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Fee For All

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

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

The Office of Management and Budget (OMB) is at itagain-proposing SBA budget cuts. As a small-business owner andformer analyst with the SBA in Washington, DC, I'm concernedcuts could dramatically reduce the small-business community'saccess to capital.

The OMB is proposing to increase 7(a) loan fees to as high as 4percent, claiming this will reduce the program's costs to zero.However, the OMB has historically overestimated the cost of the7(a) program. In fact, in the past five years, the program'srevenue has surpassed its expenditures by $1.3 billion. The OMBcalls this a "negative subsidy." Business owners call ita profit. In reality, the SBA 7(a) fees should be reduced.

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