SBA & Treasury plans show less support for entrepreneurs

The U.S. Small Business Administration and Department of Treasury have released strategic plans through FY 2022. Similar to the new Department of Commerce plan, these documents do not mention programs and offices that the administration has marked for elimination, creating a lack of clear strategic direction for millions of dollars in entrepreneurship and innovation funding that Congress continues to appropriate and direct. Specific areas of concern at these agencies are the SBA’s Regional Innovation Clusters and Growth Accelerator programs and the Community Development Financial Institutions Fund.

The SBA plan focuses on the agency’s core activities of providing access to capital and technical assistance. The agency primarily addresses capital through its 504 and 7(a) lending programs, and these programs appear to have strong support in the plan. A secondary capital program, the Small Business Investment Company (SBIC) is the subject of a strategic priority for increased oversight and risk management for the funds. The SBA’s core technical assistance programs, e.g., Small Business Development Centers and SCORE, do not have a clear strategy for restructuring set forth in the strategic plan, but a question for research at the end of the document asks whether small businesses use multiple services. With the administration’s budget often targeting “duplicative” programs, the implication of this question may be a future reorganization of technical assistance.

Despite a broad goal of building healthy entrepreneurial ecosystems, the administration makes very limited commitments to innovation-driven startups or supporting a cluster-based focus on business support. The one reference is to provide “high-growth small businesses” an opportunity to strengthen their local entrepreneurial ecosystem. Because the actor in the strategy is the business, it is unclear if the SBA is assuming high-growth businesses automatically strengthen their ecosystems, or if this is a reference to programmatic investments in regional entrepreneurship. High-growth or innovative businesses also do not appear to be a target of any of the agency’s research questions that it lists to guide future policy.

Innovation and technology are addressed only in connection with the SBIR/STTR programs. The one relevant strategy for these programs is to “coordinate with agencies” on reaching their required set-asides. The grammatical tense of these strategy is passive, unlike all of the contracting strategies in the same section, making the office’s commitment to continuing to provide outreach and coordination unclear. A step back from the administration at this point could be particularly disruptive to the SBA’s ability to work with the SBIR program: the administrative funding that has supported this work is expired and will require either agency discretion or congressional action to continue as effectively as in recent years.

The Treasury plan makes no mention of support for small businesses or entrepreneurship. These services are primarily offered now through the CDFI Fund. While the administration has proposed eliminating most of the office’s programmatic dollars, the office oversees the New Markets Tax Credit, which the administration has been continuing to support. Whether this omission reflects how low small business support is as a priority to the administration or a strategic change in policy direction is currently unclear.