The Small Business Administration (SBA) calls its budget for 2007"fiscally responsible," but Senators from both parties immediately criticized it.
The SBA budget request totals $624 million for operating costs and authority to make $28 billion in loans and venture capital investments. "This builds on our successes over the last four years, when we reached more small businesses, including more women and minority entrepreneurs," says SBA Administrator Hector Barreto. The budget proposes fees from lenders and borrowers on SBA loans of more than $1 million, a program that will "strike a balance between the needs of the SBA's customers and clients with the needs of all American taxpayers," according to Mr. Barreto.
But Senator Olympia Snowe, a Republican from Maine who chairs the Committee on Small Business & Entrepreneurship, maintains that Mr. Barreto "has been tasked to do more with a lot less from the Federal treasury. That is unreasonable and short-sighted."
In particular, Ms. Snowe plans to fight elimination of the microloan program, new fees for loans, and funding cuts for Small Business Development Centers. Some of the programs have already achieved fiscal self-sufficiency, so increasing fees will only raise revenues to cover the SBA's administrative costs, she says.
"While President Bush brags about government costs going down for the [SBA], he fails to tell the truth that slashing federal resources over the years raises costs for small business owners," says Senator John Kerry of Massachusetts, ranking Democrat on the committee. "This budget cuts or eliminates key programs that meet the needs of small businesses."
Ms. Snowe notes that the SBA budget represents only three hundredths of a percent of the federal budget, yet "the SBA and its programs have a tremendous return on investment." She concludes that "annual cuts, taken cumulatively, threaten to significantly reduce small businesses' ability to compete."
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