Microbusiness and the Budget: What AEO Members Need to Know

by: Jake Clabaugh

In February, the President released his FY 2017 Budget Proposal, the final budget proposal of his administration. The President’s annual budget is often referred to as an economic blueprint as it outlines the Administration’s spending priorities. Importantly, last year’s Bipartisan Budget Act, already set the top-line spending levels for FY2016 and FY2017. The President’s budget follows the top-line discretionary spending limit, and distributes $4.1 trillion in total across the Administration’s priorities. The Budget proposal has no effect on law, but instead begins the budget season.

The President’s Budget Request is supplemented by each Agency’s budget justifications. The chart below highlights programs important to AEO members:

           

Program	FY2017- Request
Treasury CDFI Fund	$246 million
Treasury CDFI BGP	$1 billion
Microloan Program Lending	$44 million
Microloan Program Technical Assistance	$31 million
PRIME	$0
Women’s Business Centers	$16.7 million
Veteran's Outreach	$12.3 million
Rural Business Development Grants	$ 30 million

The Small Business Administration’s (SBA’s) request for the Microloan program is a win for AEO members. SBA increased their request for the Microloan program lending authority to $44 million – up over 25% from last year’s request of $35 million

Like last year, the SBA did not make a budget request for the PRIME program, which provides training and technical assistance to disadvantaged entrepreneurs and microenterprise development organizations. Despite the SBA not making a request, AEO’s advocacy efforts were successful in restoring funding for PRIME to $5 million. AEO will be sure to work with Congress to ensure that appropriators know the value of the PRIME program. 

Looking Past the Numbers

While the budget lays out funding levels, it also allows agencies to highlight their legislative priorities. SBA aligned its FY2017 priorities with issues AEO members will be familiar with.

Specifically, SBA requested that Congress eliminate the 25/75 technical assistance rule in the Microloan program. The SBA cited intermediaries’ need to provide “unconstrained" pre- and post-loan technical assistance. Also, the SBA called for changes to the 1/55 rule. SBA pointed out that, “this restriction effectively delays deployment of microloan funds thereby limiting the availability of capital for small businesses regardless of the size of the state or the needs of the small business community.”  

Moving Forward

The President’s submission of a budget to Congress formally kicks off the annual spending process. Since Congress has already agreed upon the top-level of $1.1 trillion in discretionary spending for FY2017, the debate will be about the level of funding for agencies, and certain programs. While it is unclear if there is enough time in the calendar to complete a comprehensive budget process with 12 separate appropriation bills, AEO’s policy team is committed to advocating for our priorities every step of the way. Members can look forward to updates through out the spring and summer on our efforts.