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Obama's Budget to Cut Small Business by 45%

By Jason Beahm on February 17, 2011 | Last updated on March 21, 2019

We recently wrote that it looked as if the Obama administration is planning to gut the Small Business Administration. We now know that President Obama does in fact intend to make dramatic cuts to the SBA budget, after the President released his budget proposal.

"We have to tighten our belt, too, and we have to make tough choices," SBA Administrator Karen Mills said in a conference call with reporters, CNN Money reports.

That's because while the SBA received $963 million in supplemental appropriations in fiscal year 2010, on top of its $824 million budget, it can't count on anything of the sort in 2011. As of December 31, 2010, such stimulus measures have come to an end.

That led to a big rush for small businesses to get loans at the close of the year, followed by a lull in early 2011, said Mills, CNN Money reports. But now it seems that borrowers and lenders are beginning to come back.

Under the SBA budget proposal, the SBA will see a drop in overall funding of 45%. The actual SBA budget went down by $8 million, from $993 million to $985 million. However, this year there will be no supplemental allocations. That means that the SBA will have to tighten its belt in a major way when it comes to small business programs.

One thing already mentioned is that the SBA will have to decrease funding to Small Business Development Centers by $10 million. They also plan to cut staff for disaster loan programs by $8 million. Of course those two cuts are minor compared to the total budget cut.

All in all, it makes for a tough situation for small business programs. That's especially true because the SBA has to deal with an uncertain situation. Congress has yet to approve Obama's budget for 2011, which means that the government is currently operating on a month-to-month basis.

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