SBA Microcredit Program: Opportunities Exist to Strengthen Program Performance Measurement, Collaboration and Reporting

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What GAO found

Analysis of GAO’s data for the Small Business Administration (SBA) Microcredit Program found that in 2014-2018, about 80% of microloans were granted to borrowers who identified as female, to veterans or minorities or low income businesses. . In addition, most of the intermediaries (non-profit lenders) who provide the loans have participated in at least one other federal microcredit activity. For example, 73 percent of the intermediaries (122 out of 168) in the program are also community development finance institutions of the Department of the Treasury (designated private sector financial institutions).

The SBA has put in place mechanisms for monitoring intermediaries and borrowers, some of which were put in place in response to recommendations from the Office of the Inspector General (OIG) of the SBA. For example, SBA

  • developed a plan for carrying out on-site visits to intermediaries, and
  • updated guidelines for the documentation requirements of certain borrowers.

The SBA also requires intermediaries to report various loan and borrower information in the program’s data reporting system.

The microcredit program has procedures for data collection and performance measurement, but GAO has identified weaknesses in these efforts. For example, one of the goals of the program is to help low income borrowers, but the program guidelines do not define low income. Another goal of the program is to develop and provide timely, accurate and useful output and outcome data. However, the GAO and SBA OIG found gaps in the way certain information about borrowers’ business performance was collected and recorded. As a result, SBA lacks quality information to help assess program performance in these areas. The SBA has also not taken steps to ensure that its planned new data reporting system will capture the information needed to assess the performance of the program. Specifically, as of August 2019, the SBA had not taken the appropriate pre-planning steps, such as involving the relevant offices in the SBA or reviewing the data that will be needed to assess the performance of the program.

The microcredit program collaborates informally with other SBA programs on surveillance and other activities, but has little collaboration (e.g. no information sharing agreement) with other federal agencies that are ‘engage in microcredit activities. As a result, the program may miss opportunities to improve collaboration and leverage existing resources of agencies that collect similar types of data. Additionally, although the SBA reports some aggregate data on the financial performance of the program, it does not include data on the populations served. Communicating this data publicly, as other agencies do, could provide greater transparency on program results and achievements.

Why GAO did this study

The SBA’s microcredit program integrates microfinance (loans up to $ 50,000) with training and technical assistance for small businesses, including those owned by women, low-income entrepreneurs, veterans and minorities . John S. McCain’s National Defense Authorization Act for fiscal 2019 included a provision for GAO to review the program.

This report examines (1) the characteristics of borrowers and intermediaries in the microcredit program, (2) program monitoring of intermediaries and borrowers, (3) measures of program performance and (4) collaboration within the SBA and with other agencies.

The GAO reviewed the program documents; analyzed SBA demographics and performance data; reviewed documents on similar programs of the ministries of treasury and agriculture; and interviewed representatives of the agency. GAO also reviewed documents and interviewed officials from a non-generalizable sample of 10 intermediaries, selected to provide a range for the number of loans made and the average loan size.


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