Lays Out Detailed Analysis of Budget’s Harm to America’s Small Business Sector

Washington, D.C.-- Today, House Small Business Committee Chairwoman Nydia M. Velazquez (D-NY) released a comprehensive report showing the deep cuts and harm that the President's FY 2020 budget would inflict on America's small business sector.

"After enacting a tax law that adds over one trillion dollars to our national deficit, the President is now looking to balance his 2020 budget on the backs of small businesses," said Chairwoman Velazquez. "This budget request would cruelly impose new fees for small businesses seeking a loan, slash funding for job-creating entrepreneurial development programs, and make it even harder for the minority-owned business, rural family farm, or women-led startup to compete on a level playing field."

Overall, the budget proposes a 6.5 percent cut from $715 million to $669 million for the Small Business Administration (SBA). It also takes aim at SBA's cornerstone entrepreneurial development initiatives, slashing funding by over $67 million (27 percent). In the lending sector, the proposal would scale back SBA's microloan program for small-dollar borrowers by $2 million and decrease technical assistance by $6 million. The budget also proposes new fee increases in the SBA's flagship 7(a) loan guaranty program and 504 programs, a move that if implemented, would shift costs onto small business borrowers and lenders.

In addition to breaking down the Administration's proposed cuts to the SBA, Velazquez's report looks more broadly at federal agencies that house small business initiatives, finding a similarly dim fate for numerous programs across the board.

Under the President's proposal, entire agencies geared towards helping underserved businesses would be eliminated entirely, including the Commerce Department's Economic Development Agency (EDA), a cornerstone for many economically distressed communities, and the Manufacturing Extension Partnership (MEP), a federal-state-industry partnership that generates nearly $18 in new sales growth for every dollar of federal investment.

At the Treasury Department, the budget contains no funding for the Community Development Financial Institutions Fund Program (CFFI), which has a proven record of helping underserved communities revitalize their local economies by providing jobs and entrepreneurial opportunities for residents. The Commerce Department's Minority Business Development Agency (MBDA), would also be drastically reduced, seeing an overall cut from $40 million to $10 million, and delivering another blow to services that help minority-owned businesses, one of the faster growing subsets of entrepreneurs.

At the Department of Agriculture, the following rural development initiatives would be eliminated: Rural Business Development grants; Intermediary Relending Program; Delta Regional Authority grants; Rural Cooperative grants; and Socially-Disadvantaged Groups grants. These cuts could compound the hardships facing many rural small businesses and small farmers hurting from this Administration's trade war and devastation from recent flooding.

Instead of addressing climate change by helping more small business invest in renewable energy, the budget would slash funding for the Department of Energy's Office of Energy Efficiency and Renewable Energy by 85.6 percent. Such a move would shortchange opportunities for small firms that are leading the way in developing innovative solutions to the climate crisis.

"It is hard to think of a component of the small business community that would not suffer under these needless budget cuts," said Chairwoman Velazquez. "The President's budget is a symbol of an Administration's priorities, but at the end of the day, the power of the purse rests in Congress. In coming weeks, I will be working to ensure that America's small businesses are given the resources to continue to do what they do best--create new jobs and fuel economic growth in communities across this country."

The full report is available online here https://smallbusiness.house.gov/UploadedFiles/The_FY_2020_Presidential_Budget_FINAL_.pdf.

Read this original document at: https://smallbusiness.house.gov/news/documentsingle.aspx?DocumentID=515