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The Voice: Policy - August 7, 2018

August 7, 2018


Mid-Year Policy Review: Moving the Needle on AEO Priorities 

Every month we provide alerts and insights on the policy issues gaining traction in Congress and the Administration. As we hit the midpoint of 2018, it’s time for us to commence a midyear performance review of our policymakers to determine if they are addressing the needs of microbusinesses. 

Key priorities for AEO and our network this legislative cycle have been FY2019 funding, entrepreneurial training programs and improving pathways to capital for underserved populations and communities. 

Funding efforts have been focused around the FY 2019 Financial Services and General Government Appropriations (FSGG) bill, which includes funding for Treasury’s CDFI Fund and other small business loan and technical assistance programs. The bill heads to conference for both sides to hammer out the differences as part of a four-bill spending package. We are waiting for the final report to determine the final funding levels for these programs. However, most of the programs appear to have funding close to the AEO numbers. 

AEO advocated for and won on funding levels for the CDFI program, beating back significant cuts proposed by the Administration in both its FY2018 rescissions package and the President’s budget proposal for FY2019. We did not do this alone – we collaborated with other organizations who amplified our voice and we know our action alerts resulted in AEO member outreach to their Members of Congress. In addition, our advocacy resulted in an increase in funding for the Microloan program. We await the final number for the Women’s Business Centers but remain hopeful that an amendment by Rep. Stephanie Murphy which increased for Women’s Business Centers by $600,000, to $19 million will be adopted in the Conference. 

AEO continues to be the primary advocate on behalf of is the SBA PRIME program, providing critical support to organizations who support entrepreneurs in economically distressed areas. The House of Representatives passed their appropriations legislation funding this program for FY2019 at the same level as FY2018 - $5 million. The Senate version cuts funding of the program down to $2.5 million. We are still hopeful that the PRIME program stays at the $5 million level. 

The chart below highlights the funding levels in each chamber’s version, compared to FY2018 funding and AEO’s requests.

Small Business Legislation

 

The House has passed numerous pieces of legislation with a small business focus. In fact, the House Small Business Committee has been one of the most productive and bipartisan committees in Congress this session, holding an array of hearings and passing a number of small business bills on various issues such as access to capital, tax, regulation, and procurement. The Senate passed a bill, S.526, which changed the loan amount available to intermediaries in the microloan program from $5 million to $6 million. The House now needs to act. 

On other access to capital issues, President Trump signed into law a bill passed by the House & Senate to strengthen the Small Business Administration’s (SBA) oversight of its loan programs and increase maximum lending authority. The Small Business 7(a) Lending Oversight Reform Act will help the SBA increase efficiency of the (7)a Loan program and expand its reach by strengthening the SBA’s Office of Credit Risk Management which manages the loan program, enhancing the SBA’s lender oversight review process, and providing the SBA Administrator with flexibility to increase the program’s maximum lending authority should it be reached. According to the SBA7(a) lending to women-owned businesses (both majority and minority-owned) grew in total dollar and volume in FY2017, exceeding $7.5 billion which is an increase of $298 million from FY2016. 

Also signed into law was theSmall Business Investment Opportunity Actwhich will increase the amount of leverage made available to small business investment companies (SBICs) to assist business owners using that program access more capital. 

This year the Administration began to implement Opportunity Zones, which were created in the Tax Cuts and Jobs Act to spur investment in distressed communities throughout the country. Treasury and the IRS finalized Opportunity Zones in all 50 states. We’re now waiting on additional guidance from the IRS and the Treasury Department on the establishment and certification of Opportunity Funds. 

So, how did lawmakers do? When it comes to passing funding bills, the Congress has been more successful at passing individual appropriations bills this year than in recent memory. They also put the 7(a) program on better footing and it appears the Opportunity Zones could be very impactful. We are encouraged by the activity on Capitol Hill, but we are never satisfied. With your help, we will continue to carry forward the mission of microbusinesses, especially those who are underserved. The rising tide lifts all boats.


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