic direction for small-business-
Business Act (15 U.S.C. §641) permits the President to related activities.
transfer to the SBA “any functions, powers, and duties of
any department or agency which relate primarily to small- On July 18, 1975, President Ford issued Executive Order
business problems.” This provision also allows a President, 11871 to transfer the ACTION Agency’s statutory duties
in connection with a transfer of functions, powers, or duties, related to SCORE and ACE to the SBA. The Executive
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Moving USDA Programs to the Small Business Administration: Authorities and Considerations

Order cited Section 12 of the Small Business Act as an Potential Impacts of Transfer
authority for the transfer. Congress codified this transfer in SBA staff have administered loan guarantee programs and
1978 by statutorily moving the SCORE and ACE an investment fund program but do not administer direct
authorities to the Small Business Act via P.L. 95-510. The loan and grant programs. According to a news report, some
SBA continues to administer the programs (now combined USDA officials not in favor of the transfer reportedly
in SCORE). argued in part “that SBA is not equipped to handle those
programs.”
Limitations
This provision remains available as a potential tool for a The SBA does administer a similar program to the USDA
President to reorganize governmental small business Rural Business Investment Program called the Small
functions, powers, or duties by placing them within the Business Investment Program, which licenses Small
SBA. This authority is subject to several limitations, Business Investment Companies. The SBA program
however. First, as a matter of statutory text, the authority involves leveraged funds (i.e., low-cost, government-
extends only to those “functions, powers, and duties … backed capital). The House Appropriations Committee
which relate primarily to small-business problems.” The FY2026 report for Agriculture appropriations stated that
statute does not define “small-business problems.” This USDA has struggled to effectively implement its program
could lead to interpretative questions about whether a with leveraged funds (H.Rept. 119-172). Transferring the
particular function proposed for transfer to the SBA is program administration to the SBA may result in the
primarily related to small-business problems. program being implemented differently.

The historical use of this authority has not given rise to any USDA and the SBA provide different levels of support to
judicial interpretation of the transfer statute. It is reasonable applicants in their loan guarantee programs. USDA
to expect that any court examining the extent of this employees are closely involved throughout the loan
authority would employ the typical tools of statutory application process, providing technical assistance to
interpretation in determining the scope of the statutory prospective borrowers and lenders for the USDA Business
transfer authority. The USDA programs in question support and Industry Loan Guarantee Program. By contrast, SBA
businesses in rural areas. Although “rural” is distinct from loans are processed using delegated authority where lenders
“small,” as a practical matter there may be substantial are generally prohibited from requesting the SBA’s direct
overlap between rural and small businesses such that a involvement in the loan decision beyond asking for
rural-focused program may also qualify as a function clarifications of SBA policy. Statute and regulations
“relate[d] primarily to small-business problems.” For governing the Business and Industry Loan Guarantee
example, the Rural Microentrepreneur Assistance Program Program do not require the agency administering the
requires applicants to own and operate microenterprises, program to provide a certain level of staff support. If the
business entities with 10 or fewer full-time-equivalent SBA were to administer the USDA program, it is unclear
employees. The Rural Business Investment Program what level of staff support it would provide.
requires the companies to invest 50% of their funds in
smaller enterprises. Policy Considerations
Congress may consider whether to take actions such as the
Second, even where the requirements of 15 U.S.C. §641 are following concerning the potential transfer of USDA
met, other laws may place limits on this authority. For programs to the SBA:
example, Section 716 of the Consolidated Appropriations
Act, 2024 (P.L. 118-42, Division B, Title VII), provides • Clarify the transfer authority. Congress could clarify
that “[n]one of the funds provided by this Act, or provided the authority provided by 15 U.S.C. §641 to include or
by previous appropriations Acts, … shall be available for exclude USDA rural business programs in the transfer
obligation or expenditure” through a transfer of funds that authority.
“reorganizes offices, programs, or activities” unless the
appropriate Secretary notifies the Committees on • Directly transfer programs. Congress could legislate
Appropriations of both houses of Congress 30 days in the transfer of the USDA programs to the SBA directly.
advance of the exercise of such authority and receives
approval from both committees. These procedural • Increase cooperation between USDA and the SBA.
requirements remain in effect in FY2025 under Section As an alternative to transferring the programs, Congress
1105 of P.L. 119-4, the current continuing resolution. could promote a closer integration of USDA and SBA
programs, such as by sharing best practices, technology,
Thus, before the Secretary of Agriculture could transfer any or staff.
funds to the SBA in conjunction with a presidential transfer
of a function, the Secretary would likely need to comply Lisa S. Benson, Specialist in Agricultural Policy
with at least some of these procedural requirements. Courts Matthew D. Trout, Legislative Attorney
have generally upheld congressional notification Anthony A. Cilluffo, Analyst in Public Finance
requirements, sometimes called “report and wait”
provisions, like the one found in Section 716. However, the IF13062
requirement to obtain committee approval prior to
completing the transfer raises legal issues beyond the scope
of this In Focus.

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Moving USDA Programs to the Small Business Administration: Authorities and Considerations

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