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.

learn more about Catherine Clifford

By Catherine Clifford • Mar 5, 2013

Shutterstock

Opinions expressed by Entrepreneur contributors are their own.

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

Senior Entrepreneurship Writer at CNBC

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

Related Topics

Editor's Pick

Have More Responsibilities at Work, But No Pay Bump? Use This Script to Get the Raise You Deserve.
Black and Asian Founders Face Opposition at All Levels — Here's Why That Has to Change
Business News

Mark Cuban's Grocery Store Hack Will Help You Score Cheaper Produce

The billionaire talked about his early days in Dallas when he was strapped for cash.

Business News

Frontier Airlines Just Announced Its All-You-Can-Fly Summer Pass for $399. What's the Catch?

As travel begins to pick up, the airline hopes unlimited travel will jumpstart its business.

Thought Leaders

5 Small Daily Habits Self-Made Millionaires Use to Grow Their Wealth

We've all seen what self-made millionaires look like on TV, but it's a lot more subtle than that. Brian Tracy researched what small daily habits these successful entrepreneurs adopted on their journey from rags to riches.

Business News

This Is Where Subway's Co-Founder Left Half of His Fortune

Dr. Peter Buck left only 50% of his company to his two sons after he died last year, according to a new report. The other half will go to charity.