From the August 2003 issue of Entrepreneur

As part of the 2004 federal budget, two Department of Commerce programs, the Advanced Technology Program (ATP) and the Manufacturing Extension Partnership (MEP), may be eliminated. Historically, these programs have had strong support on Capitol Hill, where advocates claim the programs benefit small companies. The ATP, which has received more than $1.5 billion since 1990, is supposed to provide grants to support R&D at companies that might not win commercial funding, while the MEP oversees a nationwide network of centers to help manufacturers upgrade technology and human resources.

But do the programs really benefit small companies? Gary Weaver says yes. "We wanted to hire consultants to help us revamp our plants but couldn't afford to," explains the president of Timber Tech, a Cibolo, Texas, company that manufactures housing components. "The local branch of the MEP assessed our operations and helped us save tons of money. Before, the waste we created was sent to landfills, costing us $35,000 per year, but the MEP taught us to reprocess the waste and sell it as animal bedding."

The Commerce Department lists several small businesses it claims have benefited from the ATP. Yet overall, research suggests the ATP and the MEP primarily benefit neither entrepreneurs nor companies that have exhausted other sources of capital. "When you go through the federal government's reports on the programs, you see most ATP money winds up going to large, wealthy companies," says Stephen Slivinski, an economist at the Goldwater Institute, a think tank in Phoenix. According to Congress' General Accounting Office, Caterpillar, IBM and General Electric are three of the largest recipients of ATP grants. Over the past 12 years, numerous Fortune 500 companies have received millions from the ATP, and 63 percent of businesses that applied for ATP funding did so without first searching for commercial funding. Maybe those cuts won't be so painful after all.