Senator criticizes SBA initiatives

Several new Small Business Administration programs could jeopardize the

agency's core mission, says Sen. Christopher "Kit" Bond.

According to Bond, chairman of the Senate Small Business Committee, SBA's

fiscal 2001 budget does not include enough money to staff existing

programs.

Also, the "strain of financing a range of new programs" raises doubts about

the agency's ability to

start a computerized loan monitoring system, Bond said.

Congress mandated the computer system to monitor SBA loan programs and

lenders who participate in 1997. The first phase of the $24 million system

is scheduled for completion this year.

"It is unclear to me how the SBA will meet its human capital needs, its

funding challenge and its challenge to retool for the 21st century

at the same time it rolls out a raft of new programs," Bond said. "Congress

has approved substantial budgets for SBA.... However, I continue to receive

reports that offices supporting key programs are underfunded or

understaffed."

But SBA Administrator Aida Alvarez said the agency has contracted out

services to the private sector so that SBA can downsize and use its staff

strategically.

"All this has been accomplished while keeping our fiscal house in order,"

Alvarez said.

Bond was particularly critical of SBA's proposed New Market Venture Capital

Program, designed to increase technical assistance to women,

minorities and businesses in moderate-income rural areas and inner cities.

Bond believes the program duplicates actions taken by

existing SBA initiatives.

Alvarez said the program is expected to fill a huge "unmet need in

America's inner cities, poor rural areas and Native American reservations."

The SBA is asking for more than $1 billion in fiscal 2001, a 28 percent

increase from last year. Part of the money would be used to improve the

agency's internal management and infrastructure including:

* $13 million for systems modernization and lender oversight and risk

management activities.

* $7 million for information technology support.

* $4 million to train and transition SBA's work force.