Easy Target?

Budget-cutters in Congress have set their sights on the SBA.
Magazine Contributor
2 min read

This story appears in the January 2006 issue of Entrepreneur. Subscribe »

Small-business owners find themselves caught in the cross hairs again as Congress considers billions of dollars in cuts to various federal programs following one of the most destructive hurricane seasons on record.

At press time, the House was seeking a 2 percent across-the-board cut that would hurt the SBA--even though the SBA's budget has already been slashed in half over the past five years. There could also be additional cutbacks included in pending appropriation bills this year that would trim programs that provide small-business loans and other support for entrepreneurs.

On Capitol Hill, "just about every kind of budget cut you can imagine" is being proposed in the name of paying for Katrina and keeping deficits down, says Adam Hughes, budget policy analyst for OMB Watch, a nonprofit government watchdog organization in Washington, DC. SBA programs "are definitely going to be pinched. Maybe even more than pinched--maybe eliminated."

Some say the SBA will be DOA unless things change. For small-business owners, "it's time to panic," says Lloyd Chapman, founder of the American Small Business League, a Petaluma, California, organization working to change federal contracting rules to help small businesses. He predicts a bleak future for the SBA, which has decreased staff and closed field offices over the past few years. The current SBA budget is "miniscule," Chapman says. "It's literally not enough to buy the latest jet fighter."

The SBA's budget may buy even less without the political will to save it. Hughes isn't hopeful. "Congress is continuing to push forward with reconciliation that increases the deficit; at the same time, they're [saying] we need to cut the budget to pay for Katrina." Caught in the middle, the SBA's budget may get squeezed out of existence.

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