What GAO found
In fiscal year 2020, Congress provided the Small Business Administration (SBA) with nearly $ 3.4 billion in additional funding to manage small business assistance during the COVID-19 pandemic, including loan programs such as the Program Wage Protection (PPP) and EIDL Disaster Loans). This amount is seven times greater than typical annual SBA resources for salaries and expenses (a budget category that includes many administrative costs). SBA spending plans show that the agency planned to use the additional administrative funds primarily for contract and staffing expenses.
As of January 31, 2021, SBA had committed about 57% ($ 1.9 billion) and had spent 49% ($ 1.6 billion) of the additional endowments. SBA used approximately three-quarters of these funds for contractual services and approximately one-fifth for personnel costs (payroll, benefits, and overtime) (see figure).
Obligations and expenses of SBA for the financial year 2020 Supplementary credits for administrative expenses at January 31, 2021, by category of use
Note: Percentages may not add up to 100 due to rounding.
SBA has used supplemental funds for a variety of contractual services, including (1) loan processing and other loan management services and (2) information technology products and services. For example, as of January 31, 2021, SBA had committed about $ 750 million in additional funds for a contract to process EIDL loan applications and loan decision recommendations. As of that date, SBA had also owed about $ 150 million to a contract to improve SBA’s technology to implement PPP loan forgiveness provisions. In terms of staff costs, SBA determined that it needed large increases in temporary staff to manage the largest volume of assistance during the pandemic. According to SBA, the agency hired more than 6,000 temporary employees (nearly half of them for loan specialist positions) for the office that manages the EIDL program. SBA also reported hiring about 400 temporary employees (about two-thirds of them for loan specialist positions) for other components of the SBA, including the office that manages PPP.
Why GAO did this study
The COVID-19 pandemic disrupted small businesses and generated the immediate need for emergency funding to keep businesses running. In response, Congress drastically increased the amount of loans, grants, and other financial aid available from SBA. To help SBA manage the large volume of assistance, Congress provided the agency with additional funds for administrative expenses.
Congress included a statutory provision for GAO to report on SBA’s use of the additional appropriations provided for fiscal year 2020 for administrative expenses. This report discusses (1) the amount of additional credits that SBA received in fiscal year 2020 for administrative expenses and the intended uses of these funds, and (2) the extent to which SBA had required and spent these funds. from January 31, 2021, and for what purposes.
To carry out this work, GAO reviewed the allocation legislation, analyzed SBA spending plans and financial data, and interviewed SBA officials.
For more information, contact William B. Shear at (202) 512-8678 or firstname.lastname@example.org.