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SBA Budget Whacked $92 Million By Sequestration The Small Business Administration's budget has to be chopped by 5 percent across the board as a result of forced budget cuts.

By Catherine Clifford

Opinions expressed by Entrepreneur contributors are their own.

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The U.S. Small Business Administration has to cut $92 million, or 5 percent, from its annual budget as a result of sequestration.

The SBA cuts are among many forced federal budget cuts, which went into effect March 1.

Here is a breakdown of the SBA cuts:

  • Salaries and expenses: $22 million
  • Office of the Inspector General: $1 million
  • Office of the Advocacy: Less than $500,000
  • Disaster-loan program: $45 million
  • Business-loan program: $24 million

Despite the decrease in the salaries-and-expenses budget, outgoing SBA chief Karen Mills says no furloughs will be necessary. A year ago, the agency offered early retirement to a number of employees and the decrease in headcount achieved then was enough to mitigate the requisite budget cuts, Mills told reporters in a meeting in New York last week.

Related: SBA Lending Marches On Post-Sequester, But Anxieties Linger

The SBA expects no disruption to its loan programs since it doesn't typically reach its actual loan cap, but small businesses that depend on federal contracts are expected to suffer. The SBA has estimated that the sequester will result in $4 billion less revenue for small-business contractors as a result of reduced federal spending. Also, the sequester funding cuts mean that the SBA will be able to mentor fewer entrepreneurs and will have to invest less money in entrepreneurship communities.

"The sequester is just terrible for small business," Mills said.

Related: Sequester Countdown: What's in Store for the SBA

Each agency has seven months to make the required budget cuts. Overall, the U.S. federal government will have to eliminate $85 billion from its 2013 fiscal year budget.

When you have to make cuts to your business's budget, what do you cut first? Leave a note below and let us know.

Catherine Clifford

Frequently covers crowdfunding, the sharing economy and social entrepreneurship.

Catherine Clifford is a senior writer at Entrepreneur.com. Previously, she was the small business reporter at CNNMoney and an assistant in the New York bureau for CNN. Catherine attended Columbia University where she earned a bachelor's degree. She lives in Brooklyn, N.Y. Email her at CClifford@entrepreneur.com. You can follow her on Twitter at @CatClifford.

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