U.S. SMALL BUSINESS ADMINISTRATION

Statement of Regulatory Priorities

Overview

The mission of the U.S. Small Business Administration (SBA) is to maintain and strengthen the Nation's economy by enabling the establishment and viability of small businesses and by assisting in the physical and economic recovery of communities after disasters. In carrying out this mission, SBA strives to improve the economic environment for small businesses, including those in areas that have significantly higher unemployment and lower income levels than the Nation's averages and those in traditionally underserved markets. SBA has several financial, procurement, and technical assistance programs that provide a crucial foundation for those starting or growing a small business. For example, the Agency serves as a guarantor of loans made to small business by lenders that participate in SBA's programs, and also licenses small business investment companies that make equity and debt investments in qualifying small businesses using a combination of privately raised capital and SBA guaranteed leverage. SBA also funds various training and mentoring programs to help small businesses, particularly businesses owned by women, veterans, minorities, and other historically underrepresented groups, gain access to Federal government contracting opportunities. The Agency also provides management and technical assistance to existing or potential small business owners through various grants, cooperative agreements or contracts. Finally, as a vital part of its purpose, SBA also provides direct financial assistance to homeowners, renters, and businesses to repair or replace their property in the aftermath of a disaster.

Reducing Burden on Small Businesses

SBA's regulatory policy reflects a commitment to developing regulations that reduce or eliminate the burden on the public, in particular the Agency's core constituents-small businesses. SBA's regulatory process generally includes an assessment of the costs and benefits of the regulations as required by Executive Order 12866, "Regulatory Planning and Review;" Executive Order 13563, "Improving Regulation and Regulatory Review;" and the Regulatory Flexibility Act. SBA's program offices are particularly invested in finding ways to reduce the burden imposed by the Agency's core activities in its loan, grant, innovation, and procurement programs.

On January 30, 2017, President Trump issued E.O. 13771, ''Reducing Regulation and Controlling Regulatory Costs,'' 82 FR 9339, which establishes principles for prioritizing an agency's regulatory and deregulatory actions. E.O. 13771 was followed by E.O. 13777, "Enforcing the Regulatory Agenda,'' 82 FR 12285 (February 24, 2017), which identified processes for agencies to follow in overseeing their regulatory programs. This Agenda was prepared in accordance with both E.O. 13771 and E.O. 13777, and SBA will continue to work internally, as well as with the Office of Management and Budget, to fully integrate the executive orders and implementing OMB principles into the SBA rulemaking processes. As part of that effort, SBA issued a Request for Information in the Federal Register requesting public input on which SBA regulations should be repealed, replaced, or modified because they are obsolete, unnecessary, ineffective or burdensome. 82 FR 38617 (August 15, 2017). In addition, SBA's Office of Advocacy is hosting a series of small business roundtables in order to hear firsthand from small businesses facing regulatory burdens. For more information on these roundtables, please visit https://www.sba.gov/advocacy/regulatory-reform.

Based on the requirements of EO 13771 and OMB guidance, SBA currently anticipates that 3 of the 29 rulemakings that will appear in the Agency's Regulatory Agenda will be regulatory actions and 1 will be a deregulatory action. All other rulemakings are either not subject to EO 13771 or there is insufficient information at this stage to determine whether they are regulatory or deregulatory actions. SBA continues to work on assessing the incremental cost savings of these Agenda items, which do not include non-rulemakings, such as guidance documents, or information collections.

Openness and Transparency

SBA promotes transparency, collaboration, and public participation in its rulemaking process. To that end, SBA routinely solicits comments on its regulations, even those that are not subject to the public notice and comment requirement under the Administrative Procedures Act. Where appropriate, SBA also conducts hearings, webinars, and other public events as part of its regulatory process.

Regulatory Framework

The SBA Strategic Plan serves as the foundation for the regulations that the Agency will develop during the next twelve months. This Strategic Plan provides a framework for strengthening, streamlining, and simplifying SBA's programs while leveraging collaborative relationships with other agencies and the private sector to maximize the tools small business owners and entrepreneurs need to drive American innovation and strengthen the economy. The plan sets out three strategic goals: (1) growing businesses and creating jobs; (2) serving as the voice for small business; and (3) building an SBA that meets the needs of today's and tomorrow's small businesses. In order to achieve these goals SBA will, among other objectives, focus on:

Expanding access to capital through SBA's extensive lending network;

Ensuring Federal contracting goals are met or exceeded by collaborating across the Federal Government to expand opportunities for small businesses and strengthen the integrity of the Federal contracting data and certification process;

Strengthening SBA's relevance to high growth entrepreneurs and small businesses to more effectively drive innovation and job creation; and

Mitigating risk and improving program oversight.

The regulations reported in SBA's semi-annual regulatory agenda and plan are intended to facilitate achievement of these goals and objectives. Over the next twelve months, SBA's highest priorities will be to implement the following three regulations.

EO 13771 Designation - Regulatory Action:

(1) SBA Express Loan Program; Export Express Program (RIN 3245-AG74);

This rule will propose to amend the regulations for the SBA Express and Export Express loan programs. Current regulations, as well as policy and procedural guidance, provide an extensive framework for the delivery of SBA's 7(a) guaranteed loans through participating private sector lenders. These requirements add time and expense for lenders who must not only comply with their primary banking regulator but also with the SBA program requirements. SBA is authorized to reduce some of its requirements for small dollar loans ($350,000 or less) and permit lenders to apply many of their conventional underwriting rules instead. This proposed regulation will solicit public comment on the terms and conditions that would apply to these reduced requirements. The rule will also propose to not require certain SBA mandated forms, which in some instances may be redundant, and increase costs for lenders to deliver loans to small businesses. Since cost is an important consideration for lenders when assessing the benefits of participating in SBA programs, streamlining program requirements should increase lender participation, particularly for community banks, credit unions and other mission based lenders that generally serve rural communities and underserved populations with small loans. In addition, SBA continues to explore the economic feasibility of the RISE After Disaster Act of 2015 Recovery Opportunity Loan Program.

EO 13771 Designation - Other Actions:

(2) Women's Business Center Program (RIN 3245-AG02).

SBA's Women's Business Center Program is authorized by section 29 of the Small Business Act. The program provides financial assistance to private nonprofit organizations to conduct 5-year projects for the benefit of small business concerns owned and controlled by women. There are currently no regulations that govern the administration, management or oversight of the WBC program, including the statutorily required regulations related to disclosure of certain information during a financial audit of the non-profit organization. By finalizing the proposed rule that was published in the Federal Register on November 22, 2016 (81 F.R. 83718), this rule will resolve the regulatory gap and provide standardized and transparent guidance for program participants.

This final rule will codify the program requirements and procedures for WBCs as outlined in statute, including:

eligibility criteria for selection as a WBC;

use of Federal funds;

standards for WBCs to effectively carry out program duties and responsibilities;

use and disclosure of client data as stipulated in statute;

conditions for receipt of supplemental funding to provide services in a declared major disaster area; and

requirements for reporting on financial and programmatic performance.

The rule will streamline the policy and procedural requirements of the WBC Program, which are currently included in the Program Announcement and Notice of Award (NOA). In addition, certain amendments to government-wide grant requirements will be incorporated.

(3) Women-Owned Small Business and Economically Disadvantaged Women-Owned Small Business -- Certification (RIN 3245-AG75).

SBA is proposing to amend its regulations to implement amendments to the Women-Owned Small Business (WOSB) and Economically Disadvantaged Women-Owned Small Business (EDWOSB) Federal Contract Program that were authorized by section 825 of the National Defense Authorization Act of 2015. Based on this authority, SBA is proposing to create a certification program for its WOSB and EDWOSB contracting program.

The current WOSB and EDWOSB contracting program permits firms to self-certify for the program or to be certified by a third party certifier (TPC). The program currently requires firms to submit documentation to an SBA-maintained electronic document repository. SBA regulations currently require that contracting officers must check the repository for every WOSB or EDWOSB contract awardee.

The proposed rule will create an SBA certification process, in addition to the certifications issued by TPCs. This will create an SBA certification option for WOSB and EDWOSBs similar to other SBA contracting programs. SBA's proposed rule will also contain provisions for increased oversight in order to ensure continuing eligibly of certified program participants.

The creation of an SBA certification program will remove the self-certification option, and also remove the requirement that contracting officers review repository documents of WOSB and EDWOSB contract awardees. This shift of responsibilities to SBA will enable contracting officers to focus more on awarding awards, which should lead to an increased number of set-aside or sole source contracts for WOSBs and EDWOSBs.