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The OMB is trying to fix a machine that ain't broke.

This story appears in the June 2001 issue of Entrepreneur. Subscribe »

The Office of Management and Budget (OMB) is at it again-proposing SBA budget cuts. As a small-business owner and former analyst with the SBA in Washington, DC, I'm concerned cuts could dramatically reduce the small-business community's access to capital.

The OMB is proposing to increase 7(a) loan fees to as high as 4 percent, claiming this will reduce the program's costs to zero. However, the OMB has historically overestimated the cost of the 7(a) program. In fact, in the past five years, the program's revenue has surpassed its expenditures by $1.3 billion. The OMB calls this a "negative subsidy." Business owners call it a profit. In reality, the SBA 7(a) fees should be reduced.

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