SBA’s FY 2008 Annual Performance Report (SBA file name: serv_abtsba_2008_apr_001-040)

Summary

The Small Business Administration's Annual Performance Report for FY 2008, subtitled Helping Small Business Start, Grow and Succeed. It reports results under four strategic goals: ownership in underserved markets, timely disaster assistance, the economic environment for small business, and management and organizational excellence. A summary table of performance indicators counts 53 met, 26 not met, 1 improved and 7 N/A, for a total of 87. Program sections cover the 7(a), 504 and Microloan programs, surety bond guarantees, the 8(a) and HUBZone programs and disaster assistance. The HUBZone section reports 10,772 certified firms listed on or before September 30, 2008, and changes made after a GAO audit and a GAO forensic investigation.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Cite this document

“SBA’s FY 2008 Annual Performance Report (SBA file name: serv_abtsba_2008_apr_001-040).” Original at legacy.sba.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/sba-agency-financial-report-fy-2008-serv-abtsba-2008-apr-001-040-f057ee0fef/, SHA-256 7eb161f99d6cc77d034cc64a9dd50bb21610cc57d01e6c15ee0ab3fb0b0eb383.

Full text

SBA’s FY 2008 Annual
Performance Report

Helping Small Business Start, Grow and Succeed
The Annual Performance Report and the Citizens’ Report are available at
http://www.sba.gov/aboutsba/budgetsplans/serv_budget_links.html, or by
writing or calling the contacts below.

Information about SBA’s programs is available at:
www.sba.gov

SBA’s plans and reports are available at:
http://www.sba.gov/aboutsba/budgetsplans/serv_budget_links.html

Para información acerca de los programas de la SBA:
http://www.negocios.gov

Requests for printed copies, or questions and comments regarding the content,
presentation and usefulness of this report are welcome and may be addressed to:
performancereports@SBA.gov

Or, you may write to:
U.S. Small Business Administration Or, you may call:
Office of the Chief Financial Officer Bruce Crippin
409 Third Street, S.W. Performance Management Office
Suite 6000 (202) 205-6188
Washington, DC 20416

Association of Government Accountants (AGA) Awards the

Certificate of Excellence
in Accountability Reporting

In recognition of your outstanding efforts in preparing
the Small Business Administration
Performance and Accountability Report
for the fiscal year ended September 30, 2006 & 2007

2006 2007
Table of Contents

Table of Contents

Administrators Message
Overview
Summary Performance Measure Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Strategic Goal One – Expand America’s ownership society, particularly in underserved markets . . . . . . 5
Financial Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7(a) Loan Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
504 Loan Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Microloan Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Credit Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Small Business Investment Company Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
New Markets Venture Capital Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
International Trade Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Surety Bond Guarantee Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Management and Technical Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Small Business Development Center Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Drug Free Workplace . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Women’s Business Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Entrepreneurship Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7(j) Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Veterans Business Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Faith-Based and Community Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Native Americans Affairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Contracting Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8(a) Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Prime Contracting and Subcontracting Assistance Programs . . . . . . . . . . . . . . . . . . . . . . . . 31
Small Disadvantaged Business Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
HUBzone Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Strategic Goal Two – Provide timely financial assistance to homeowners, renters,
nonprofit organizations and businesses affected by disaster . . . . . . . . . . . . . . . . . . . . . . . . 35
Disaster Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Strategic Goal Three – Improve the economic environment for small business . . . . . . . . . . . . . . 38
Regulatory Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Office of Advocacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Office of the National Ombudsman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Citizen’s Report  FY 2008 Summary of Performance and Financial Results iii
Table of Contents

Business Gateway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Strategic Goal Four – Ensure management and organizational excellence to increase responsiveness
to customers, streamline processes, and improve compliance and controls . . . . . . . . . . . . . . . . . 46
Human Capital Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Office of Human Capital Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Information Technology Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Office of the Chief Information Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Financial and Performance Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Office of the Chief Financial Officer/Performance Improvement Officer . . . . . . . . . . . . . . . . . . . . 60

Appendices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Appendix 1 — Data Validation and Verification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Appendix 2 — SBA Programs and Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Attached CD - Supplementary Information
SI – FY 2008 Agency Financial Report
S2 – FY 2008 Annual Performance Report
S3 – SBA’s Citizens’ Report: The FY 2008 Summary of Performance and Financial Results

iv Citizen’s Report  FY 2008 Summary of Performance and Financial Results
Administrators Message

Citizen’s Report  FY 2008 Summary of Performance and Financial Results v
Administrators Message

vi Citizen’s Report  FY 2008 Summary of Performance and Financial Results
Overview
This FY 2008 Performance Plan lays out the activities that the SBA will undertake as it moves
forward to expand opportunities for the nation’s small businesses and to assist victims of
federally-declared disasters. The goals, objectives and strategies outlined in this plan are guided
by four core values:

yyOutcomes Driven — The SBA will clearly define the outcomes it is targeting and
ensure that its programs, processes and policies are aligned in achieving them.
yyCustomer Focused — The Agency serves people and will be responsive to their
needs, both in the services it provides and in how they are delivered.
yyEmployee Enabled — SBA employees extend the hand of service to Americans
every day, and the Agency must ensure they have the tools, training, and support
they need to be effective.
yyAccountable, Efficient and Transparent — The SBA has a bedrock obligation to
the taxpayer to manage efficiently, invest capital prudently, and be open and honest
about its results.

The four strategic goals outlined in this plan are not significantly different from those of recent
SBA planning cycles. The Agency’s core objectives of effectively supporting the nation’s
entrepreneurs and providing assistance to victims of disasters remain unchanged. However,
the means for achieving these goals reflects the lessons learned through experiences in serving
customers across the nation and from listening to, and working with, Agency employees at all
organizational levels. The SBA’s four strategic goals are:

Strategic Goal One — Expand America’s ownership society, particularly in
underserved markets.
Strategic Goal Two — Provide timely financial assistance to homeowners, renters,
nonprofit organizations and businesses affected by disaster.
Strategic Goal Three — Improve the economic environment for small business.
Strategic Goal Four — Ensure management and organizational excellence
to increase responsiveness to customers, streamline
processes, and improve compliance and controls.

As this plan reflects, the SBA continues to focus on the impact of its programs and its
effectiveness in managing operations. The Agency is driving improvements in customer service
and simplifying its programs to make them more accessible and more useful to small business
owners.
Strategic Goal One

Summary Performance Measure Indicators

Performance Indicators Performance Indicators by Type
FY 2008 FY 2008
N/A
8% Efficiency
30%
Not Met
30%
Output
33%

Met
Improved 61% Outcome
1%
37%

# % # %
Met 53 0.61 Output 29 0.33
Improved 1 0.01 Outcome 32 0.37
Not Met 26 0.30 Efficiency 26 0.30
N/A 7 0.08 Total 87 1
87 1

Met Improve Not Met N/A

Strategic Goal 1
Financial Assistance
FY 2008
Program Performance Indicator Type
Variance
7(a) Loans Funded (#) Output -35%
7(a) SB Assisted (#) Output -35%
7(a) Under Served Markets - Lns Funded (#) Output -32%
7(a) USM - SB Assisted (#) Output -32%
7(a) Jobs Created/Retained (#) Outcome -25%
7(a) Cost per Loan Funded ($) Efficiency -96%
7(a) Cost per SB Assisted ($) Efficiency -61%
504 SB Lns Funded (#) Output -23%
504 SB Assisted (#) (1) Output -23%
504 USM - SB Lns Funded (#) Output -13%
504 USM - SB Assisted (#) Output -12%
504 Jobs Created/Retained (#) Outcome -20%
504 Cost per SB Loans Funded ($) Efficiency -42%
504 Cost per SB Assisted ($) Efficiency -26%
Int'l Trade Loans Funded (#) Output 4%
Int'l Trade SB Assisted (#) Outcome 8%
Int'l Trade USM Assisted (#) Outcome 13%
Int'l Trade Cost per Loan Funded ($) Efficiency 33%
Int'l Trade Cost per SB Assisted ($) Efficiency 35%
Microloan Loans Funded (#) Output 7%
Microloan SB Assisted (#) Outcome 7%
Microloan Cost per SB Assisted ($) Efficiency 14%
Microloan Cost per Loan Funded ($) (1) Efficiency 42%
SBIC SB Assisted (#) Outcome 8%
SBIC USM - SB Assisted (#) Outcome 14%
SBIC Cost per SB Assisted ($) (1) Efficiency 15%
SBG Final SBG (#) Output -12%
SBG Total Bonds (#) Output 1%
SBG USM- Final SBG (#) Output 11%
SBG Cost per Final SBG ($) Efficiency 33%
SBG Cost per Total Bid Bonds ($) Efficiency 42%

2 Annual Performance Report  FY 2008
Strategic Goal One

Management and Technical Assistance
FY 2008
Program Performance Indicator Type
Variance

SBDC Multi-Year Extended Engagement Clients (#) Output 13%
SBDC SB Created (#) ) (1) Outcome 112%
SBDC Capital Infusion ($ Billion) Outcome 44%
SBDC Cost per Multi-Year Exended Engagement Clients (#) Efficiency 11%
SBDC Cost per SB Created ($) (2) Efficiency 41%
WBC SB Assisted (#) Output 19%
WBC Jobs Created/ Retained (#) (1) Outcome 3%
WBC SB Created (#) (1) Outcome 18%
WBC Cost per SB Assisted ($) Efficiency 12%
WBC Cost per Job Created/Retained ($) Efficiency 10%
SCORE SB Assisted (#) Output 11%
SCORE SB Created (#) Outcome -13%
SCORE Cost per SB Assisted ($) Efficiency 5%
DFWP SB Educated (#) Output 57%
DFWP Programs Implemented (#) Output 120%
DFWP Cost per SB Educated ($) Efficiency 53%

Contracting Assistance

FY 2008
Program Performance Indicator Type
Variance
7(j) SB Assisted (#) Output -10%
7(j) Cost per SB Assisted ($) Efficiency -14%
8(a) SB Assisted (#) Outcome -1%
8(a) Cost per SB Assisted ($) Efficiency -17%
HubZone SB Assisted (#) Output N/A
HubZone Annual Value of Federal Contracts ($ Billion) Output N/A
HubZone Cost per SB Assisted ($) Efficiency N/A
HubZone Cost per Federal Contract Dollar ($) Efficiency N/A
PrimeContr Fed Contract Dollars Awarded to SB ($ Billion) Output N/A
PrimeContr Jobs Created/Retained (#) Outcome N/A
PrimeContr Cost per Job Created/Retained ($) Efficiency N/A
SDB SB Certified (#) Output -1%
SDB Cost per SB Certified ($) Efficiency 15%

District Offices Support - All Assistance Areas
FY 2008
Program Performance Indicator Type
Variance

OFO/8(a) Annual 8(a) Reviews (%) Output 0%
OFO/DO
SB Assisted - Counseling/Training (#) Outcome -13%
C&T
OFO/DO
Cost per SB Assisted ($) Efficiency 42%
C&T

Annual Performance Report  FY 2008 3
Strategic Goal One

Strategic Goal 2
Disaster Assistance
Disaster Disasters Having Field Presence Within 3 Days (%) Output 5%

Loans With Initial Disbursements Within 5 Days of Loan
Disaster Output 4%
Closing (%)
Disaster Time to Process 85% of Home Applications (Days) Output 40%
Time to Process 85% of Business Physical Applications
Disaster Output 31%
(Days)
Disaster Time to Process 85% of EIDL Applications (Days) Output 25%
SB Sustaining Economic Injury That Remain
Disaster Outcome 15%
Operational 6 Months After Final Disbursement (%)
SB Sustaining Physical Damage Restored Within 6
Disaster Outcome -1%
Months After Final Disbursement (%)
Homeowners Restoring Their Homes Within 6 Months of
Disaster Outcome -16%
Final Disbursement (%)
Renters Restored Within 6 Months After Final
Disaster Outcome -19%
Disbursement (%)
Disaster Customer Satisfaction Rate (%) Outcome -10%

Strategic Goal 3
Regulatory Assistance
Advocacy Research Publications (#) Output 8%

Advocacy Outcome 95%
Regulatory Cost Savings to Small Businesses ($ Billion)
Regulatory Staff with In-House Regulatory Flexibility Act
Advocacy Outcome 51%
Expertise (#) (1)
States Considering Legislative/Executive Regulatory
Advocacy Outcome 0%
Flexibility Action (#) (2)

Advocacy Outcome 27%
Research Publications and Data Reports in Curricula (#)
Advocacy Cost per $1 Million Savings ($) Efficiency 57%
BGateway Hours Saved (# in Millions) Outcome 47%
BGateway Customer Satisfaction (%) Outcome 0%
BGateway Referrals to Partner Sites per Month (%) (1) Outcome 155%
BGateway Cost per Hours Saved ($) Efficiency 67%

Strategic Goal 4
Ensure Management Excellance
OCIO IT Systems Availability (%) Output 0%
OCIO Unauthorized Network or Data Breaches (#) Outcomes -400%
OCFO Unquailified Opinions for Audit Year Outcomes 100%
OCFO Number of Material Weaknesses (#) Outcomes 100%

* Underserved markets represent small businesses in low to moderate income

4 Annual Performance Report  FY 2008
Strategic Goal One

Strategic Goal One – Expand America’s ownership
society, particularly in underserved markets.

Small businesses represent an essential mechanism by which individuals enter the economic and social mainstream of American
society. The needs of a small business change as the entity goes through the various stages of its lifecycle — from a possibility
to a vibrant, successful business. Strategic Goal One represents the SBA’s commitment to helping small businesses overcome
the competitive opportunity gaps often faced by entrepreneurs. The SBA empowers small business entrepreneurs to take advan-
tage of the opportunities the market offers by providing knowledge, skills and technical assistance; access to loans and equity;
and contracting opportunities either directly or through its partners. While SBA programs benefit all small business entrepreneurs,
the Agency places particular emphasis on groups that own and control little productive capital and have limited access to markets.

Strategic Goal One has three Long-Term Objectives:
LTO 1.1 — Improve access to SBA programs and services by small businesses to drive business formation, job
growth, and economic activity.
LTO 1.2 — Support entrepreneurship in markets with higher poverty and unemployment, and in our military
community.
LTO 1.3 — Ensure stewardship and accountability over taxpayer dollars through prudent financial portfolio
management and oversight.

Financial Assistance — Having access to capital when needed, and under the right conditions, is vital to the success of
small businesses. This need changes as a business goes through the various stages in its lifecycle. The financial vulnerability
of a small business may make SBA financial assistance a vital component at any given time. The SBA has structured its
programs to fill the financial gap as determined by differing financial markets and the various stages of a small company’s
lifecycle. The SBA provides loans through its 7(a) loan, 504 loan, and Microloan programs, as well as equity and mezzanine
financings through its SBIC program. The Agency has placed its focus on providing financing assistance that is effective
and at the lowest possible cost to the taxpayer. The Surety Bond Guarantee program, assists small businesses in obtaining
required bonding in the construction, supply, and service sectors by guaranteeing between 70 and 90 percent of the value of
the bond issued to the small business by a surety company.

Management and Technical Assistance — One of the roles of the SBA is to help small businesses avoid negative
consequences, including business failure and bankruptcy. Businesses fail for many reasons and, although it is the reason
most often cited, inadequate financing (i.e., insufficient cash flow or initial start-up capital) is only one of those reasons.
Businesses also fail because of inadequate short- and long-term planning, inadequate market research, ineffective market-
ing, incomplete or deficient strategy or vision, and inadequacies in the management team, among other reasons. The SBA,
through its management and technical assistance programs, addresses these potential pitfalls. It helps small businesses get
off to a good start; increases their chance of becoming established, employment-generating businesses; and it helps existing
businesses to prosper and grow.

One of the Agency’s main objectives is to continue to improve the quality of the management and technical assistance data
collected so that it can better measure the services that it provides and the outcomes resulting from those services, and so it can
better target its assistance to address the needs of its small business clients. Having complete, consistent and accurate data is
the first requirement for measuring the effectiveness and efficiency of SBA assistance.

Contracting Assistance — The SBA offers already-established businesses opportunities to sell products and services to
the federal government. Purchases by military and civilian agencies amount to more than $340 billion a year and include

Annual Performance Report  FY 2008 5
Strategic Goal One Financial Assistance

everything from complex space vehicles to janitorial services and cancer research. In sum, the federal government buys just
about every category of commodity and service available.

Two of the main contracting assistance programs are 8(a) and HUBZone. The 8(a) program is a business development program
that offers a broad scope of assistance to socially and economically disadvantaged firms. The HUBZone program, a contracting
assistance program whose primary objective is job creation and increasing capital investment in distressed communities, was
designed from its inception as an electronic-based program. This design maximizes its utilization of resources.

Financial Assistance
The SBA helps make capital available through financing partners to small businesses who might not otherwise obtain financ-
ing on reasonable terms and conditions. The SBA offers financial assistance through loan guaranty and investment programs.
Except for the Disaster loan program, the Agency does not make direct loans to businesses, but rather guarantees loans made by
its partners (lenders, certified development companies, and microlending institutions). The guaranty allows business owners to
obtain funds that they would not otherwise be able to obtain. The SBA also provides surety guaranties for surety bonds.

The financing programs are currently delivered through four offices within the Office of Capital Access (OCA): Financial Assistance,
International Trade, Investments and Surety Guarantees. The focus of the OCA is to balances the need to make capital available
to small businesses with the need to provide appropriate monitoring and oversight to ensure that tax dollars are used most
effectively and wisely. The OCA works to ensure that financial assistance products provided to small businesses meet their needs,
particularly the needs of underserved markets, and that operational processes are streamlined and efficient, with adequate
controls to protect the taxpayer from unnecessary losses, and that the Agency’s partners receive excellent customer service.

The Office of Capital Access is presently re-organizing to better meet the changing environment surrounding providing services to
the small business community. These changes address key issues facing the OCA, including the need to strengthen and expand
its capacity to even more effectively manage the risks posed by financial assistance, investment and other programs, and the
need to continue reform efforts to balance resources needed for operational support work in lending centers and at headquarters.
The OCA is addressing these challenges and instilling a performance culture throughout its program offices by re-aligning current
resources and adding strategic new positions.

The reorganization expands leadership in three areas: risk management, financial program operations, and centralized manage-
ment support. The program offices are expanding to include two additional offices, an Office of Risk Management and an Office
of Financial Program Operations in addition to the current five offices. Staff will be added in the central Office of Capital Access
to facilitate prioritization and coordination of resources and information across program offices.

The newly-established Office of Risk Management will set risk management goals and standards for functions across OCA
program areas. This expansion enables increased focus and attention to developing a risk governance structure while not
diminishing the ongoing oversight role of the office of Credit Risk Management.

The Office of Financial Program Operations whose functions are currently within the Office of Financial Assistance will become
a separate office. This office maintains its responsibility for loan processing, servicing and liquidation and its sub-structure that
supports accomplishing these functions.

Ultimately, the changes will help the SBA achieve its mission to provide important financing to creditworthy businesses unable to
obtain financing through the conventional lending market, while balancing appropriate program integrity and oversight.

Small businesses are an important component of the nation’s economy. A 2007 Office of Advocacy study shows that, in 2004,
the small business share of the GDP in the 16 non-farm industry sectors ranged from 18 percent of the information sector to 85

6 Annual Performance Report  FY 2008
Financial Assistance Strategic Goal One

percent of both the construction and other services. Over the 7-year period studied, the small business share of GDP held steady
at around 50 percent.1 In addition, start-up businesses help a state’s economy grow. Another study held that “the most fruitful
policy option available to state governments is to establish and maintain a fertile environment for new establishment formations.”2

Financial Assistance and Financial Program Operations
Financial assistance is provided through three major loan programs: the 7(a), 504 and Microloan programs. The guarantied loan
programs are largely provided through lending partners such as financial institutions, small business lending companies, credit
unions and certified development companies (CDC). The SBA also makes direct loans to microloan intermediaries to support
lending to micro-enterprises.

The process by which the SBA provides small businesses with opportunities for obtaining loans is supported by three major
activities — processing, servicing, and purchasing loans. Processing includes reviewing and approving loans; servicing activi-
ties include loan collections and modifications; and purchasing is characterized by activities related to purchasing delinquent
guarantied loans and coordinating the liquidation of collateral with lending partners. These activities are delivered through six
centers located throughout the country that approve, service, and purchase SBA loans.

The SBA has centralized all disaster loan servicing activities in two centers, each responsible for servicing disaster loans for one-
half of the country. Servicing activities include all loan collection and modification activities.

7(a) Performance - Delinquency & 12 Month Purchase Rate
As of June 2008
3.50%

3.00%

2.50%

2.00%

Percentage
1.50%

1.00%

0.50%

0.00%

200507 200508 200509 200510 200511 200512 200601 200602 200603 200604 200605 200606 200607 200608 200609 200610 200611 200612 200701 200702 200703 200704 200705 200706 200707 200708 200709 200710 200711 200712 200801 200802 200803 200804 200805 200806

Month
Delinquency Rate
12 Month Purchase Rate

1 The Small Business Share of GDP, 1998-2004 by Katherine Kobe (April 2007). SBA Office of Advocacy-funded research contract SBAHQ-05-M-0413. The
report may be found at www.sba.gov/advo/research/rs299tot.pdf.
2 Small Business and State Growth: An Economic Investigation by Donald Bruce et al (Feb. 2007). SBA Office of Advocacy-funded research contract SBAHQ-
05-M-0410. The report may be found at www.sba.gov/advo/research/rs292tot.pdf.

Annual Performance Report  FY 2008 7
Strategic Goal One Financial Assistance

504 Performance - Delinquency & 12 Month Purchase Rates
As of June 2008
2.50%

2.00%

1.50%

Percentage

1.00%

0.50%

0.00%

Month
Delinquency Rate
12 Month Purchase Rate

When normal loan collection activities fail to restore a successful loan repayment plan, loans are transferred from the service
centers
7(a) to a third
Loan center, a nationwide loan liquidation center, for intensive workout or liquidation. This includes oversight of
Program
collateral and the referral ofType
Performance Indicator
defaulted loans to the
of Measure
FY U.S.
2005Treasury cross-servicing
FY 2006 program
FY 2007 FYfor the Agency
2008 nationwide.
FY 2008 FY 2008
Actual Actual Actual Actual Goal Variance

Consistent
Loans with
Funded (#) the trends seen in the current economic
Output 88,845environment,
90,483the performance
92,553 of the SBA’s loan99,494
64,514 portfolio began-35%
a declin-
ing trend
SB beginning towards the end
Assisted (#) of FY 2007. As83,102
Output shown in the following charts,
80,303 84,666 the SBA59,019
has seen an91,016
increase in -35%
delinquency
Output N/A N/A 33,388 25,119 36,727
USM - Lns Funded (#)
and purchase rates in both the 7(a) and 504 programs, its two major credit programs. Between March 2007 and March-32%
2008,
USM - SB Assisted (#) Output N/A N/A 30,529 22,978 33,581 -32%
Jobs delinquency
the Created/Retained
rate increased by 62 percent in the 7(a) program and 35 percent in the 504 program, while purchase rates
Jobs Created/Retained (#) Outcome 662,133 790,170 864,947 649,271 864,947 -25%
increased by 22 percent in the Efficiency
7(a) program and 45 percent in the 504 program. The Agency believes this trend is not indicative
-96%
Cost per Loan Funded ($) $ 559 $ 461 $ 452 $ 865 $ 442
of weakness in its credit
Cost per SB Assisted ($) programs but reflect the
Efficiency $ broader
881 economic
$ conditions
903 $ as
843well$as challenges
1,468 $ in credit
911 and financial
-61% mar-
kets throughout the country. The declining trend has significant implications for both program fees as well as for loan operations.
With increasing numbers of loans requiring action on the part of the
Budgetary SBA, significant
Obligations Incurredpressure is put upon operations centers to
Budgetary Resources
mange the increase in loan related activity. FY 2005 FY 2006 FY 2007 FY 2008
Actual Actual Actual Actual

In the
Total following pages,
Administrative the 7(a)
Resources and 504 programs
($000) $ are presented
73,238 separately
$ 72,485 (individual$charts
$ 71,387 and narratives). These two pro-
86,626

grams are highly suited to a variety of small business owners and, in many cases, small businesses qualify for both types of loans.
Loan Making ($000) $ 49,672 $ 41,741 $ 41,822 $ 55,793
$ 16,362 $ 17,190
Loan Servicing ($000)
However, the SBA is interested primarily in ensuring that small businesses$ have5,674
access$ to capital
6,672
regardless what programs are
Loan Liquidation ($000) $ 7,204 $ 13,554 $ 15,146 $ 20,120
used. Therefore, the following chart shows the combinedN/A
numberN/A
of 7(a) and 504 loans funded.
Lender Oversight ($000) $ 8,745 $ 4,041

7(a) and 504 Loans
FY 2005 FY 2006 FY 2007 FY 2008
Loans Funded
Actual Actual Actual Actual
7(a) and 504 Loans Funded Combined (#) 97,819 100,203 102,958 73,144

8 Annual Performance Report  FY 2008
Financial Assistance Strategic Goal One

7(a) Loan Program
Through its 7(a) loan program, the SBA enhances the access to capital for small businesses. Improving access to capital often
improves the chances that a small business can create or maintain employment, increase revenue and survive. The 7(a) loan
program is the Agency’s primary business loan program to assist small businesses to obtain financing when they do not qualify
for conventional credit. It is particularly valuable to those underserved businesses that have traditionally had trouble accessing
the conventional credit market. Its flexibility enables small businesses to obtain financing of up to $2 million for various business
uses, with a loan maturity of up to 10 years for working capital and 25 years for real estate. The program had seen growth
over the past years, including FY 2007, despite the rising interest rate environment. However, that growth has not continued
into 2008 due to a number of factors, including the current economic environment, resulting in a lessening of demand by small
businesses for credit, reduced creditworthiness of small business borrowers, and some tightening by banks of credit in the
commercial lending area, reducing volume for commercial lending overall.

One initiative that the SBA intends to build upon to help reverse this trend is the expansion of the Small/Rural Lender Advantage
initiative which was launched at end of FY 2007. It provides smaller SBA lenders a more streamlined way to process standard
7(a) loans up to $350,000 as a way to encourage them to consider doing more SBA lending. If the initiative proves successful in
FY 2009, the SBA would like to make it available to all lenders in FY 2010 for smaller dollar loans that are made in underserved
markets, regardless of the size of the lender. This will encourage lenders to make more of these more costly loans in the commu-
nities that need them most. These smaller dollar loans have fallen off in volume, in part because they are the costliest to make.

7(a) Loan Program
FY 2005 FY 2006 FY 2007 FY 2008 FY 2008 FY 2008
Performance Indicator Type of Measure
Actual Actual Actual Actual Goal Variance

Loans Funded (#) Output 88,845 90,483 92,553 64,514 99,494 -35%
SB Assisted (#) Output 83,102 80,303 84,666 59,019 91,016 -35%
USM - Lns Funded (#) Output N/A N/A 33,388 25,119 36,727 -32%
USM - SB Assisted (#) Output N/A N/A 30,529 22,978 33,581 -32%
Jobs Created/Retained
Jobs Created/Retained (#) Outcome 662,133 790,170 864,947 649,271 864,947 -25%
Cost per Loan Funded ($) Efficiency $ 559 $ 461 $ 452 $ 865 $ 442 -96%
Cost per SB Assisted ($) Efficiency $ 881 $ 903 $ 843 $ 1,468 $ 911 -61%

Budgetary Obligations Incurred
Budgetary Resources FY 2005 FY 2006 FY 2007 FY 2008
Actual Actual Actual Actual
Total Administrative Resources ($000) $ 73,238 $ 72,485 $ 71,387 $ 86,626
Loan Making ($000) $ 49,672 $ 41,741 $ 41,822 $ 55,793
Loan Servicing ($000) $ 16,362 $ 17,190 $ 5,674 $ 6,672
Loan Liquidation ($000) $ 7,204 $ 13,554 $ 15,146 $ 20,120
Lender Oversight ($000) N/A N/A $ 8,745 $ 4,041

7(a) and 504 Loans
FY 2005 FY 2006 FY 2007 FY 2008
Loans Funded
Variance Explanation Actual Actual Actual Actual

All 7and
7(a) (a)504
loan program
Loans Combined (#)indicators have 97,819
performance
Funded 100,203
a FY 2008 negative 102,958
variance of 25% or73,144
greater - The reason is that there
has been a significant reduction in number of loans approved than was forecast due to the unforeseen downward trend in the
current economic environment resulting in a lessening of demand by small businesses for credit, reduced creditworthiness
of small business borrowers, tightening by banks of credit in the commercial lending area reducing volume for commercial
lending overall, as well as the failure of some lenders.

Annual Performance Report  FY 2008 9
Strategic Goal One Financial Assistance

FY 2008 Accomplishments
The SBA is actively reaching out to its lending partners through a Lender Relationship Management Initiative. The initiative both
reminds lenders that the Agency continues to be available to guarantee loans to small businesses and works with lenders to
provide good customer service to ensure that both the SBA’s and the lender’s operational needs are met. The Agency is taking
this proactive step to inform lenders of the improvements made in its products, technology and processes that make its lending
programs even more attractive during these challenging economic times. This initiative involves both headquarters and field
personnel throughout the Agency. The initiative has increased the knowledge in the lender community of product offerings and
operational requirements. The Agency is able to improve the effectiveness of its programs by maintaining closer contact with
lenders, their needs and their perceptions of SBA, as a part of this initiative.

The SBA successfully established the Small/Rural Lender Advantage initiative in FY 2008 to improve access to SBA products for
community lenders and increase their ability to assist underserved customers. S/RLA is not a new product, but rather a stream-
lined way for lenders with small SBA loan volume to gain experience with regular 7(a) lending. Features include a streamlined
application and eligibility questionnaire to significantly reduce paperwork requirements, making the SBA’s products and services
more attractive to lenders and borrowers.

In FY 2007, the SBA embarked upon an initiative to update its Standard Operating Procedures governing 7(a) and 504 loan
processing, servicing and liquidation and providing them it in a searchable format. This modernization initiative has proven highly
successful in FY 2008. The first effort, a major revision of SOP 50 10 that describes the rules and policies to become a 7(a)
lender or CDCs as well as 7(a) and 504 loan processing regulations, policies and procedures, has been completed and presents
the Agency’s policies in a much shorter and easier format to understand for its lending partners. This modernized edition is better
organized by type of loan program, and is web-based and designed with searchable PDF technology, which has become the
industry standard for large web-based documents.

The highly successful re-engineering of its National Guaranty Purchase Center (NGPC) in Herndon, Virginia allowed the SBA to
surpass the key goal of the “Brand Promise Restored” Campaign that lenders would receive a decision on their guaranty pur-
chase request within 45 calendar days of submission of a workable package. The center also eliminated a substantial backlog of
pre-purchase reviews by the end of May 2008, as pledged at the launch of the BPR Campaign. The time to purchase a typical
guaranty fell from more than 279 days at the beginning of September 2007 to less than 20 days by end of the campaign. In
addition, the acceptable quality of guaranty purchase packages from the SBA’s lending partners rose from less than 10 percent to
more than 75 percent. A documented, standardized operations manual and review process were part of the re-engineering effort.
As a result, the NGPC has doubled its productivity while improving the quality and effectiveness of the guaranty purchase review
process. Lenders are paid faster, and their confidence in the predictability of the SBA guaranty has been restored. The NGPC
continues to re-engineer other areas of its operation to gain further efficiencies and improve quality throughout the organization.

In addition to Herndon, center re-engineering and continuous improvement projects are under way in all of the SBA’s loan pro-
cessing, servicing and purchase/liquidation centers. By eliminating non-value added activities, the SBA is able to focus resources
on those areas representing the most risk to the Agency, improve customer service and make sound business decisions driven
by performance metrics that promote transparency and accountability. Work initiated in FY 2007, and continued in FY 2008 to
implement performance management metrics and scorecards in all centers, will continue to be refined in FY 2009 and FY 2010
as key management tools for enhancing performance, quality, and accountability.

Workload in SBA service and liquidation centers has increased due to the substantial growth in the total loan portfolio over the
last the last five years. As a result of this growth and the product life cycle of several newer loans products, in FY 2008 the
Agency began to experience an increase the number of loan defaults, liquidation, and charge off activity. Higher defaults are a
natural outgrowth of the large increase in new loan volume the SBA experienced since 2004, and are also likely exacerbated by
the current state of the economy. Although new loan volume is down in FY 2008, the growth in loan servicing and liquidation
transactions will persist for several years to come due to the growth experienced in the past several years.

10 Annual Performance Report  FY 2008
Financial Assistance Strategic Goal One

Staffing in SBA centers was carefully reviewed during FY 2008 in order to ensure that adequate staffing was available to address
the increases in volume. The SBA created balanced staffing models for all of its centers to model the impact of projected
changes in workload and the impact on the ability of the centers to maintain continuity in all of their operations. By ensuring
that there is adequate staffing to manage lending functions, the Agency is able to continue its efficient, timely, and quality level
of service while performing at a higher level in the secondary functions vital to the center and ensuring the on-going quality and
integrity of its loan programs. The models indicated that additional staffing is required to meet the incoming workload through
FY 2009, and the SBA took immediate steps to reallocate staffing resources to meet those demands.

504 Loan Program
The 504 loan program serves small businesses requiring “brick and mortar” financing. A typical 504 loan project includes a loan
secured from a private sector lender with a senior lien, and a SBA backed loan secured from a CDC in a second lien position.
Thanks to particular features of this program, such as a statutorily-mandated job creation component, a community development
goal, or a public policy goal achievement component, the program helps the SBA facilitate job creation and meet the Agency’s
mission to maintain and strengthen the nation’s economy by enabling the establishment and viability of small businesses. As
with the 7(a) loan program, the 504 loan program receives much support from SBA field offices which promote the program
and train lenders and small businesses on the program’s features. After several years of growth in 504 lending, the Agency is
experiencing a reduction in the number of 504 loans approved in FY 2008.

504 Loan Program
Type of FY 2005 FY 2006 FY 2007 FY 2008 FY 2008 FY 2008
Performance Indicator
Measure Actual Actual Actual Actual Goal Variance

SB Lns Funded (#) Output 8,974 9,720 10,405 8,630 11,185 -23%
(1)
SB Assisted (#) Output 7,629 7,569 9,708 8,084 10,436 -23%
USM - SB Lns Funded (#) Output N/A N/A 3,695 3,544 4,065 -13%
USM - SB Assisted (#) Output N/A N/A 3,449 3,332 3,794 -12%
Jobs Created/Retained (#) Outcome 135,022 135,479 140,778 121,723 152,040 -20%
Cost per SB Loans Funded ($) Efficiency $ 1,581 $ 1,651 $ 1,540 $ 2,103 $ 1,477 -42%
Cost per SB Assisted ($) Efficiency $ 2,859 $ 2,830 $ 2,566 $ 3,118 $ 2,465 -26%
(1)
FYs 2005 and 2006 totals for these indicators only include the data for existing businesses. Start-up business were not
included. Starting in FY 2007, all Small Businesses Assisted are included.

Budgetary Obligations Incurred
Budgetary Resources FY 2005 FY 2006 FY 2007 FY 2008
Actual Actual Actual Actual

Total Administrative Resources ($000) $ 21,812 $ 21,424 $ 24,915 $ 25,206
Loan Making ($000) $ 14,190 $ 16,046 $ 16,028 $ 18,152
Loan Servicing ($000) $ 5,452 $ 3,636 $ 2,590 $ 1,527
Loan Liquidation ($000) $ 2,170 $ 1,742 $ 1,687 $ 3,011
Lender Oversight ($000) N/A N/A $ 4,610 $ 2,516

Variance Explanation
All 504 loan program performance indicators have a FY 2008 negative variance of 12% or greater - The reason is that there
has been a significant reduction in number of loans approved than was forecast due to the unforeseen downward trend in the
current economic environment resulting in a lessening of demand by small businesses for credit, reduced creditworthiness
of small business borrowers, tightening by banks of credit in the commercial lending area reducing volume for commercial
lending overall, as well as the failure of some lenders.

Annual Performance Report  FY 2008 11
Strategic Goal One Financial Assistance

FY 2008 Accomplishments
Re-engineering projects in the Citrus Heights Loan Processing Center reduced the turnaround time on 504 loan modification
decisions from six days and over to three days or less on a consistent basis. In addition, policy improvements eliminated the
need for SBA approval of certain actions normally processed by the center, freeing up resources for more value-added activities.
Continuous process improvement of the activities that remain will allow the center to process more loans more efficiently.

The SBA introduced ETran, its direct electronic lender interface with the SBA that is widely used in the 7(a) program, into the 504
program to include 504 loan servicing actions. The Agency expects that ETran servicing will be particularly useful for the CDCs
as there are often numerous minor changes to a 504 loan record just prior to loan closing. The Agency expects that all CDCs will
have access to ETran before the end of FY 2008.

The Agency also re-engineered the 504 loan liquidation process in its two centralized locations, the Little Rock and Fresno servic-
ing centers. The re-engineering leverages the efficiencies gained from centralizing the activity into a more performance-based
environment where the emphasis is on timely, consistent and sound decisions to maximize recovery for the portfolio. The SBA’s
centers encourage participation with the CDCs in the liquidation process.

Microloan Program
Through the Microloan program, the SBA provides loans and technical assistance to intermediaries that provide very small
loans to start-up and newly-established small businesses such as childcare centers needing small scale financing and techni-
cal assistance for start-up or expansion. Under this program, the Agency makes direct loans to nonprofit community based
lenders (intermediaries) which in turn make loans to eligible borrowers in amounts up to $35,000. The microloans made by the
intermediaries are not guaranteed by the Agency.

Microloan
Type of FY 2005 FY 2006 FY 2007 FY 2008 FY 2008 FY 2008
Performance Indicator
Measure Actual Actual Actual Actual Goal Variance

Loans Funded (#) Output 2,436 2,395 2,427 2,682 2,500 7%
SB Assisted (#) Outcome 2,436 2,395 2,427 2,682 2,500 7%
Cost per SB Assisted ($) Efficiency $ 7,590 $ 6,626 $ 7,126 $ 6,860 $ 7,964 14%
(1)
Cost per Loan Funded ($) Efficiency $ 1,584 $ 1,269 $ 1,536 $ 932 $ 1,608 42%

(1)
Does not include the cost of Technical Assistance

Budgetary Obligations Incurred
Budgetary Resources FY 2005 FY 2006 FY 2007 FY 2008
Actual Actual Actual Actual
Total Resources ($000) $ 18,489 $ 15,870 $ 17,294 $ 18,399
Total Loan Making ($000) $ 3,859 $ 3,040 $ 3,727 $ 2,500
Loan Servicing ($000) $ 387 $ 20 $ 312 $ 469
Loan Liquidation ($000) $ 115 $ - $ 157 $ 207
Technical Assistance ($000) $ 14,128 $ 12,810 $ 13,098 $ 15,223

Variance Explanation
“Cost per SB Assisted ($)” has a variance of 13%. The reason is that the surge in microloan activities at the end of FY2008. As
a result, the final numbers exceeded the goal, therefore since the costs did not increase, the Cost per SB Assisted improved.

“Cost per Loan Funded ($) has a variance of 25%. The reason is that the surge in microloan activities at the end of FY2008. As
a result, the final numbers exceeded the goal, therefore, since the costs did not increase, the Cost per Loan Funded improved.

12 Annual Performance Report  FY 2008
Financial Assistance Strategic Goal One

FY 2008 Accomplishments
The Microloan program is experienced a slight surge in activity at the end of last fiscal year. As late as early September 2008,
the cumulative numbers had been running behind the prior year. Based on a surge in September, the final figures exceeded the
prior year and the goal for fiscal 2008. This situation is attributed to the difficulty of obtaining regular bank financing. Currently,
new microloan originations are running about 21% behind last year in terms of both number of loans and dollars loaned. This is
attributable to the relatively strong performance during October-December 2007, and the weak conditions which have prevailed
since October 2008. However, nearly 2,200 microloans are expected to be made to borrowers by year’s end.

The program continues to be a major resource for entrepreneurial development and financing, especially among underserved
communities. The SBA projects that the Microloan program will continue to effectively reach significant numbers of women
and minorities with about 48 percent of its microloans going to businesses 51 percent or more owned by women, and about 53
percent going to minority-owned firms.

The SBA is strengthening the management of the Microloan program by conducting a top to bottom review of the program to
identify opportunities for improvement. Additionally, the Microloan program is seeking to create greater transparency in the
accounting and portfolio management of the loans to the program’s intermediaries.

Credit Risk Management
The SBA works to maximize the efficiency of its lending programs by effectively managing program credit risk, monitoring lender
performance, and enforcing lending program requirements. The Agency conducts a continuous risk-based, off-site analysis of
lending partners through the Loan/Lender Monitoring System, a state-of-the-art portfolio monitoring system that incorporates
credit scoring metrics for portfolio management purposes. In February 2006, Thomas H. Stanton, Managing Information and
Risk: Promising Practices of Federal Financial Systems, sponsored by Deloitte and Touché USA, recognized this system as a
promising practice in federal credit management.

With the implementation of the Loan/Lender Monitoring System and redesign of the on-site review process, oversight functions
are focused on those 7(a) lenders, certified development companies, and microloan Intermediaries that pose the most risk to
the SBA. In addition to overseeing lenders, the L/LMS provides policy, portfolio and program analysis. The Office of Credit Risk
Management is divided into three teams: large lender oversight, small lender oversight, and program and policy analysis. The
differentiation of lender oversight by lender size reflects the different forms of oversight needed for large lenders versus small
lenders.

The Office of Credit Risk Management also assesses the quality of the overall SBA 7(a), 504, microloan, and disaster loan port-
folios. The program’s efforts not only help protect the interests of the taxpayer, but also help lending partners better understand
how best to fulfill the requirements of the lending programs in a way that is mutually beneficial to lenders and the SBA. SBA
lending partners are crucial to the overall success of these programs.

FY 2008 Accomplishments
Increased the Number of On-site Reviews — The implementation of the lender fee regulations enabled the Agency to
increase the number of on-site risk-based reviews from 80 performed in FY 2007 to over 200 performed in FY 2008.

Improved Portfolio Analytics — The Agency undertook several initiatives that will assist in improving portfolio analytics to
support lender oversight operations. A staffing analysis was performed to determine the appropriate effective level of staff
resources the Office of Credit Risk Management needed to perform its function. As a result of the staffing analysis, the of-
fice revised its processes to make individual financial analysts responsible for lenders in specific geographic regions. This
will improve the management of lender relationships within the Office of Credit Risk Management and allow the analysts
to become more familiar with regional issues that may affect individual lender performance.

Annual Performance Report  FY 2008 13
Strategic Goal One Financial Assistance

Developed a Communications Plan — In an effort to increase awareness of the risk management policies and procedures,
a communications plan was created. The purpose of this plan is to improve understanding of the Office of Credit Risk
Management’s mission, objectives and oversight processes to increase transparency.

Enhancements to the Lender Loan Monitoring System — A rescaling was completed to address the Inspector General’s
concern about the “subjectiveness” of the SBA’s former risk ratings scale.

Small Business Investment Company Program
The Small Business Investment Company program supports small businesses and the U.S. economy by providing private equity
capital and long-term loans to small businesses. SBICs are privately owned and managed investment funds, licensed and
regulated by the SBA. They use their own private capital plus funds borrowed with an SBA guaranty to make investments in
qualifying businesses.

By increasing availability of venture capital to small businesses, the SBA is able to assist entrepreneurs during a critical phase
of a company’s establishment. SBICs make investments in small businesses that have exceeded the personal resources of the
founder or the capacities of angels (private investors) but are often too small to merit the attention of the larger venture funds. In
addition, unlike typical angel investors, SBICs provide strategic guidance to small businesses.

Due to deficiencies in the structure of the participating securities program, and the downturn in the stock market in 2001, the
SBA estimates significant losses in that program. As a result, the participating securities program was not funded past FY 2004,
and FY 2008 was the last year of leverage availability for the program. In order to help minimize the losses on the participating
securities program, and to ensure the debentures program remains financially sound, the SBA has increased financial monitoring
in the Office of Operations and the Office of Licensing and Program Standards.

In addition, since FY 2004, the SBA has focused on improving collections in the Office of Liquidations. As a result, since FY 2005,
the recovery rate, as measured by total collections to average of beginning and ending leverage outstanding, has consistently
exceeded subsidy model estimated recovery rates. (See the third performance measure in the Office of Management and Budget
Program Assessment Review Tool at http://www.whitehouse.gov/omb/expectmore/detail/10009026.2007.html.)

SBIC
Type of FY 2005 FY 2006 FY 2007 FY 2008 FY 2008 FY 2008
Performance Indicator
Measure Actual Actual Actual Actual Goal Variance

SB Assisted (#) Outcome 2,298 2,121 2,057 1,905 1,770 8%
USM - SB Assisted (#) Outcome 781 729 721 632 555 14%
(1)
Cost per SB Assisted ($) Efficiency $ 6,908 $ 7,152 $ 7,656 $ 9,010 $ 10,558 15%
(1)
The formula for calculating the Cost Per Small Business Assisted was revised in FY 2006 to include only the cost of loan
making. Previously, this measure was calculated using Total Administrative Resources.

Budgetary Obligations Incurred
Budgetary Resources FY 2005 FY 2006 FY 2007 FY 2008
Actual Actual Actual Actual
Total Administrative Resources ($000) $ 15,874 $ 15,169 $ 15,749 $ 17,165
Loan Making ($000) N/A $ 3,648 $ 4,382 $ 2,489
Loan Servicing ($000) N/A $ 8,385 $ 8,459 $ 9,529
Loan Liquidation ($000) N/A $ 3,136 $ 2,908 $ 5,147

Variance Explanation
“USM - SB Assisted (#)” has a variance of 14%. The reason that we are over is that the goal was an estimate and reflected the
anticipated impact of the termination of the participating securities program. However, the impact was less than expected. As

14 Annual Performance Report  FY 2008
Financial Assistance Strategic Goal One

the participating securities program was the largest component on the SBIC program and this was our first experience with a
termination of this magnitude, we had little historical experience to guide our estimates.

“Cost per SB Assisted ($)” has a variance of 15%. The reason for this variance is that the goal for small business assisted was an
estimate and reflected the anticipated impact of the termination of the participating securities program. However, the impact was
less than expected. As the participating securities program was the largest component on the SBIC program and this was our
first experience with a termination of this magnitude, we had little historical experience to guide our estimates. As a result of the
underestimated goal for small business assisted in FY08, the actual Cost per SB Assisted in FY08 was under its FY08 goal.

FY 2008 Accomplishments
FY 2008 marked the 50th anniversary of the SBIC program. As a small business progresses through the stages of its life cycle,
the type of capital required may include venture or mezzanine financing. The SBA meets these types of financing needs through
the SBIC program, principally in the $500,000 to $5 million range. In FY 2008, the Investment Division assisted approximately
2,000 small businesses with over $2.2 billion of capital.

In FY 2008, SBA’s Investment Division implemented the Office of Liquidation Standard Operating Procedures, revised in FY 2007
to address the specific needs of the participating securities program and help maximize recoveries. The Agency will continue
to monitor these activities to ensure that recoveries continue to occur in an efficient and effective manner. As a result of these
efforts, the SBA expects to exceed its recovery rate goal as identified in the Program Assessment Review Tool in FY 2008.

In addition to its liquidation efforts, the SBA has focused on operational changes designed to ensure appropriate credit risk man-
agement practices and make the program more attractive to fund managers and investors. As part of this effort, the Agency has
embarked on an enhancement of its data management functions via an extranet website to collect critical SBIC financial, investor,
and capital information. The Investment Division awarded the contract in FY 2008 and expects to implement it in FY 2009.

New Markets Venture Capital Program
The New Markets Venture Capital program combines equity investing and hands-on technical assistance to foster new business
growth and job creation in low-income areas. Businesses in these areas have traditionally lacked access to equity capital, and
the program is helping to address this need. Through its unique combination of equity capital and no-cost technical assistance,
New Markets Venture Capital companies offer entrepreneurs in low-income areas an enhanced opportunity to succeed.

Selected by the SBA through a competitive process, eligible companies are privately owned and managed for-profit entities with
a unique perspective regarding the geographic areas in which they invest. They use their own private capital plus debentures
obtained at favorable rates with SBA guaranties for investing. They also provide technical assistance to the enterprises in which
they invest or intend to invest, using private resources matched by the SBA in the form of Operational Assistance grants.

The New Markets Venture Capital program is a small pilot program. The SBA will assess the future potential of this program as
investment results become clearer.

International Trade Program
According to U.S. Department of Commerce data 97 percent of U.S. exporters are small businesses. The SBA estimates that in
FY 2010 these businesses will account for over $600 billion in exports, equivalent to 29 percent of all U.S. anticipated exports.
The SBA’s Office of International Trade takes two approaches to enhancing the participation of small businesses in international
trade. The first is a field-based export promotion and finance network of senior international trade specialists working in U.S.
Export Assistance Centers. The second is policy-oriented collaboration with the government’s international affairs agencies to
advance U.S. international commercial, economic and diplomatic objectives.

Annual Performance Report  FY 2008 15
Strategic Goal One Financial Assistance

Lenders are often hesitant to provide loans for export transactions because of the inherent degree of uncertainty and complicated
characteristics of international trade. The SBA addresses these challenges by providing small businesses and lenders with train-
ing and technical assistance in order to facilitate access to capital. The Agency’s network of export specialists at 18 U.S. Export
Assistance Centers works closely with businesses and banks to deliver trade promotion and finance services.

The SBA also helps represent and advance U.S. interests with international organizations concerned with small business develop-
ment and supports trade capacity building efforts as part of U.S. international trade agreements. The SBA’s Office of International
Trade also engages small business agencies in other countries to facilitate opportunities for small business linkages and exports.

International Trade
Type of FY 2005 FY 2006 FY 2007 FY 2008 FY 2008 FY 2008
Performance Indicator
Measure Actual Actual Actual Actual Goal Variance

Loans Funded (#) Output 2,638 3,082 2,767 3,090 2,975 4%
SB Assisted (#) Outcome 2,484 2,851 2,513 2,908 2,702 8%
USM Assisted (#) Outcome N/A N/A 1,007 1,248 1,108 13%
Cost per Loan Funded ($) Efficiency $ 2,047 $ 1,396 $ 1,900 $ 1,350 $ 2,013 33%
Cost per SB Assisted ($) Efficiency $ 2,174 $ 1,510 $ 2,092 $ 1,434 $ 2,216 35%

Budgetary Obligations Incurred
Budgetary Resources FY 2005 FY 2006 FY 2007 FY 2008
Actual Actual Actual Actual
Total Administrative Resources ($000) $ 5,400 $ 4,304 $ 5,258 $ 4,170

Variance Explanation
“USM Assisted (#)” has a variance of 13%. The reason that we are over is that the overall FY2008 actual international trade
loan volume was up and the portion going to USM was up accordingly.

“Cost per Loan Funded ($)” has a variance of 33%. The reason that we are over is that the actual international trade loan
volume was up in FY2008.

“Cost per SB Assisted ($)” has a variance of 35%. The reason that we are over is that the actual international trade loan volume
was up in FY2008.

All of the above variances are relative to the increased loan volume that has significant impact on Underserved Markets and
Small Businesses. Increased leveraging of loan-making by lenders through electronic processing has reduced the costs to
SBA for underwriting and processing of such trade loans.

FY 2008 Accomplishments
In FY 2008 the SBA, through its Office of International Trade, approved over 3,000 loan guaranties to support small business
exporters; trained over 3,200 lenders; counseled over 2,800 lenders; trained over 6,300 small businesses; and counseled over
4,500 small businesses.

The Agency took important steps to improve its international finance products, including the following:
Issued new Export Working Capital Program SOP and Lender’s Guide;
yy
Initiated a new policy designed to provide preferred lender status to the Export Working Capital program;
yy
Issued an updated EWCP loan authorization wizard;
yy
Conducted an international trade finance lender roundtable; and
yy
Created a marketing task force to ensure that products and services are available to both the lender and small business
yy
community, including a strong effort to enlist more participating lenders to provide working capital through the EWCP and
Export Express loan programs.

16 Annual Performance Report  FY 2008
Financial Assistance Strategic Goal One

The SBA coordinated the first Small Business International Trade Symposium in South Florida. This celebration of small business
in international trade drew more than 400 people for a town hall meeting with the former Administrator Preston and Commerce
Secretary Gutierrez, a small business exporter success story panel, a discussion on “What Free Trade Agreements Mean to Small
Business,” and a panel of local resource providers. Feedback was extremely positive. A second Small Business International
Trade Symposium is planned for November 2008 in Washington, D.C.

The SBA participated in the Americas Competitiveness Forum. The presentation highlighted best practices to prepare micro,
small, and medium-sized businesses to effectively engage in international trade. The ACF was hosted by the Commerce
Department and the City of Atlanta.

During the September 2008 ASBDC Annual Conference, the Office of International Trade and the Trade Promotion Coordinating
Committee conducted a six-hour training session for international trade technical assistance personnel (counselors and train-
ers) from the SBDC network. Those counselors/trainers who successfully completed this training were awarded TPCC Training
Certification.

Surety Bond Guarantee Program
Under the Surety Bond Guarantee program, the SBA guarantees bid, payment, and performance bonds on contracts up to
$2 million for small and emerging contractors who cannot obtain surety bonds through regular commercial channels. The SBA
guarantee gives sureties an incentive to provide bonding for eligible contractors and thereby increases a contractor’s access
to contracting opportunities. Under the surety guarantee, an agreement between a surety and SBA, SBA assumes between
70 percent and 90 percent of the loss in the event of contractor default.

Surety Bond Guaranties
Type of FY 2005 FY 2006 FY 2007 FY 2008 FY 2008 FY 2008
Performance Indicator
Measure Actual Actual Actual Actual Goal Variance

Final SBG (#) Output 1,680 1,706 1,617 1,576 1,800 -12%
Total Bonds (#) Output 5,678 5,214 5,809 6,055 6,000 1%
USM- Final SBG (#) Output N/A N/A N/A 668 600 11%
Cost per Final SBG ($) Efficiency $ 2,906 $ 4,107 $ 4,283 $ 2,812 $ 4,196 33%
Cost per Total Bid Bonds ($) Efficiency $ 860 $ 1,344 $ 1,192 $ 732 $ 1,259 42%

Budgetary Obligations Incurred
Budgetary Resources FY 2005 FY 2006 FY 2007 FY 2008
Actual Actual Actual Actual
Total Administrative Resources ($000)
(1)
$ 4,882 $ 7,006 $ 6,926 $ 4,431
(1)
Administrative resources do not include funds appropriated for the contingent liability in the revolving fund.

Variance Explanation
“Final SBG (#)” has a variance of -12%. The reason is that the FY2008 goal used an estimated percentage to calculate the find
bonds and FY08 goal turned out to be overestimated. Final bond targets were based on a percent of total bonds. The percent
(30%) was calculated using an average of the previous three years of total bonds; however, in FY 2008 actual final bonds were
26% of total bonds or 12% below the target. Due the nature of the estimation process, SBA does not feel any adjustments are
required to the program or to future targets at this time.”

“USM – Final SBG (#)” has a variance of 11%. The reason is that the FY2008 goal used an estimated percentage to calculate
the USM portion of the Find Bonds and FY08 goal turned out to be underestimated.

“Cost per Final SBG ($)” has a variance of 33%. The reason is that FY08 actual full costs were 41% below the original estimate
resulting in the positive variance noted here.

Annual Performance Report  FY 2008 17
Strategic Goal One Financial Assistance

“Cost per Total Bid Bonds ($)” has a variance of 42%. The reason is that FY08 actual full costs were 41% below the original
estimate resulting in the positive variance noted here.

FY 2008 Accomplishments
In FY2008, SBA guaranteed 6,055 bonds. As a result, $538 million in contract revenue has been generated for small businesses,
and approximately 5,075 jobs have been created. While it is difficult to predict the spread between bid and final bonds, the key is
that total bond activity is experiencing an upward trend.

In FY 08, several program initiatives designed to strengthen the Agency’s partnership with the surety industry were completed. A
proposed rule was drafted to address needed program changes that will enhance productivity and efficiency. We also conducted
an independent study of the program to: (1) identify the approximate size of the small business market for the program, (2) evalu-
ate marketplace factors that influence surety and small business participation in the program, and (3) identify actions required to
enhance program efficiency and effectiveness. The study concluded that the small business market is significantly larger than
is currently being served, and major program adjustments are needed to reduce the paperwork burden on small businesses and
surety companies that discourages their participation in the program. Additionally, the study confirmed that broad marketplace
factors, such as upturns and downturns in the economy at large affect the demand for surety bond guarantees, but that the
program serves a useful purpose in smoothing out cyclical changes. Overall, the study recommended that the program office
identify and adopt best practices from the reinsurance industry as a way to overcome complaints that the program is too paper
intensive. Finally, the program office published a new Field Office Operating Guide to standardize best practices within our field
offices, and new metrics were adopted in FY 08 to promote improved customer service.

18 Annual Performance Report  FY 2008
Management and Technical Assistance Strategic Goal One

Management and Technical Assistance
Each year over 1.4 million small businesses and entrepreneurs utilize the expertise of the SBA and its resource partners — the
Small Business Development Centers, the Women’s Business Centers and SCORE — to establish or grow a small business. This
assistance includes support for business and strategic plan development, planning and conducting market studies, implementing
new technologies, accessing capital, and many other undertakings vital to the success of a typical small business throughout its
lifecycle.

In the following pages, the Office of Entrepreneurial Development programs — Small Business Development Centers, Women’s
Business Centers, SCORE, Drug Free Workplace, and services - the Small Business Training Network — plus other SBA programs
that provide management and technical assistance — the 7(j) program, Native American Affairs, Faith-Based and Community
Initiatives, and Veterans Business Development — are discussed.

Small Business Development Center Program
As the SBA’s largest non-financing program, Small Business Development Centers meet the counseling and training needs of
more than 600,000 business clients annually. SBDCs deliver management and technical assistance to small businesses using
an extensive business education network comprised of 63 lead centers that manage more than 950 service center delivery points
throughout the U.S. and the territories, including the District of Columbia, Guam, Puerto Rico, American Samoa and the U.S. Virgin
Islands. SBDCs focus on providing marketing, financial and business planning services through counseling and training. Special
emphasis areas include manufacturing, procurement, technology transfer, disaster recovery, technology, market research, and
international trade.

Small Business Development Centers exist from a unique mix of SBA funding combined with state and private sector resources.
By providing grant funding across the country, the SBA fosters economic growth of small businesses. These small businesses in
turn foster local and regional economic development through business revenues generated and job creation and retention.

SBDC
Type of FY 2005 FY 2006 FY 2007 FY 2008 FY 2008 FY 2008
Performance Indicator
Measure Actual Actual Actual Actual Goal Variance

Multi-Year Extended Engagement
Output N/A N/A 44,242 50,807 45,026 13%
Clients (#)
(1)
SB Created (#) Outcome N/A N/A 7,331 12,730 6,000 112%
Capital Infusion ($ Billion) Outcome N/A N/A 3.4 3.6 2.5 44%
Cost per Multi-Year Extended
Efficiency N/A N/A $ 2,288 $ 2,190 $ 2,453 11%
Engagement Clients (#)
(2)
Cost per SB Created ($) Efficiency N/A N/A $ 13,810 $ 4,983 $ 8,404 41%

Budgetary Obligations Incurred
Budgetary Resources FY 2005 FY 2006 FY 2007 FY 2008
Actual Actual Actual Actual
Total Administrative Resources ($000) $ 105,593 $ 103,007 $ 101,241 $ 111,288
(1)
The original projection for Small Businesses Created was implemented before it was measured using EDMIS. The FY
2008 and FY 2009 goals were reduced to reflect a more realistic goal based on the data analysis from EDMIS
(2)
Prior to FY 2008, the SBDC program used full program budget dollars to calculate this metric. To better represent the
program results, only program funding attributable to assisting nascent entrepreneurs is used in the calculation. This
percentage is determined annually by the percentage of the client base that consists of nascent entrepreneurs. In FY 2008,
the percentage of nascent entrepreneurs was 57%, which has also been applied in developing the FY 2009 & FY 2010
targets.

Annual Performance Report  FY 2008 19
Strategic Goal One Management and Technical Assistance

Variance Explanation
“Multi-Year Extended Engagement Clients (#)” has a variance of 13%. The program received an unexpected $10M increase
in funding for FY 08 which we feel increased capability resulting in serving more clients than the original target goals promul-
gated under the lesser funding amount.

“SB Created (#)” has a variance of 112%. The reason is greatly improved data collection and reporting plus the additional $10M
increase in funding which was not anticipated. Expanded training to grantees on reporting methodology for SBDC counselors
has greatly improved the quality of data collection in this category. In addition, improvements were made in the analytical
methodology of computing this category in 08. Goaling and reporting for ’09 and ’10 should be much more closely aligned
than in past years because of these enhancements.

“Capital Infusion ($ Billion)” has a variance of 44%. Given the state of the current economy, it is surprising that the program
elicited these results for this credit category. When the goaling was developed for 08, SBA was experiencing a dramatic
downturn in its new loan portfolio and 08 goals were adjusted accordingly. However, it appears that the program was able to
continue to get credit to its clients despite some of the economic factors at play. It is anticipated, however, that 09 results will
show that SBDC clients have been more drastically affected by the credit crunch.

“Cost per Multi-Year Extended Engagement Clients (#)” has a variance of 11%. The performance goal was set at an approxi-
mate target level, and the deviation from that level is slight. There was no effect on overall program or activity performance.

“Cost per SB Created ($)” has a variance of 41%. The variance indicates greater efficiency based on the increased funding
amount resulting in an increase in the number of businesses created at a lesser proportion than anticipated.

FY 2008 Accomplishments
FY 2008 saw some major improvements relative to financial and programmatic oversight of the SBDC network. Statutorily, the
SBA is required to perform financial and programmatic reviews on a biennial basis. Thus, given 63 funding recipient organiza-
tions, 31 or 32 networks receive a financial and/or programmatic review annually.

In FY 2007-FY 2008, the Agency completed a re-engineering project that revised the methodology and frequency of financial ex-
aminations while still meeting the legislative mandate. The revised financial review process, frequency and extent of examination,
is based on a risk model developed in consultation with the SBDC community, the Association of Small Business Development
Centers, and the SBA. An SBDC’s score on the model determines its level of risk and the appropriate extent of oversight neces-
sary, ranging from limited documentation submissions to complete, onsite examinations. The new process is intended to reward
those networks that demonstrate good financial management of their funding and encourage others to achieve a higher level of
financial performance.

The Office of Small Business Development Centers re-engineered the management of the SBDCs with an increased focus on
performance management. SBA field functions were addressed to make the field’s role commensurate with its capabilities, and
OSBDC program managers assumed a more proactive role in looking at individual network performance and working with SBDC
state/region directors regarding that performance. Site reviews are now based more on need, service delivery, and level of
performance instead of traditional compliance factors.

A business counselor certification process began in FY 2008. Scheduled to be completed in FY 2011, this certification is being
developed to provide quality assurance across the national network of SBDCs as to the level of counselor capability and services
being delivered to clients. This project is being developed and implemented in collaboration with the Association of Small
Business Development Centers. Some individual SBDC networks have taken an active role as well.

20 Annual Performance Report  FY 2008
Management and Technical Assistance Strategic Goal One

Drug Free Workplace Program
The Drug Free Workplace program requires the SBA to award grants to eligible intermediaries to provide financial and technical
assistance to small businesses seeking to establish Drug Free Workplace programs. The grantees are also expected to educate
working parents on how to keep their children drug free. As part of the program, the SBA also awards contracts to Small
Business Development Centers to provide information and assistance to small businesses with respect to establishing Drug Free
Workplace programs.

DFWP grantees are expected to educate 1,450 small businesses on maintaining their programs. It is anticipated that 165
programs will be implemented in FY 2009.

Drug Free Work Place
Type of FY 2005 FY 2006 FY 2007 FY 2008 FY 2008 FY 2008
Performance Indicator
Measure Actual Actual Actual Actual Goal Variance

SB Educated (#) Output 5,150 531 2,731 2,280 1,450 57%
Programs Implemented (#) Output 1,029 62 453 363 165 120%
Cost per SB Educated ($) Efficiency $ 201 $ 2,194 $ 311 $ 476 $ 1,023 53%

Budgetary Obligations Incurred
Budgetary Resources FY 2005 FY 2006 FY 2007 FY 2008
Actual Actual Actual Actual
Total Administrative Resources ($000) $ 1,033 $ 1,165 $ 849 $ 1,085

Variance Explanation
“SB Educated (#)” has a variance of 57%. There is no way to predict how many small businesses will request education on a
DFWP. We provide a “best estimate” based on previous years’ performance information, However that has not proven to be a
good predictor of future performance.

“Programs Implemented (#)” has a variance of 120%. There is no way to predict how many small businesses will implement a
DFWP. We provide a “best estimate” based on previous years’ performance information, However that has not proven to be a
good predictor of future performance.

“Cost per SB Educated ($)” has a variance of 53%. This variance is tied specifically to the variance in the number of small
businesses educated.

FY 2008 Accomplishments
During fiscal year 2008, the DFWP grantees have:
Financially assisted 1,682 small businesses;
yy
Technically assisted 1,703 small businesses;
yy
Small businesses have implemented 155 complete drug free workplace programs;
yy
Small businesses have implemented 208 partial drug free workplace programs; and
yy
Educated 2,280 small businesses.
yy

Annual Performance Report  FY 2008 21
Strategic Goal One Management and Technical Assistance

Women’s Business Ownership
The Office of Women’s Business Ownership manages the Women’s Business Center program whose mission is to provide quality
counseling and training services to women entrepreneurs, especially those who are socially and economically disadvantaged.
The program does this by reaching out to these targeted populations through 113 WBCs located throughout the U.S. and its
territories. The WBCs provide training and counseling on such topics as writing a business plan, cash flow management, and
other basic business functions.

The WBC program provides initial grants for a five-year period; and has historically given those who successfully complete this
initial funding phase, an opportunity to receive sustainability grants for an additional five years. However, in 2007, Congress
passed a bill providing for permanent 3-year renewable funding for all graduating WBCs, whether from the initial phase or from
the sustainability phase. In three years, the sustainability grants will be phased out, leaving the initial 5-year grants and the
continuous 3-year renewable option.

WBC grants are continued or new grants are awarded depending on the availability of funds and based on recipients’ ability
to demonstrate the following: milestone achievement, sound grant management practices (both financial and programmatic),
sound financial systems, ability to meet match requirements, demonstrate successful market penetration in their target market,
alignment with their host organization’s mission, and be in compliance with their cooperative agreement as outlined by the Office
of Women’s Business Ownership.
WBC
Type of FY 2005 FY 2006 FY 2007 FY 2008 FY 2008 FY 2008
Performance Indicator
Measure Actual Actual Actual Actual Goal Variance

SB Assisted (#) Output 144,316 129,373 146,828 159,879 134,733 19%
(1)
Jobs Created/ Retained (#) Outcome 9,442 6,879 632 650 632 3%
(1)
SB Created (#) Outcome N/A N/A 618 727 618 18%
Cost per SB Assisted ($) Efficiency $ 163 $ 170 $ 139 $ 143 $ 162 12%
Cost per Job Created/Retained ($) Efficiency $ 2,495 $ 3,203 $ 32,329 $ 35,051 $ 38,926 10%

Budgetary Obligations Incurred
Budgetary Resources FY 2005 FY 2006 FY 2007 FY 2008
Actual Actual Actual Actual
Total Administrative Resources ($000) $ 23,555 $ 22,033 $ 20,432 $ 22,783

Prior to FY2007, the SBA collected the number of Jobs Created/Retained from the WBCs through annual reports for which
(1)

SBA had no way to verify the data. SBA now collects the information through EDMIS which is tied to the Form 641
Counseling records for each counseling session. While this number does not include impact data from training, it is an
accurate reflection of the impact from counseling.

Variance Explanation
For all Variances except “Jobs Created/Retained”- The current Entrepreneurial Development Management Information System
was first used beginning in FY2006. At the time of establishing FY2008 goals, FY2007 data was still being entered into EDMIS
and therefore the goaling process was the best estimate based on 2006 data. FY2009 goals should be more accurate targets
as the system has more data that can be used for estimates.

“Jobs Created/Retained ($)” has a variance of 3%. The performance goal was set at an approximate target level, and the
deviation from that level is slight. There was no effect on overall program or activity performance.

FY 2008 Accomplishments
In FY 2008, the Office of Women’s Business Ownership went through a complete re-engineering process. The effort included
the conversion to a payment system housed at the Department of Health and Human Services. This system allowed grantees,

22 Annual Performance Report  FY 2008
Management and Technical Assistance Strategic Goal One

through an automated electronic system, to access their funds within 24 hours. This was a huge undertaking and required an
enormous effort to migrate each grantee into the new system.

Staffing within the Office of Women’s Business Ownership was realigned to better serve WBC grantees. Program managers
were assigned SBA regions for which they have daily responsibility for oversight and management of the WBCs within their
regions, working with the respective district offices. In addition, a financial team was assembled with oversight responsibility of
the grants function. At the very end of FY 2008, a grants management specialist position was filled to oversee the entire grants
function. These accomplishments were acknowledged by the SBA by presenting OWBO with one of the Agency’s first Continuous
Improvement Awards.

Finally, OWBO has begun a serious examination of all WBCs within the portfolio to assess risk and to take corrective action,
including termination, of any WBCs that are in violation of their cooperative agreement by non-performance, lack of matching
funds, or have demonstrated fraud, waste or abuse of federal funds through on-site financial examinations.

Entrepreneurship Education
SCORE
The Office of Entrepreneurship Education manages the national SCORE program and is the education, information and outreach
office for the Office of Entrepreneurial Development.

SCORE mobilizes the experience and expertise of 11,000 business professionals who volunteer to assist entrepreneurs and
emerging small businesses participating in America’s ownership society. Distinct in the federal government as the only volunteer
business advisor and mentoring program, SCORE adapts its structure and services to meet the needs of small businesses in
changing economic conditions.

SCORE
Type of FY 2005 FY 2006 FY 2007 FY 2008 FY 2008 FY 2008
Performance Indicator
Measure Actual Actual Actual Actual Goal Variance

SB Assisted (#) Output 403,724 308,710 336,411 360,559 325,389 11%
(1)
SB Created (#) Outcome N/A N/A 1,082 943 1,082 -13%
Cost per SB Assisted ($) Efficiency $ 46 $ 55 $ 29 $ 29 $ 31 5%

Budgetary Obligations Incurred
Budgetary Resources FY 2005 FY 2006 FY 2007 FY 2008
Actual Actual Actual Actual
Total Administrative Resources ($000) $ 18,507 $ 16,932 $ 9,799 $ 10,609

(1)
In the FY 2009 CBJ and the FY 2010 OMB Submission, the target (for the FY 2007 Actual and the FY 2008 Goal) was
incorrectly identified as 19,732. That number did not represent "Small Businesses Created". We have since corrected the
FY 2007 Actual and the FY 2008 Goal to reflect the correct actual and goal of 1,082. We will receive the FY 2008 actual
January 15, 2009.

Variance Explanation
For all Variances except “Cost per SB Assisted”- The current Entrepreneurial Development Management Information System
was first used beginning in FY2006. At the time of establishing FY2008 goals, FY2007 data was still being entered into EDMIS
and therefore the goaling process was the best estimate based on 2006 data. FY2009 goals should be more accurate targets
as the system has more data that can be used for estimates.

“Cost per SB Assisted” has a variance of 5%. The performance goal was set at an approximate target level, and the deviation
from that level is slight. There was no effect on overall program or activity performance.

Annual Performance Report  FY 2008 23
Strategic Goal One Management and Technical Assistance

FY 2008 Accomplishments
In FY 2008, SCORE launched a unique website for the age 50-plus entrepreneur market on www.score.org. SCORE also
revamped and enhanced the young entrepreneur online community website. The new online training workshops have been very
successful. Two new entrepreneurship series were launched in locations around the country: Business Disaster Preparedness
in partnership with Hewlett Packard, and Speed Mentoring in partnership with American Express OPEN. SCORE’s online cyber
counseling provides access to more than 1,500 business advisors with 800 business industry and functionality skill sets.
SCORE’s website in FY 2008 featured a business center, two newsletters on business trends and assistance, and has unique
entrepreneurial communities for minorities, women, manufacturing and rural businesses.

The Office of Entrepreneurship Education led the Agency’s Emerging 200 Underserved Markets initiative. The Emerging 200
initiative identified 200 inner-city businesses in 10 host cities across the country that demonstrated a high potential for growth
and provided them the network, resources and motivation required to build a sustainable business of size and scale within a
designated inner-city geographic location.

The SBA Emerging 200 initiative enabled the participating small businesses to engage in an intensive curriculum focused on
developing a winning expansion strategy for their business, including options for capital access and contracting. Participants also
had the opportunity to work with experienced mentors, attend workshops and develop connections with their peers, city leaders,
and financial community.

The following cities were selected to participate in the SBA Emerging 200 initiative for 2008: Boston, Baltimore, Philadelphia,
Atlanta, Memphis, Chicago, New Orleans, Albuquerque, Milwaukee and Des Moines.

The Office of Entrepreneurship Education also oversees the Office of Entrepreneurial Development’s Economic Impact Study.
The sixth year of this longitudinal impact study was conducted to assess the continued impact of resource partner services. It
examines three key indicators of success: (1) client value added measures which measure the clients’ perceptions of the services
provided; (2) managerial and marketing operations/implementation measuring the extent clients implemented changes to their
managerial and marketing operations; and (3) economic impact measuring the change in clients’ business revenue and employ-
ees based on the face-to-face counseling received and new business starts.

The Small Business Training Network
Consistent with its mission to inform and educate, the Office of Entrepreneurship Education provides a virtual campus for small
businesses - The Small Business Training Network (SBTN). SBTN currently offers more than 26 free online courses. Greater than
10,400 clients each week register for SBTN courses. In FY 2008, this resulted in more than 500,000 small business clients en-
rolling and benefiting from SBTN online training. In addition, Small Business Training Network online courses, which are available
to all resource partners and SBA District Offices, significantly improve how, when and where SBA customers are served. Targeted
courses provide the ability to create and deliver meaningful training plans that support small businesses in underserved markets
and address very specific client needs, such as helping entrepreneurs navigate and survive these tough economic times.

24 Annual Performance Report  FY 2008
Management and Technical Assistance Strategic Goal One

FY 2008 Accomplishments
OED exceeded its internal performance goals for the number of clients registering for SBTN courses by 112 percent. Twelve new
courses were added to the SBTN catalog of offerings, and multiple other offerings were improved. In addition, assessment tools
were created and launched to evaluate client needs and lead them to targeted online training. Approximately 350,000 clients
have completed such assessment tools.

7(j) Program
The SBA is authorized, under Section 7(j) of the Small Business Act, to enter into grants, cooperative agreements or contracts
with public or private organizations that can deliver management or technical assistance to individuals and enterprises eligible
for assistance under the Act. This assistance is delivered through the 7(j) Management and Technical Assistance program to 8(a)
certified firms, small disadvantaged businesses, businesses operating in areas of high unemployment, or low-income or firms
owned by low-income individuals.

Under the 7(j) program grants, cooperative agreements or contracts are awarded to qualified service providers who have the
capability to provide business development assistance to eligible clients. Program funding is not available to finance a business,
purchase a business or use as expansion capital for an existing business.

Assistance under the 7(j) program may be given for projects that respond to needs outlined in a solicitation announcement or for
an unsolicited proposal that could provide valuable business development assistance for 8(a) and other socially and economically
disadvantaged small businesses. Assistance may include accounting and marketing services, feasibility studies, marketing/
presentation analyses and advertising expertise, loan packaging, proposal/bid preparation, industry specific technical assistance,
and other specialized management, training and technical services. Additionally, an executive education program is offered for
owners and senior officers of 8(a) firms to take part in intensive week-long training sessions.
7(j)
Type of FY 2005 FY 2006 FY 2007 FY 2008 FY 2008 FY 2008
Performance Indicator
Measure Actual Actual Actual Actual Goal Variance
SB Assisted (#) Output 2,107 2,317 2,486 2,021 2,244 -10%
Cost per SB Assisted ($) Efficiency $ 1,479 $ 988 $ 1,344 $ 2,365 $ 2,081 -14%

Budgetary Obligations Incurred
Budgetary Resources FY 2005 FY 2006 FY 2007 FY 2008
Actual Actual Actual Acual
Total Administrative Resources ($000) $ 3,116 $ 2,289 $ 3,340 $ 4,780

Variance Explanation
“SB Assisted (#)” has a variance of -10%. The performance goal was set at an approximate target level, and the deviation from
that level is slight. There was no effect on overall program or activity performance.

“Cost per SB Assisted ($)” has a variance of -14%. The reason is the cost of the program increased while the actual SB assets
(#) went down.

FY 2008 Accomplishments
During FY 2008, the SBA continued to provide technical assistance to 8(a) firms and other 7(j) eligible firms utilizing 7(j) funding.
Also, as part of the individual business development plan, the 8(a) Business Development Assessment Tool provided an assess-
ment of program participants’ management and technical assistance needs and recommended training. Using 7(j) funds, the
SBA provided management and technical assistance training including Cost Pricing Levels I and II, Financial Management for
Small Businesses, Managing Success in the 8(a) Business Development Program as well as providing all the 8(a) firms in the
developmental stage with a publications highlighting the most successful graduated 8(a) firms and the insights from the former
8(a) chief executive officers.

Annual Performance Report  FY 2008 25
Strategic Goal One Management and Technical Assistance

Veterans Business Development
Through its Office of Veterans Business Development (OVBD), the SBA complies with it’s responsibility, pursuant to statute, to
provide “special” and “full consideration” to veterans and enhance successful small business ownership of veterans by conduct-
ing comprehensive outreach, through program and policy development and implementation, ombudsman support, coordinated
Agency initiatives and direct assistance to veterans, service-disabled veterans, Reserve and National Guard members, and
discharging active duty personnel. This is accomplished through enabled SBA district office veterans business development
officer initiatives, through OVBD-developed and distributed materials, websites and partnering, through management of regional
Veterans Business Outreach Centers, through direct guidance and assistance to agency veteran customers, through inter-agency
assistance with other federal partners, and through enhancements to intra-agency programs targeting to and usability by the
entrepreneurial military and veterans communities.

FY 2008 Accomplishments
OVBD enhanced veteran, service member and reservists business ownership opportunities through the following activities. The
Associate Administrator conducted 69 major media interviews on behalf of the agency to increase public awareness of SBA
programs and services for veterans and Reserve component members of the U.S. Military.

OVBD provided e-based assistance to 11,104 veterans and reservists seeking entrepreneurial, financial and procurement
guidance and direction. Email requests are instrumental in identifying specific assistance veteran, service-disabled veteran and
Reserve component members seek, while supporting OVBD’s program and policy development role for the agency. In response,
OVBD developed a PowerPoint module on DOD Procurement Technical Assistance Centers which was distributed to SBA veteran’s
business development officers for use in presentations and district office outreach and training events, and OVBD developed a
service-disabled veteran federal procurement officer “Letter Packet” for use in securing enhanced procurement opportunities in
the federal marketplace. OVBD provided 207 public presentations and training events both individually and through large group
presentations to enhance veterans and external understanding of and access to SBA programs and partners to improve access to
broader federal procurement opportunities, initiatives, and programs for veterans and for service-disabled veterans in compliance
with Executive Order # 13360. OVBD also provides referrals to SBA district offices and SBA resource partners for locally based
training and service delivery workshops and assistance where veterans live.

OVBD continued distribution of requested veteran’s entrepreneurial resource material “Kits” to state offices of the DOD National
Committee for Employer Support of the Guard and Reserve, to DOD military family support centers, to state National Guard
Adjutants Generals, to state departments of veterans affairs, to all SBA program and partner offices, and to some 75 veterans
serving organizations. In FY 2008 more than 52,629 “Kits” were requested by and distributed to resource partners nationally.

OVBD continued producing and distributing the VETGazette and Vet News/Business Opportunity alerts to more than 44,000
veterans, Agency employees and veteran’s organizations to provide timely relevant information on federal procurement opportuni-
ties and other programs for veterans and transitioning active duty personnel participating in the Department of Labor and the
Department of Defense Transition Assistance Program.

OVBD expanded its District Office-Veterans Outreach Initiative by providing competitive opportunities for SBA veteran’s business
development officers through their District Directors to secure OVBD funding for specific outreach coordination and training
events and conferences for veterans to start, grow or restart small business concerns. In FY 2008, OVBD provided $58,050
to 17 SBA district offices for this targeted outreach, coordination and assistance. Through this initiative, and through OVBD
material-supported (but non funded) initiatives, the veteran’s business development officers build relationships with and coordi-
nate outreach and training with hundreds of local partners, while reaching 34,244 veterans, discharging service members and
reservists. Each year this program has grown and continues to operate at a cost of less than $2 per veteran customer reached
and engaged.

26 Annual Performance Report  FY 2008
Other Management Information, Initiatives, and Issues Strategic Goal One

OVBD hosts, funds and manages the SBA’s Advisory Committee on Veterans Business Affairs to achieve their statutorily required
meetings and annual reporting to Congress, the President, the Administrator, the Associate Administrator for Veterans Business
Development and other U.S. policymakers. In FY 2008, OVBD managed the process of establishing this important Advisory
Committee as a permanent SBA Advisory Committee.

OVBD continued to develop, update and provide veterans business web and resource guides, fact sheets, PowerPoint presenta-
tions, frequently asked questions, first steps to selling to the government, and pre and post mobilization business planning guides
for reservists, veterans, service disabled veterans and discharging service members.

The OVBD funded Veteran Business Outreach Centers conducted their second annual Customer Satisfaction Survey in FY 2008.
The centers survey two percent of their total of 54,817 veteran customer populations. The Survey revealed that 85 percent of the
clients using the centers were satisfied or highly satisfied with the quality, relevancy and timeliness of the assistance provided;
clients evaluating the centers gave 85 percent ratings for the training programs provided and 85 percent ratings for program
evaluation; and the combined ratings for both training and program evaluation equated to an overall satisfaction rating of 85
percent. In FY 2008, the five centers provided counseling assistance, training and directed referrals to more than 54,800 veteran
and reservists small business owners and entrepreneurs nationally.

In FY 2008, OVBD enhanced procurement opportunities across the federal marketplace specifically for service-disabled veteran-
owned small business and veteran-owned small business. In implementing the requirements of the Presidents Executive Order
No.13360, OVBD provided enhanced tools, one-on-one and group counseling and training, increased outreach, and provided
specific guidance to other federal agency procuring offices and personnel. OVBD staff worked specifically with service-disabled
veterans, their organizations and with SBA field personnel to improve government-wide opportunity and performance. In FY 2007,
the number of federal agencies that achieved the three percent goal grew from three to ten agencies. Final FY 2008 data is not
yet available.

In FY 2008, OVBD continued to assist other external and internal Agency partners in development of specific initiatives affecting
veteran, service disables-veteran, Reserve component member, and discharging service member entrepreneurs with information
and assistance. Examples included development and support of the Pilot “Army Advantage Fund” special recruitment initiative for
the Department of the Army. OVBD updated the veteran’s entrepreneurship chapters for the on line DOL Turbo TAP program and
for the DOL TAP Seminar Facilitation Manual. OVBD participated on the DOL-VETS Advisory Committee on Veterans’ Employment,
Training and Employer Outreach and the DOL Office of Disability Employment Policy “America’s Heroes at Work” Committees,
bringing the perspective of veteran’s entrepreneurship to the federal Veterans employment programs arena. The office developed
program materials and program recommendations for Inclusion in the DOD “676 Committee” Report to Congress, and partici-
pated on the DOD Commission on the National Guard and Reserve Working Group, as well as the DOD Advisory Committee to the
Yellow Ribbon Reintegration Program (YRRP) being developed and implemented for Reserve component members, veterans and
their families. Internally, OVBD worked with the SBA Office of Native Affairs in development of a special outreach initiative target-
ing SBA assistance to Native American veterans; and OVBD assisted the SBA Office of Field Operations in developing special
outreach initiatives targeted to veterans and reservists. OVBD assisted the SBA Office of Small Business Development Centers
in the design and implementation of their new Veterans Assistance and Services program, and in their annual program SBDC
announcement/agreement. OVBD also continues working with the DOD Office of the Assistant Secretary for Reserve Affairs,
the Independent SBA Office of Advocacy and the U.S. Census Bureau in developing special data set runs to help determine the
economic effects of Title 10 activations on self-employed Reserve component members of the U.S. military.

OVBD outreach, coordination, ombudsman responsibility and program and policy development resulted in a record number
(more than 200,000) of veterans, service-disabled veterans, reservists, discharging service members, their family members,
and external program partners utilizing SBA services and programs in FY 2008. These accomplishments were attained while
operating within an extremely constrained program budget. However, other high-profile program and policy responsibilities were
not met due to imposed funding constraints. These unmet responsibilities included expanding the number or Veterans Business
Outreach Centers, conducting mandated studies, improving/creating a special loan program for veterans, and expanding SBA

Annual Performance Report  FY 2008 27
Strategic Goal One Contracting Assistance

participation in the DOL/DOD Transition Assistance Programs nationally for hundreds of thousands of service members and their
families discharging annually from voluntary military service.

Faith-Based and Community Initiatives
The Faith-Based and Community Initiative helps the Federal Government Coordinate a national effort to expand opportunities
for faith-based and other community organizations and to strengthen their capacity to better meet the social needs in America’s
communities. It also creates a level-playing field for faith-based and other community organizations so that they can work with
the government. Although nonprofit community organizations have long performed a critical service by helping people in need,
they have often encountered obstacles to providing federally-funded services. To facilitate their involvement in federal programs
within constitutional parameters, the President launched the Faith-Based and Community Initiative in 2001.

SBA’s Center for Faith-Based and Community Initiatives was established by Executive Order in 2004.The Center’s main goal is to
develop and coordinate outreach efforts to disseminate information on SBA programs through faith-based and other community
organizations, particularly in underserved and economically distressed areas. Many faith-based and other nonprofit organiza-
tions support economic and community development. By working with these organizations, the SBA and its resource partners
can more effectively reach entrepreneurs and small businesses to inform them of the wide range of SBA financial and technical
assistance programs available.

FY 2008 Accomplishments
The Center continued its effort with the Office of Field Operations whereby SBA district offices partner with local faith-based and
other community organizations to conduct outreach to entrepreneurs and small businesses and inform them about SBA programs
and services. Much of this outreach focuses on reaching people in underserved communities and contributes to achieving the
Agency’s Strategic Goal One: “Expand America’s ownership society, particularly in underserved markets… that have significantly
higher unemployment and lower income levels than the Nation’s averages.”

In FY 2008 the district offices, in partnership with faith-based and other community organizations, held 4,502 meetings and
workshops and provided information on SBA programs to 218,679 individuals.

Between FY 2005, when the district offices began reporting quarterly on their outreach activities, and FY 2008 the number of
individuals who received information about SBA products and services and related instruction and training through meetings and
workshops held in cooperation with faith-based and other community organizations doubled.

Separate data collection for faith-based and secular organizations began in October 2007. In FY 2008, the percentage of meet-
ings and workshops conducted with faith-based organizations was 15 percent of the total outreach with community organizations.

The Center continued to work with program administrators to include appropriate guidance on equal treatment and religious
freedom principles in the Agency’s grant program announcements and cooperative agreements with its resource partners.

The Center collected the data requested by the White House Office of Faith-Based and Community Initiatives on participation
of faith-based and other community organizations, including educational institutions, in the Women’s Business Center Program.
Seven of the 112 FY 2008 funding recipients are identified as faith-based organizations.

The Center implemented a Large Community Organization Outreach Test, which is designed to strengthen partnerships with larger
faith-based and other community organizations, and to develop more efficient methods of outreach for underserved markets.
Five district offices are participating in the test: Boston, Philadelphia, Atlanta, Albuquerque and Los Angeles. The test will evaluate
new strategies of outreach to bring SBA services to first-time entrepreneurs, start-ups and existing small businesses. Given posi-
tive results, the best practices of the test will be communicated to all SBA field offices and integrated into the Agency’s operations,
goals and strategic plan.

28 Annual Performance Report  FY 2008
Contracting Assistance Strategic Goal One

The Center continued to implement strategies to expand the participation of grassroots faith-based and other community
organizations in the provision of SBA programs and services. Because federal regulations restrict the provision of SBA financial
and technical assistance to for-profit small businesses, these strategies focus on the participation of these organizations in
outreach to the entrepreneurs and small businesses in their communities. The Center worked with the Office of Communications
and Public Liaison and the Office of Disaster Assistance to include faith-based and other community organizations in the SBA’s
Disaster Information Network, which was created to provide SBA field offices and headquarters with ready access to disaster
stakeholders. This effort contributes to the Agency’s Strategic Goal Two, “Provide timely financial assistance to home owners,
renters, nonprofit organizations and businesses affected by disaster.”

Native American Affairs
The SBA Office of Native American Affairs is charged with providing assistance to American Indians, Alaska Natives, Native
Hawaiians and the indigenous people of Guam and American Samoa. SBA loan guaranties and technical assistance services are
available to members of these groups living in urban areas and certain rural communities. For Native Americans living in much of
Indian Country, actual reservation communities where the land is held in trust by the U.S. federal government, SBA loan guaran-
ties and technical assistance services are not available.

FY 2008 Accomplishments
Tribal Self Assessment Tool —- The Office of Native American Affairs hired a contractor to help develop a Tribal Self
Assessment Tool and convene an Initiative Oversight Committee made up of approximately 30 individuals, mostly of Native
American descent and coming from a wide geographic area. The committee is comprised of economists, lawyers, entrepre-
neurs, tribal leaders, corporate executives and leaders of not-for-profit organizations engaged in Indian Country. The group
convenes for the purpose of providing oversight assistance to the contractor responsible for managing development of the
Tribal Self Assessment Tool. Continuing initiatives include conducting TSAT workshops to train designated tribal members
across Indian Country.

Interagency Agreement —- The Office of Native American Affairs entered into an interagency agreement supported by a
memorandum of understanding with the Environmental Protection Agency for the purpose of developing a training program for
SBA employees on working effectively with tribal governments.

Co-sponsorship Agreement —- The ONAA also entered into a co-sponsorship agreement with the American Indian Alaska
Native Tourism Association for the purpose of supplying information on SBA programs and services to Native American
entrepreneurs during the 10th Annual American Indian Tourism Conference.

Annual Performance Report  FY 2008 29
Strategic Goal One Contracting Assistance

Contracting Assistance
The strength of the nation’s economy is fortified when competitive and innovative small businesses are able to participate in the
federal marketplace and provide solutions to the many challenges facing the federal government. The SBA works to increase the
breadth and strength of the national industrial base and the number of jobs supported by the small business sector through pro-
grams having to do with federal contracting. The Agency assists other agencies in taking advantage of the resource represented
by small business, at the same time that small businesses grow stronger by benefiting from federal contracting opportunities.

The SBA provides contracting assistance through its prime contracting and subcontracting assistance programs. Each program
has a very different objective, yet their missions complement one another.

8(a) Program
The SBA 8(a) Business Development program was created to assist eligible small disadvantaged business concerns to compete
in the American economy through business development. An applicant firm must: (1) be a small business; (2) be unconditionally
owned and controlled by one or more socially and economically disadvantaged individuals who are of good character and citizens
of the United States; and (3) demonstrate potential for success.
8(a)
Type of FY 2005 FY 2006 FY 2007 FY 2008 FY 2008 FY 2008
Performance Indicator
Measure Actual Actual Actual Actual Goal Variance

SB Assisted (#) Outcome 9,458 9,600 9,536 9,122 9,180 -1%
Cost per SB Assisted ($) Efficiency $ 3,319 $ 3,081 $ 4,320 $ 5,701 $ 4,853 -17%

Budgetary Obligations Incurred
Budgetary Resources FY 2005 FY 2006 FY 2007 FY 2008
Actual Actual Actual Actual
Total Administrative Resources ($000) $ 31,387 $ 29,582 $ 41,191 $ 52,001

Variance Explanation
“SB Assisted (#)” has a variance of -1%. The performance goal was set at an approximate target level, and the deviation from
that level is slight. There was no effect on overall program or activity performance.

“Cost per SB Assisted ($)” has a variance of -17%. The primary reason for this variance was the staffing increases that oc-
curred at the district level in order to enhance the business development opportunities for existing 8(a) firms.

FY 2008 Accomplishments
The Agency embarked upon several initiatives in an effort to improve program delivery and ensure that the 8(a) Business
Development program is relevant to a changing industry. Initiatives included improvement to the 8(a) and SDB application and
the development of the electronic annual review process.

In FY 2008, the SBA awarded a contract to develop the Business Development Management Information System (BDMIS) based
on the Business Process Re-engineering initiative. BDMIS is a comprehensive, integrated system that supports the activities of
the Office of Business Development. It consists of the following components:
Electronic 8(a)/SDB certification application;
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Electronic annual review/continued eligibility; and
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Various back-office functions (defined below).
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The new BDMIS was deployed on July 28, 2008.

30 Annual Performance Report  FY 2008
Contracting Assistance Strategic Goal One

The Office of Business Development developed Insight: Guide to the 8(a) BD Program, which is a self-paced online training
program (with an indexed guide) that explains the 8(a) eligibility criteria, 8(a) application process and the resources available to
assist 8(a) firms. In addition, the Office of Business Development created an assessment tool for potential 8(a) applicants. The
8(a) Suitability Assessment Tool is a web-based, fully automated tool designed to help prospective 8(a) firms better determine if
they are a good fit for the program. The tool serves as a self-paced filter governing the number and quality of new 8(a) applicants,
based on suitability and eligibility criteria.

The Agency also developed an on-line self-paced training program designed to help small business clients understand and
participate in federal contract markets. This web-based tool includes over 40 web links highlighting the best contracting re-
sources and directly engages customers in the contracting process, specifically CCR and DUNS registration and federal business
opportunity searches.

In an effort to ensure greater oversight as it relates to 8(a) contracts issued by procuring agencies, the SBA’s Office of Business
Development has revised the language in the partnership agreements (between SBA and the procuring agencies) to clarify roles
and responsibilities. The revised partnership agreements specifically require the procuring agencies to monitor 8(a) firm’s compli-
ance with contract performance. Partnership agreements have been executed between SBA and 38 procuring agencies.

Prime Contracting and Subcontracting Assistance Programs
The SBA works to create an environment for maximum participation in federal government prime and subcontracting by small
businesses, including businesses owned and controlled by socially or economically disadvantaged individuals, women, veterans
(including service-disabled veterans), and small businesses located in HUBZones. The SBA advocates on behalf of small busi-
ness in the federal contracting world and administers several programs and services that assist small businesses in meeting the
requirements to receive government contracts, either as prime contractors or subcontractors.

By increasing contracting opportunities for small businesses under procurement preference programs and full and open competi-
tion, the SBA encourages more firms to compete in the federal marketplace and promotes awards of federal contracting dollars
to such firms. Because of these efforts, more small businesses are able to compete for a share of federal contract opportunities,
strengthening and diversifying the nation’s industrial base, and supporting an increased number of jobs.

Prime Contracting
Type of FY 2005 FY 2006 FY 2007 FY 2008 FY 2008 FY 2008
Performance Indicator (1)
Measure Actual Actual Actual Actual Goal Variance
Fed Contract Dollars Awarded to SB ($
Output $ 75 $ 78 83 2 QTR 09 $ 85 N/A
Billion)
Jobs Created/Retained (#) Outcome 562,000 612,000 605,000 2 QTR 09 601,209 N/A
Cost per Job Created/Retained ($) Efficiency $ 27 $ 31 $ 33 2 QTR 09 $ 38 N/A

Budgetary Obligations Incurred
Budgetary Resources FY 2005 FY 2006 FY 2007 FY 2008
Actual Actual Actual Actual
Total Administrative Resources ($000) $ 15,384 $ 18,853 $ 19,842 $ 24,260

(1)
Data not yet available - FY 2008 actual data will not be available until 2rd quarter FY 2009.

FY 2008 Accomplishments
During FY 2008 the SBA improved the small business procurement scorecards for tracking the statutory goals and federal
agencies’ plans for meeting their proposed goals. For the first time, all chief financial office agencies have plans in place and
are available to the public. This has increased transparency and accountability as well as the sharing of best practices for all to
review and utilize.

Annual Performance Report  FY 2008 31
Strategic Goal One Contracting Assistance

Working with the Procurement Advisory Council, scorecard guidance was clarified.

The SBA hired additional procurement center representatives, increasing the number from 52 at the fiscal year beginning to 66 by
the close. Training was conducted for all government contracting staff during the last quarter of the fiscal year. Additional training
was provided to SBA’s Procurement Center Representatives (PCR) 1102 workforce. PCR’s are required to maintain Continuous
Learning Points to sustain the 1102 Procurement Analyst certification.

A web-based internal performance management system was developed in conjunction with the Office of the Chief Information
Officer.

The Offices of Government Contracting and Field Operations developed a working arrangement to ensure maximize effectiveness
of use of district office and procurement center representative personnel. Procurement center representatives will concentrate on
buying activities to maximize opportunities for small businesses and district offices will ensure necessary training opportunities to
increase the small business contracting pool.

SBA completed a business case for the electronic procurement center representative (ePCR) system, a technology solution
envisioned to improve the efficiency and effectiveness of the SBA’s PCR function. As a web-based application, ePCR will increase
PCR coverage of federal contracting activities and automate many of the business processes currently associated with the small
business review of procurement requests and subcontracting plans. Once implemented, ePCR will provide SBA management
with timely and accurate reporting to improve the effectiveness of PCRs and will aid federal agencies in meeting their small
business goals, thereby supporting the SBA’s mission to enable the viability of small businesses.

A comprehensive size review was initiated that included industry input. In addition, size adjustments were made for inflation, and
fuel oil dealers’ size standards were changed from revenue based to employee based because of the volatility of fuel prices. A
comprehensive size standard review was initiated with draft proposed rule evaluating the size standards for the retail trade, other
services, and food services and accommodations industries submitted to the Office of Management and Budget. .

Small Disadvantaged Businesses Program (Discontinued 9/30/2008)
The Small Disadvantaged Business program is intended to help small businesses be successful in the future. Companies
just starting or in a growth stage can benefit from the wide range of services the SBA offers, such as support for government
contracts, access to capital, management and technical assistance, and export assistance. The Agency’s efforts help to build
community-based small businesses which revitalize neighborhoods, create jobs and encourage economic growth. It uses a
number of assistance intervention tools ranging from contract support to low interest loans for site acquisition, construction, and
the purchase of new or upgraded equipment.

SDB (1)
Type of FY 2005 FY 2006 FY 2007 FY 2008 FY 2008 FY 2008
Performance Indicator
Measure Actual Actual Actual Actual Goal Variance

SB Certified (#) Output 968 734 474 789 800 -1%
Cost per SB Certified ($) Efficiency $ 1,667 $ 2,414 $ 2,605 $ 1,376 $ 1,618 15%

Budgetary Obligations Incurred
Budgetary Resources FY 2005 FY 2006 FY 2007 FY 2008
Actual Actual Actual Actual
Total Administrative Resources ($000) $ 1,614 $ 1,772 $ 1,235 $ 1,086

(1) As a result of dicussions with OMB and DOJ, the SBA no longer certifies small and disadvantaged businesses on
behalf of other agencies for the Small Disadvantaged Business Certification. The cost of staffing and the certifications
process no longer exists at the SBA.

32 Annual Performance Report  FY 2008
Contracting Assistance Strategic Goal One

Variance Explanation
“SB Certified (#)” has a variance of -1% - The performance goal was set at an approximate target level, and the deviation from
that level is slight. There was no effect on overall program or activity performance.

“Cost per SB Certified ($)” has a positive variance of 15 % primarily due to the reduced budget level for FY 2008.

FY 2008 Accomplishments
The SBA certifies small businesses that meet specific social, economic, ownership and control eligibility criteria. Once certified,
the firm is added to an on-line registry of SDB-certified firms, making them eligible for special bidding benefits. Certified firms
remain in the online registry for three years. Contracting officers and large business prime contractors may search this online
registry for potential suppliers. In FY 2008, the SBA approved 613 applications for Small Disadvantaged Business certification.

HUBZone Program
The HUBZone program provides Federal contracting assistance for qualified small businesses located in economically distressed
communities, known as historically underutilized business zones or HUBZones. The objective is to increase employment, capital
investment and economic development in these areas, which includes Metropolitan Area Census Tracks; Non-metropolitan
Counties; Federally recognized Indian Reservations; difficult Development Areas and former military bases closed as a result of
the Base Realignment and Closure Act (BRAC). The program provides for set‑asides, sole source awards, and price evaluation
preferences for HUBZone certified small businesses.

HUBZone
Type of FY 2005 FY 2006 FY 2007 FY 2008 FY 2008 FY 2008
Performance Indicator (1)
Measure Actual Actual Actual Actual Goal Variance

SB Assisted (#) Output 2,960 5,044 2,833 2Q 09 3,700 N/A
Annual Value of Federal
Output $ 6.1 $ 7.1 $ 8.5 2Q 09 $ 8.5 N/A
Contracts ($ Billion)
Cost per SB Assisted ($) Efficiency $ 2,625 $ 1,486 $ 2,389 2Q 09 $ 2,027 N/A
Cost per Federal Contract
Efficiency $ 0.0013 $ 0.0011 $ 0.0008 2Q 09 $ 0.0011 N/A
Dollar ($)

Budgetary Obligations Incurred
Budgetary Resources FY 2005 FY 2006 FY 2007 FY 2008
Actual Actual Actual Actual
Total Administrative Resources ($000) $ 7,769 $ 7,496 $ 6,767 $ 8,679

(1)
Data not yet available - FY 2008 actual data will not be available until 2nd Quarter FY 2009.

FY 2008 Accomplishments
A search in the Dynamic Small Business Search showed that 10,772 certified HUBZone firms were listed on or before September
30, 2008. Although this is a healthy portfolio, representing various NAICS, the HUBZone program encountered several challenges.
Specifically, a GAO audit, a GAO forensic investigation, and the Office of Advocacy report measuring the effectiveness of the
program.

As a result of these challenges, the HUBZone program embarked on a complete analysis of the program. This included an
independent audit to perform a sample inspection of its portfolio and a comprehensive business process re-engineering effort.
The following improvements have taken place:
The HUBZone maps, a web-based system that identifies qualified HUBZone areas, were updated. The update insures
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eligible firms the opportunity for Federal contracting assistance in the form of HUBZone set-asides, sole source awards, or
price evaluation preferences in full and open competition.

Annual Performance Report  FY 2008 33
Strategic Goal One Contracting Assistance

Procedures were put in place to minimize program risk by collecting additional supporting documentation of all HUBZone
yy
applications to support program eligibility. These procedures have improved internal control standards and enhanced the
programs integrity by ensuring firms meet the HUBZone program criteria.
A methodology for measuring the economic impact of the HUBZone Program was drafted and published in the Federal
yy
Register. The final version is expected to be finished and published in a Final Notice to the Federal Register in FY 2009.
The methodology will assist in the determination of the programs effectiveness.
The Business Process Re-Engineering (BPR) effort was deployed which will help create a roadmap to streamline the
yy
HUBZone program processes while maintaining program integrity.

34 Annual Performance Report  FY 2008

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