    [Appendix]
    [Detailed Budget Estimates by Agency]
    [Small Business Administration]
    [From the U.S. Government Printing Office, www.gpo.gov]

                         THE BUDGET FOR FISCAL YEAR 1998

    [[Page 987]]

                          SMALL BUSINESS ADMINISTRATION

        The budget provides $701 million in new budget authority for the
    Small Business Administration (SBA). When combined with anticipated
    carryover and decreased loan subsidy costs, this funding level allows
    SBA to continue to expand assistance to small businesses at a reduced
    cost to the Federal taxpayer.

        In 1998, SBA proposes to continue to increase its reliance on its
    private sector partners. Three initiatives will allow SBA to complete
    its transition from physically servicing and liquidating its $36 billion
    loan portfolio to overseeing its private sector partners. First, 7(a)
    General Business lenders will be required to service and liquidate all
    loans approved after FY 1997. Second, SBA will sell its $10 billion
    portfolio of defaulted guarantees and direct loans beginning in FY 1998.
    Third, SBA requests $18 million to improve its portfolio monitoring
    capabilities. These proposals will allow SBA to focus its limited
    resources on expanding assistance to small businesses while relying on
    its private sector partners for ``back-end'' activities. The budget
    estimates that these proposals will lead to lower credit,
    administrative, and subsidy costs.

        The budget proposes growth in programs to expand access to capital,
    assist disadvantaged small businesses, and provide education and
    training. As part of SBA's goal of stretching taxpayers' dollars, the
    budget also assumes that (1) Small Business Development Companies will
    charge counseling fees to substitute for a reduction in federal grants
    and proposes that (2) disaster loan borrowers pay an interest rate equal
    to the rate on Treasury securities of comparable maturity.

                                  Federal Funds

    General and special funds:

                              Salaries and Expenses

        For necessary expenses, not otherwise provided for, of the Small
    Business Administration as authorized by Public Law 103-403, including
    hire of passenger motor vehicles as authorized by 31 U.S.C. 1343 and
    1344, and not to exceed $3,500 for official reception and representation
    expenses, [$223,547,000, of which $1,000,000 shall only be available for
    obligation and expenditure for projects jointly developed, implemented
    and administered with the Minority Business Development Agency of the
    Department of Commerce] $246,100,000: Provided, That the Administrator
    is authorized to charge fees to cover the cost of publications developed
    by the Small Business Administration, and certain loan servicing
    activities: Provided further, That notwithstanding 31 U.S.C. 3302,
    revenues received from all such activities shall be credited to this
    account, to be available for carrying out these purposes without further
    appropriations: Provided further, That [$75,500,000] $57,500,000 shall
    be available to fund grants for performance in fiscal year [1997] 1998
    or fiscal year [1998] 1999 as authorized by section 21 of the Small
    Business Act, as amended. [In addition, for expenses not otherwise
    provided for, of the Small Business Administration, $11,500,000, of
    which: $3,000,000 shall be available for a grant to continue the WVHTC
    Foundation outreach program to assist small business development;
    $7,000,000 shall be available for a grant to the Center for Rural
    Development in Somerset, Kentucky, for small business and rural
    technology development assistance; $1,000,000 shall be available for a
    grant to Indiana State University for the renovation and equipping of a
    training facility, to assist in creating small business and economic
    development opportunities; and $500,000 shall be available for a
    continuation grant to the Center for Entrepreneurial Opportunity in
    Greensburg, Pennsylvania, to provide for small business consulting and
    assistance.] (Departments of Commerce, Justice, and State, the
    Judiciary, and Related Agencies Appropriations Act, 1997.)

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-0100-0-1-376      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.01 Government Contracting and
            Minority Enterprise Development.          21          21          32
    00.02 Disaster assistance...............         112         126         123
    00.03 Economic development..............         117         132         127
    00.04 Management and administration.....          83          75          77
    00.05 Executive direction...............           2           1           1
    00.06 General counsel...................           5           5           5
    00.07 Congressional and legislative
            affairs.........................           1           1           1
    00.08 Hearings and appeals..............           1           1           1
    00.09 Communications and publications...           3           2           2
    00.11 Advocacy..........................           5           5           5
    00.12 Field operations..................           3           4           5
    00.13 Equal Employment Opportunity and
            civil rights compliance.........           2           2           2
    00.14 Regional and district offices.....         123         123         126
    00.15 Chief financial officer...........          10           9          10
                                               ---------   ---------  ----------
    10.00   Total obligations...............         488         507         517
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance available,
            start of year: Uninvested
            balance.........................           4
    22.00 New budget authority (gross)......         487         508         517
    22.22 Unobligated balance transferred
            from other accounts.............           2
    22.30 Unobligated balance expiring......          -5
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......         488         508         517
    23.95 New obligations...................        -488        -507        -517
    24.40 Unobligated balance available, end
            of year: Uninvested balance.....
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Current:

    40.00   Appropriation...................         219         235         246
          Permanent:

    68.00   Spending authority from
              offsetting collections:
              Offsetting collections (cash).         268         273         271
                                               ---------   ---------  ----------
    70.00   Total new budget authority
              (gross).......................         487         508         517
    ----------------------------------------------------------------------------

        Change in unpaid obligations:
    72.40 Unpaid obligations, start of year:
            Obligated balance: Appropriation         174         182         181
    73.10 New obligations...................         488         507         517
    73.20 Total outlays (gross).............        -477        -508        -514
    73.40 Adjustments in expired accounts...          -3
    74.40 Unpaid obligations, end of year:
            Obligated balance: Appropriation         182         181         184
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new current authority         169         180         188
    86.93 Outlays from current balances.....          40          55          55
    86.97 Outlays from new permanent
            authority.......................         268         273         271
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........         477         508         514
    ----------------------------------------------------------------------------

        Offsets:
          Against gross budget authority and outlays:

            Offsetting collections (cash)
                from:
              Federal sources:
    88.00       Payments from business loan
                  program account...........         -97         -95         -97
    88.00       Payments from disaster loan
                  program account...........        -164        -127        -173
    88.00       Reprogramming of disaster
                  loan subsidy..............                     -50
    88.40     Non-Federal sources...........          -7          -1          -1
                                               ---------   ---------  ----------
    88.90       Total, offsetting
                  collections (cash)........        -268        -273        -271
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................         219         235         246
    90.00 Outlays...........................         209         235         243
    ---------------------------------------------------------------------------

    [[Page 988]]

                     Summary of Budget Authority and Outlays

                            (in millions of dollars)

                                         1996 actual  1997 est.   1998 est.
    Enacted/requested:
      Budget Authority..................         219         235         246
      Outlays...........................         209         235         243
    Legislative proposal, subject to
        PAYGO:
      Budget Authority..................                                   1
      Outlays...........................                                   1
                                        ------------------------------------
    Total:
      Budget Authority..................         219         235         247
      Outlays...........................         209         235         244
                                        ====================================

        This appropriation funds salaries, other administrative expenses of
    the Small Business Administration (SBA), and business education and
    training programs. The SBA provides assistance to small businesses and
    to victims of natural disasters through these primary program areas:

        Economic Development.--The Associate Deputy Administrator (ADA) for
    this function exercises direction over the following SBA program
    offices: Financial Assistance; Surety Bond Guarantees; Investment;
    International Trade; Women's Business Ownership; Small Business
    Development Centers; Veterans' Affairs; Native-American Affairs; and
    Business Initiatives, which includes the Service Corps of Retired
    Executives.

        These offices are responsible for the administration of all SBA
    credit and business education training programs. In 1998, SBA plans to
    continue providing business management training and tools for the small
    business community through U.S. Export Assistance Centers, and Business
    Information Centers. In addition, through new programs such as LowDoc,
    FASTRAK, and the Export Working Capital Programs (EWCP), SBA has begun
    targeting financial assistance to segments of the population that have
    historically been under represented in SBA's credit programs. The SBA's
    efforts to reduce unnecessary paperwork and make the agency more
    customer-friendly have attracted new banks interested in establishing
    partnerships with SBA.

        Government Contracting and Minority Enterprise Development.--The
    Associate Deputy Administrator for this function exercises direction
    over the following SBA program offices: Government Contracting; Minority
    Enterprise Development; Technology; and Size Standards. These offices
    are responsible for effectively advocating for small businesses in the
    area of government contracting. Government contracting activities are
    aimed at ensuring that small businesses receive a fair share of Federal
    procurement awards. The Minority Enterprise Development programs provide
    assistance to socially and economically disadvantaged small business
    concerns, primarily in the areas of business development and Federal
    procurement. Through this office, SBA assists firms that are owned by
    disadvantaged persons to help them develop into viable competitive
    businesses in a reasonable period of time.

        Disaster Assistance.--The Associate Administrator for the Office of
    Disaster Assistance oversees the Disaster Loan Program which provides
    physical disaster loans to individuals and businesses of any size, and
    economic injury loans to small businesses unable to obtain credit
    elsewhere. In addition to Presidentially-declared disasters, the program
    provides loans when a declaration is made by the SBA Administrator.
    Program eligibility is based on financial criteria and interest rates
    are set according to statutory formulas. In recent years, the average
    interest rate on disaster loans has been about four percent. The budget
    proposes to reduce the cost of disaster loan subsidies by increasing the
    interest rate on disaster loans to the Treasury's cost of borrowing.

        Advocacy.--The Chief Counsel for Advocacy is charged by law to be an
    independent voice for small business within the government, and to: (1)
    examine the role of small business in the economy and its contribution
    to competition; (2) evaluate financial markets and the credit needs of
    small business; (3) measure the costs of regulation on small business;
    and, (4) monitor agency compliance with the Regulatory Flexibility Act
    (RFA), as amended by the Small Business Regulatory Enforcement Fairness
    Act (SBREFA).

    Program Performance

        Small Business Development Centers (SBDCs).--The SBDCs provide long
    term counseling to small businesses at about 1,000 locations in 50
    states. In FY 1996, nearly 600,000 customers were helped of which
    roughly 40 percent of the customers were women and 17 percent were
    minorities.

        Service Corps of Retired Executives (SCORE).--Using one-on-one
    counseling and workshops SCORE reaches about 270,000 business owners
    annually using approximately 13,000 counselors through approximately 400
    chapters located across the country. Counseling costs to the Government
    are less than $3 per hour. For 1998, the budget proposes a funding level
    of $3.5 million for this program.

        Microloan Technical Assistance.--The Microloan Program helps support
    the Administration's initiative to put those on welfare to work by
    providing opportunities to start up small businesses using SBA-
    guaranteed microloans. Microloan Technical Assistance grants ensure that
    microloan borrowers are provided the necessary education and training
    needed for them to succeed. The budget provides $16.5 million in
    Microloan grants.

        Outreach Initiatives.--The SBA is actively involved in fostering the
    development of entrepreneurial skills and economic development
    opportunities involving veterans, women and businesses engaged in
    international trade. The budget proposes a 1998 funding level of
    approximately $1 million to support veterans, women, and international
    trade outreach initiatives.

        Women's Demonstration Program.--Through this program the SBA makes
    awards to private entities to deliver entrepreneurial training programs
    for women business owners or those interested in starting a business. In
    1996, 54 demonstration sites, or business centers, were operating in 28
    states and Washington, DC. Each offers financial, management, marketing
    and technical assistance to current and potential women business owners.
    This budget proposes $4 million for this program in 1998 to establish 10
    to 12 new sites, and to continue two initiatives begun in 1996: the
    Women's Business Intranet (which links all of the demonstration sites)
    and a virtual demonstration site on the Internet, which will allow women
    nationwide to have access to these services.

        Business Information Centers (BIC).--These centers offer self-help
    hardware, software and reference materials, and on-site counseling
    provided by SCORE volunteers. Individuals who are in business or are
    interested in starting a business will find many resources specifically
    targeted at helping businesses grow or find new market niches. For 1998,
    the budget proposes $500 thousand for this program.

        Native American Affairs.--This program supports the economic
    development needs of reservation communities. In 1996, over 400 loans
    were made to Native Americans under the agency's 7(a) program, amounting
    to more than $66 million in loans. The agency also opened 15 new Tribal
    Business Information Centers (TBICs) to deliver business education and
    training on reservations.

        Business Assistance Publications.--The SBA provides publications on
    a self-funding basis and distributes an estimated 300,000 items to the
    public each year.

        One Stop Capital Shops (OSCS).--One Stop Capital Shops are located
    in Empowerment Zone, Enterprise Community, and Rural Economic Area
    Partnership communities. The objectives of these programs are to
    stimulate and sustain eco-

    [[Page 989]]

    nomic development in these economically distressed and underserved
    areas. The OSCS is a delivery mechanism for existing SBA programs that
    emphasize the use of public/private relationships. The SBA serves as a
    catalyst by offering its business development and capital resources
    together in one location with other federal, state, local, and private
    sector resources in order to leverage and complement those resources and
    provide better customer service. Based on the performance of the 15
    shops, the SBA plans to expand the number in 1998.

        Other Services.--The SBA co-sponsors a variety of special activities
    with the for-profit, not-for-profit, and public sectors. Many co-
    sponsored events cost customers between $35 and $100, with comparable
    commercially-sponsored training costing $300 to $800. Among the most
    visible public/private co-sponsorships undertaken is SBA Online, SBA's
    electronic bulletin board for small businesses. The SBA Online system
    has been principally underwritten by Sprint, which has paid the cost of
    all toll-free connections to the system. Between October, 1992, and
    January, 1996, more than one and a half million connections to SBA
    Online were logged, and more than 120,000 individuals used the system on
    a regular basis.

    Performance Measures

        Program and Policy Goals under the GPRA.--President Clinton has made
    small business formation and growth an essential part of his national
    economic plan. He has asked the Small Business Administration to focus
    on five program and policy goals as part of the plan: (1) improve small
    businesses' access to capital; (2) reduce the regulatory and paperwork
    burden on small firms; (3) offer quality business education,
    information, and training; (4) serve as the President's eyes and ears,
    reporting back to him on the needs of small business, and function as an
    ``advocate'' for small businesses; and, (5) help disaster victims to
    rebuild so they can contribute again to the Nation's economy.

        SBA Strategic Plan.--It is the mission of the SBA to serve America's
    small businesses in the most cost effective manner possible to help
    preserve free competition, to contribute to strengthening the Nation's
    economy, and to assist disaster-ravaged communities recover from their
    losses.

        Performance Indicators.--In the long run, the Agency's performance
    goal is true economic development and the capacity to assess how SBA
    assistance contributes to helping small businesses succeed. A variety of
    credit and non-credit business output and outcome measures are included
    in the SBA strategic and annual performance plan to measure progress in
    the following areas: businesses created, maintained, and/or expanded;
    jobs created, and revenues generated; cost effective access to quality
    training, counseling and information; private capital leveraged more
    effectively; improved customer satisfaction; reduced paperwork, more
    understandable regulations, and increased compliance; increased use of
    resource partners and more flexible lending; small businesses receiving
    an increased share of Federal procurement and research; efficient
    delivery of disaster service and a greater satisfaction level; and,
    delivery of SBA programs that ``work better and cost less.''

    1998 Proposals

        For agency operating expenses, the budget proposes to continue SBA's
    efforts to increase administrative efficiencies and enhance the delivery
    of its programs. Although the agency's programs have grown substantially
    in recent years, SBA's administrative budget has been able to decline
    gradually as efficiencies have been realized. Total employment at the
    agency, excluding disaster-funded positions which fluctuate with the
    incidence of natural disaster activity, has been reduced by more than 22
    percent since the end of 1992.

        Portfolio monitoring.--Over the past four years, SBA has
    aggressively increased access to capital, reduced staffing, and
    delegated authority to its private sector partners. In order to support
    these trends and to maintain a quality portfolio, the budget requests
    $18 million for improving portfolio monitoring. This initiative, which
    is a key part of the 1998 7(a) General Business Loan Guaranty Program
    proposal, will allow SBA to: recruit expertise in lender oversight;
    develop the necessary in-house systems for lender monitoring; contract
    with a financial advisor on asset disposition; and establish performance
    standards for SBA lenders similar to those developed by other financial
    institutions such as Fannie Mae. The ADA for Economic Development will
    re-engineer portfolio management, incorporate the best practices of the
    other financial institutions with lender oversight, and develop lender
    performance goals. The Chief Information Officer will direct the design
    of a corporte database that provides timely information on portfolio
    performance, and the Chief Financial Officer will guide the collection
    of financial information, analysis and the reporting needed to support
    this enhanced oversight capability.

        SBDC counseling fees.--The budget requests $57.5 million for the
    SBDC program, $16 million below the 1997 level. The Administrator
    assumes that SBDCs will charge fees for counseling services to offset
    this reduction in Federal support.

        Disadvantaged business development.--The budget includes additional
    resources that will enable SBA to assume increased responsibilities
    pursuant to the U.S. Department of Justice's Affirmative Action Review.
    The budget provides $1.9 million to re-engineer business processes and
    improve SBA's ability to provide support for Small Disadvantaged
    Businesses. The budget also proposes to increase the 7(j) program to
    $9.2 million in order to provide increased management and technical
    assistance and training for the development of firms owned by socially-
    and economically-disadvantaged individuals. Assistance to these 8(a)
    program participants will be tailored to the developmental needs of
    individual firms. The existing 7(j) Executive Education Program will be
    expanded to four additional sites to reach a geographically wider
    audience of new entrepreneurs.

        PASS database.--The 1998 budget includes $1.2 million for the
    Procurement Automated Source System (PASS). PASS is the cornerstone of
    SBA's system for posting the profiles of small businesses interested in
    procurement opportunities with the federal government or its large,
    prime contractors. The system also will accept data required to support
    the certification process as recommended by the Department of Justice's
    Affirmative Action Review and will be an important component of new
    efforts to ensure compliance with federal acquisition regulations.

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-0100-0-1-376      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------

          Personnel compensation:

    11.1    Full-time permanent.............         144         148         152
    11.3    Other than full-time permanent..           7           7           7
    11.5    Other personnel compensation....           4           4           4
                                               ---------   ---------  ----------
    11.9      Total personnel compensation..         155         159         163
    12.1  Civilian personnel benefits.......          39          40          41
    21.0  Travel and transportation of
            persons.........................           5           5           5
    22.0  Transportation of things..........           1
    23.1  Rental payments to GSA............          26          25          27
    23.3  Communications, utilities, and
            miscellaneous charges...........          12          12          13
    24.0  Printing and reproduction.........           2           1           1
    25.2  Other services....................          35          31          54
    26.0  Supplies and materials............           2           1           1
    31.0  Equipment.........................           3           1           1
    41.0  Grants, subsidies, and
            contributions...................          96         106          88
          Undistributed:

    92.0    Undistributed (disaster loan
              making).......................          93         104         102
    92.0    Undistributed (disaster loan
              servicing)....................          19          22          21
                                               ---------   ---------  ----------

    [[Page 990]]

    99.9    Total obligations...............         488         507         517
    ---------------------------------------------------------------------------

                                  Personnel Summary

    ----------------------------------------------------------------------------
    Identification code 73-0100-0-1-376      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------
        Total compensable workyears:
    1001  Full-time equivalent employment...       4,640       4,450       4,522
    1005  Full-time equivalent of overtime
            and holiday hours...............         300         290         300
    ---------------------------------------------------------------------------
        Note.--The personnel summary includes regular (non-disaster) full-
    time equivalents (FTEs) of 3,023, 2,985, and 3,047 in 1996, 1997, and
    1998, respectively.

                              Salaries and Expenses

                    (Legislative proposal, subject to PAYGO)

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-0100-4-1-376      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.03 Economic development..............                                   1
                                               ---------   ---------  ----------
    10.00   Total obligations (object class
              25.2).........................                                   1
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    22.00 New budget authority (gross)......                                   1
    23.95 New obligations...................                                  -1
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
    42.00 Transferred from other accounts...                                   1
    ----------------------------------------------------------------------------

        Change in unpaid obligations:
    73.10 New obligations...................                                   1
    73.20 Total outlays (gross).............                                  -1
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new current authority                                   1
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................                                   1
    90.00 Outlays...........................                                   1
    ---------------------------------------------------------------------------

        In 1998, the budget proposes that fees collected for SBIC
    examination and licensing be collected by the Salaries and Expenses
    Account to fund the costs of contracting out for SBIC examination and
    licensing.

                           Office of Inspector General

        For necessary expenses of the Office of Inspector General in
    carrying out the provisions of the Inspector General Act of 1978, as
    amended (5 U.S.C. App. 1-11, as amended by Public Law 100-504),
    [$9,000,000] $10,600,000. (Departments of Commerce, Justice, and State,
    the Judiciary, and Related Agencies Appropriations Act, 1997.)

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-0200-0-1-376      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.01 Management and counsel............           2           2           2
    00.02 Audit.............................           3           3           3
    00.03 Investigations....................           4           4           5
    00.04 Disaster..........................           1           2           1
                                               ---------   ---------  ----------
    10.00   Total obligations...............          10          11          11
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance available,
            start of year: Uninvested
            balance.........................           2           1
    22.00 New budget authority (gross)......           9           9          11
    22.22 Unobligated balance transferred
            from other accounts.............                       1
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......          11          11          11
    23.95 New obligations...................         -10         -11         -11
    24.40 Unobligated balance available, end
            of year: Uninvested balance.....           1
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
    40.00 Appropriation.....................           9           9          11
    ----------------------------------------------------------------------------

        Change in unpaid obligations:
    72.40 Unpaid obligations, start of year:
            Obligated balance: Appropriation           1           1           1
    73.10 New obligations...................          10          11          11
    73.20 Total outlays (gross).............         -10         -10         -11
    74.40 Unpaid obligations, end of year:
            Obligated balance: Appropriation           1           1           1
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new current authority           8           8          10
    86.93 Outlays from current balances.....           2           2           1
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........          10          10          11
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................           9           9          11
    90.00 Outlays...........................          10          10          11
    ---------------------------------------------------------------------------

        This appropriation provides funds for agency-wide audit,
    investigative, and inspection/evaluative functions to identify and
    recommend corrections of management or program deficiencies which may
    create conditions for fraud, waste, or abuse. The audit function
    provides internal audit, external audit, and inspection/evaluation
    oversight activities. Internal audits assess the general management and
    efficiency of SBA program operations. External audits review all program
    participants and their compliance with SBA regulations and procedural
    requirements. Inspection/evaluations address specific requirements of
    program management and effectiveness. The investigative function detects
    and investigates allegations of illegal and improper activities
    involving agency personnel, programs, and operations.

        The 1998 budget requests $10.6 million to support an increase in
    staff required for critical oversight of SBA's burgeoning business loan
    portfolio, the disaster assistance program, and other programs. The OIG
    oversight efforts and investigative activities: (1) enhance the SBA's
    efficiency and effectiveness; (2) serve to deter fraud and abuse in
    agency programs; and (3) consistently demonstrated a high rate of return
    on invested funds.

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-0200-0-1-376      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------
    11.1  Personnel compensation: Full-time
            permanent.......................           7           8           8
    12.1  Civilian personnel benefits.......           1           2           2
    92.0  Undistributed.....................           2           1           1
                                               ---------   ---------  ----------
    99.9    Total obligations...............          10          11          11
    ---------------------------------------------------------------------------

                                  Personnel Summary

    ----------------------------------------------------------------------------
    Identification code 73-0200-0-1-376      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------
    1001  Total compensable workyears: Full-
            time equivalent employment......         109         110         112
    ---------------------------------------------------------------------------

    Public enterprise funds:

                      Surety Bond Guarantees Revolving Fund

        For additional capital for the ``Surety Bond Guarantees Revolving
    Fund'', authorized by the Small Business Investment Act, as amended,
    [$3,730,000] $3,500,000, to remain available without fiscal year
    limitation as authorized by 15 U.S.C. 631 note. (Departments of
    Commerce, Justice, and State, the Judiciary, and Related Agencies
    Appropriations Act, 1997.)

    [[Page 991]]

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-4156-0-3-376      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    10.00 Total obligations (object class
            42.0)...........................          16          16          16
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.90 Unobligated balance available,
            start of year: Fund balance.....           2           1           6
    22.00 New budget authority (gross)......          16          22          21
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......          18          23          27
    23.95 New obligations...................         -16         -16         -16
    24.90 Unobligated balance available, end
            of year: Fund balance...........           1           6          11
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Current:

    40.00   Appropriation...................           3           4           4
          Permanent:

    68.00   Spending authority from
              offsetting collections:
              Offsetting collections (cash).          13          17          17
                                               ---------   ---------  ----------
    70.00   Total new budget authority
              (gross).......................          16          21          21
    ----------------------------------------------------------------------------

        Change in unpaid obligations:
    72.90 Unpaid obligations, start of year:
            Obligated balance: Fund balance.          40          41          39
    73.10 New obligations...................          16          16          16
    73.20 Total outlays (gross).............         -15         -18         -18
    74.90 Unpaid obligations, end of year:
            Obligated balance: Fund balance.          41          39          37
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new current authority           2           1           1
    86.93 Outlays from current balances.....
    86.97 Outlays from new permanent
            authority.......................          13          17          17
    86.98 Outlays from permanent balances...
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........          15          18          18
    ----------------------------------------------------------------------------

        Offsets:
          Against gross budget authority and outlays:

    88.40   Offsetting collections (cash)
              from: Non-Federal sources.....         -13         -17         -17
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................           3           5           4
    90.00 Outlays...........................           2           1           1
    ---------------------------------------------------------------------------

        Under this program, the Small Business Administration guarantees a
    portion of the losses sustained by a surety company as a result of the
    issuance of a bid, payment, and/or performance bond to a small business
    concern.

        In 1998, the budget proposes a program level anticipated to
    accommodate expected demand from the preferred surety bond program
    authorized in P.L. 100-590. The SBA will continue to rely on both
    preferred and prior approval sureties to deliver this program, with SBA
    oversight.

                            Statement of Operations (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   73-4156-0-3-376    1995 actual    1996 actual     1997 est.      1998 est.
    -----------------------------------------------------------------------------------------------
    0101  Revenue...........................          20             16            22             21
    0102  Expense...........................         -18            -16           -16            -16
                                            ------------ --------------  ------------  -------------
    0109  Net loss..........................           2                            6              5
    -----------------------------------------------------------------------------------------------

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   73-4156-0-3-376    1995 actual    1996 actual     1997 est.      1998 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
    1101  Federal assets: Fund balances with
            Treasury........................          40             43            43             43
    1206  Non-Federal assets: Receivables,
            net.............................           2                            2              2
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................          42             43            45             45
        LIABILITIES:
    2201  Non-Federal liabilities: Accounts
            payable.........................          38             41            36             36
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............          38             41            36             36
        NET POSITION:
    3100  Appropriated capital..............         319            321           326            326
    3300  Cumulative results of operations..        -315           -320          -317           -317
                                            ------------ --------------  ------------  -------------
    3999    Total net position..............           4              1             9              9
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position          42             42            45             45
    -----------------------------------------------------------------------------------------------

    Credit accounts:

                         Business Loans Program Account

        For [the cost of direct loans, $1,691,000, and for] the cost of
    guaranteed loans, [$182,017,000] $173,235,000, as authorized by 15
    U.S.C. 631 note, of which [$2,317,000, to be available until expended,
    shall be for the Microloan Guarantee Program, and of which $40,510,000]
    $20,233,000 for the Small Business Investment Company Debentures Program
    and the Small Business Investment Company Participating Securities
    Program shall remain available until September 30, [1998] 1999:
    Provided, That such costs, including the cost of modifying such loans,
    shall be as defined in section 502 of the Congressional Budget Act of
    1974: Provided further, That during fiscal year [1997] 1998, commitments
    to guarantee loans under section 503 of the Small Business Investment
    Act of 1958, as amended, shall not exceed [the amount of financings
    authorized under section 20(n)(2)(B) of the Small Business Act, as
    amended] $2,300,000,000, and direct loan obligations and commitments to
    guarantee loans under section 7(m) of the Small Business Act of 1953, as
    amended, shall not exceed $44,086,000.
        In addition, for administrative expenses to carry out the direct and
    guaranteed loan programs, $94,000,000, which may be transferred to and
    merged with the appropriations for Salaries and Expenses. (Departments
    of Commerce, Justice, and State, the Judiciary, and Related Agencies
    Appropriations Act, 1997.)

                  Unavailable Collections (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-1154-0-1-376      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------
        Balance, start of year:
    01.99 Balance, start of year............                                 188
        Receipts:
    02.01 Business loan program downward
            reestimate of subsidy...........                     188          50
                                               ---------   ---------  ----------
    04.00 Total: Balances and collections...                     188         238
    07.99 Total balance, end of year........                     188         238
    ---------------------------------------------------------------------------

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-1154-0-1-376      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.01 Direct loan subsidy...............           1           2           2
    00.02 Guaranteed loan subsidy...........         117         226         180
    00.07 Reestimate of loan guarantee
            subsidy.........................         245         183
    00.08 Interest on reestimates of loan
            guarantee subsidy...............          29          15
    00.09 Administrative expenses...........          93          94          94
    00.10 Microloan grants (in S&E).........           4           1           3
                                               ---------   ---------  ----------
    10.00   Total obligations...............         489         521         279
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.90 Unobligated balance available,
            start of year: Fund balance.....          41          77          33
    22.00 New budget authority (gross)......         527         478         267
    22.21 Unobligated balance transferred to
            other accounts..................          -2
    22.30 Unobligated balance expiring......          -1                     -23
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......         565         555         277
    23.95 New obligations...................        -489        -521        -279
    24.90 Unobligated balance available, end
            of year: Fund balance...........          77          33
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Current:

    40.00   Appropriation...................         253         279         267
          Permanent:

    60.05   Appropriation (indefinite)......         274         199
                                               ---------   ---------  ----------
    70.00   Total new budget authority
              (gross).......................         527         478         267
    ----------------------------------------------------------------------------

    [[Page 992]]

        Change in unpaid obligations:
    72.40 Unpaid obligations, start of year:
            Obligated balance: Appropriation         129          96         160
    73.10 New obligations...................         489         521         279
    73.20 Total outlays (gross).............        -522        -458        -272
    74.40 Unpaid obligations, end of year:
            Obligated balance: Appropriation          96         160         165
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new current authority         119         176         168
    86.93 Outlays from current balances.....         129          83         104
    86.97 Outlays from new permanent
            authority.......................         274         199
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........         522         458         272
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................         527         478         267
    90.00 Outlays...........................         522         458         272
    ---------------------------------------------------------------------------

    Summary of Loan Levels, Subsidy Budget Authority and Outlays by Program (in
                                millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-1154-0-1-376      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------
        Direct loan levels supportable by subsidy
                    budget authority:
    1150  Micro loans.......................           9          24          19
                                               ---------   ---------  ----------
    1159    Total direct loan levels........           9          24          19
        Direct loan subsidy (in percent):
    1320  Micro loans.......................       15.69        8.86       10.28
                                               ---------   ---------  ----------
    1329    Weighted average subsidy rate...       15.69        8.86       10.28
        Direct loan subsidy budget authority:
    1330  Micro loans.......................           1           2           2
                                               ---------   ---------  ----------
    1339    Total subsidy budget authority..           1           2           2
        Direct loan subsidy outlays:
    1340  Micro loans.......................           2           2           2
                                               ---------   ---------  ----------
    1349    Total subsidy outlays...........           2           2           2
    ----------------------------------------------------------------------------

        Guaranteed loan levels supportable by subsidy
                    budget authority:
    2150  General business--7(a)............       7,328       7,815       6,595
    2150  General business--7(a) DELTA......          23          48          88
    2150  Section 504.......................       2,443       2,650       2,300
    2150  Section 504 DELTA.................          10          50         139
    2150  SBIC debentures...................         109         300         376
    2150  SBIC participating securities.....         238         410         456
    2150  Micro loan guarantees.............           2          19          25
                                               ---------   ---------  ----------
    2159    Total loan guarantee levels.....      10,153      11,292       9,979
        Guaranteed loan subsidy (in percent):
    2320  General business--7(a)............        1.06        2.54        2.32
    2320  General business--7(a) DELTA......        3.15        4.57        3.25
    2320  Section 504.......................        0.00        0.00        0.00
    2320  Section 504 DELTA.................        0.57        1.01        0.72
    2320  SBIC debentures...................       15.46        3.19        2.30
    2320  SBIC participating securities.....        9.00        3.29        2.54
    2320  Micro loan guarantees.............       11.95        8.21        8.12
                                               ---------   ---------  ----------
    2329    Weighted average subsidy rate...        1.15        2.12        1.51
        Guaranteed loan subsidy budget authority:
    2330  General business--7(a)............          78         199         153
    2330  General business--7(a) DELTA......           1           2           3
    2330  Section 504.......................
    2330  Section 504 DELTA.................                       1           1
    2330  SBIC debentures...................          17          10           9
    2330  SBIC participating securities.....          21          14          12
    2330  Micro loan guarantees.............                       2           2
                                               ---------   ---------  ----------
    2339    Total subsidy budget authority..         117         228         180
        Guaranteed loan subsidy outlays:
    2340  General business--7(a)............         103         135         149
    2340  General business--7(a) DELTA......                       1           2
    2340  Section 504.......................           5           1
    2340  Section 504 DELTA.................                                   1
    2340  SBIC debentures...................          17          10           9
    2340  SBIC participating securities.....          21          14          12
    2340  Micro loan guarantees.............                       1           2
                                               ---------   ---------  ----------
    2349    Total subsidy outlays...........         146         162         175
    ---------------------------------------------------------------------------

        As required by the Federal Credit Reform Act of 1990, this account
    records, for this program, the subsidy costs associated with the direct
    loans obligated and loan guarantees committed in 1992 and beyond
    (including modifications of direct loans or loan guarantees that
    resulted from obligations or commitments in any year), as well as
    administrative expenses of this program. The subsidy amounts are
    estimated on a present value basis; the administrative expenses are
    estimated on a cash basis.

        Budget authority is not requested for the section 504 and microloan
    programs in 1998. Instead, an appropriated loan level that currently
    reflects expected needs is requested.

        General Business Assistance.--The Small Business Administration
    guarantees loans under its section 7(a) General Business Loan program to
    small businesses that are unable to obtain private financing. These
    loans must be of such value or so secured as to reasonably assure
    repayment. No loan may be made unless the financial assistance is not
    otherwise available on reasonable terms. Under the guarantee plan, the
    SBA agrees to purchase the guaranteed portion of the loan only upon
    default.

        Investment Company Assistance.--A primary function of small business
    investment companies is to provide a source of equity capital or long-
    term loans to new or expanding small businesses. The Small Business
    Investment Act, as amended, authorizes the SBA to guarantee the timely
    payment of all principal and interest, as scheduled, on debentures
    issued by such companies. In addition, since 1994, the SBA has
    guaranteed the performance of participating securities issued by these
    companies.

        Development Company Assistance.--Under the Small Business Investment
    Act, the SBA makes loans through State and local development companies
    to small businesses. Through these programs, the SBA promotes economic
    development and job creation and maintenance by stimulating the flow of
    long-term financing to small business concerns for projects involving
    fixed assets. These projects are designed to create or retain a
    meaningful number of jobs in the communities affected, with a special
    emphasis on distressed areas. Approximately 243,500 jobs were created or
    maintained through the $2.4 billion in loans guaranteed under the
    Development Company programs in 1996.

    Program Performance

        Program performance and policy goals.--SBA has the following program
    performance and policy objectives to support its first GPRA goal of
    Improving Access to Capital: (1) focus lending on ``traditionally under-
    served'' small businesses; (2) offer specialized financing, such as
    venture capital, export financing, and bonding opportunities; (3)
    improve methods of providing credit assistance through electronic
    lending, less documentation, centralized functions, and one-stop capital
    access points; (4) reduce costs by maintaining high quality portfolio
    through an improved liquidation process; and, (5) effectively implement
    a loan asset sales program.

        Performance Indicators.--During the past three years SBA has focused
    on quantitative, measureable lending goals for underserved segments of
    the small business market in each district, e.g., minorities, women, and
    small exporters. The SBA began this process in 1994 when it established
    internal performance agreements that contained two-year lending goals.
    Using goal monitoring, the agency is able to track, on a regular basis,
    the status of each district office's progress in meeting these goals.

        Appropriate finance program effectiveness assessment involves the
    consideration of a number of indicators. First, effec-

    [[Page 993]]

    tiveness can be assessed by loan-making activity levels--the number and
    dollar amount of loans guaranteed by SBA. Second, effectiveness can be
    measured by the health of the loan portfolio--its currency and default
    figures, and the agency's ultimate record on loan recovery. Beyond these
    very tangible indicators of success are the more difficult-to-measure
    indicators. These include such things as the economic benefits that
    accrue to the small business, its employees, and the community in which
    it is located.

        The number and dollar volume of loans made under the section 7(a)
    loan program has increased dramatically in recent years. In 1991, SBA
    made or guaranteed approximately 9,000 loans totaling about $4 billion.
    In 1996, those figures had risen to approximately 46,000 loans totaling
    about $7.3 billion. The section 504 program has also shown impressive
    growth. In 1991, the SBA provided about 1,400 financings totaling nearly
    $400 million. By 1996, those figures had increased to about 6,900
    financings for $2.4 billion. Performance measures to be used in 1998 to
    assess progress in achieving the above goals follow.

    ------------------------------------------------------------------------
                  Outputs                              Outcomes
    ------------------------------------------------------------------------
     Number and dollar value of   Financial viability:
     guaranteed loans.                    higher percentages of business
     Percentages of loans going   skill in business after five
     to underserved markets.              years, and higher percentage of
     Client access to SBA         borrowers who fully repay loans.
     services (customer satisfaction).    Numbers of businesses
     Percentage of loans taken    created, expanded and/or
     that are current.                    maintained.
     More flexible credit         Jobs created and revenue
     delivery instruments developed.      generated.
    ------------------------------------------------------------------------

        Section 7(a): Reflecting an improvement of the 7(a) loan portfolio
    and implementation of SBA's Liquidation Improvement Project, the
    baseline (current services) 7(a) subsidy rate declines from 2.54 percent
    to 2.32 percent. The budget proposes to reduce this rate to 1.80 percent
    through a three-part policy initiative. First, lenders will be required
    to service and liquidate all loans approved after 1997. This initiative
    builds on SBA's record of success in working with lenders under the
    LowDoc, Preferred Lender, and Fastrack programs, which are now serviced
    and liquidated by 7(a) lenders. This initiative will also allow SBA to
    focus its resources on expanding access to capital and portfolio
    monitoring, rather than physically servicing and liquidating defaulted
    loans. Second, SBA will establish a deferred purchase policy for all new
    loans, requiring lenders to liquidate all business chattel prior to
    SBA's default claim payment, reducing the Government's present value
    default costs. Third, SBA will invest $18 million in portfolio
    monitoring improvements. This funding will be used to recruit expertise
    in lender oversight, establish financial performance goals for private
    sector partners, create a database for tracking lender and portfolio
    performance, and develop a management information system to provide
    timely and accurate information to agency management. In combination,
    these three proposals will lower the 7(a) subsidy rate from 2.32 percent
    to 1.80 percent, reducing the subsidy budget authority needed to fund
    the requested $8.5 billion loan level by $44.2 million. This reduction
    reflects the estimated improvement in defaults and an increase in
    recoveries resulting from improved monitoring of servicing and more
    efficient liquidation performed by SBA lenders. The lower rate also
    reflects the present value savings resulting from the deferred purchase.

        Section 504: The 1998 subsidy rate reflects improved 504 loan
    performance. However, this improvement is more than offset by reductions
    in the estimate of recoveries on defaulted loans. Therefore, to maintain
    the baseline subsidy rate at zero, the budget increases the pass-through
    fee to the 1997 authorized level of .9375%.

        Loan asset sales: As part of SBA's transition from loan servicing to
    lender oversight, the budget proposes the sale of all direct and
    defaulted business loans in FYs 1998 and 1999. (SBA disaster loans will
    be sold over a three-year period.) These sales will allow SBA to focus
    its limited resources on expanding access to capital rather than
    servicing and liquidating a growing portfolio. The budget estimates that
    SBA's business loan assets will be sold at a net gain to the Government.

        Microloan Program: The Agency proposes to continue the Microloan
    direct and guarantee loan programs in 1998, using carryover funding
    remaining from 1997.

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-1154-0-1-376      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------
    25.2  Other services....................          97          95          97
    41.0  Grants, subsidies, and
            contributions...................         392         426         182
                                               ---------   ---------  ----------
    99.9    Total obligations...............         489         521         279
    ---------------------------------------------------------------------------

                          Business Loan Program Account

                  (Legislative proposal, not subject to PAYGO)

    Summary of Loan Levels, Subsidy Budget Authority and Outlays by Program (in
                                millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-1154-2-1-376      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------
        Guaranteed loan levels supportable by subsidy
                    budget authority:
    2150  General business--7(a)............                               1,905
        Guaranteed loan subsidy (in percent):
    2320  General business--7(a)............                               -0.52
    ---------------------------------------------------------------------------

                     Business Direct Loan Financing Account

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-4148-0-3-376      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.01 Direct loans......................           9          24          39
    00.02 Interest on Treasury borrowing....           7           8          10
                                               ---------   ---------  ----------
    10.00   Total obligations...............          16          32          49
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    22.00 New financing authority (gross)...          15          30          50
    23.95 New obligations...................         -16         -32         -49
    ----------------------------------------------------------------------------

        New financing authority (gross), detail:
    67.15 Authority to borrow (indefinite)..          13          24          41
          Spending authority from offsetting
              collections:

    68.00   Offsetting collections (cash)...          32          19          46
    68.10   Change in receivables from
              program account...............          -1          -3           1
    68.47   Portion applied to debt
              reduction.....................         -29         -10         -38
                                               ---------   ---------  ----------
    68.90     Spending authority from
                offsetting collections
                (total).....................           2           6           9
                                               ---------   ---------  ----------
    70.00   Total new financing authority
              (gross).......................          15          30          50
    ----------------------------------------------------------------------------

        Change in unpaid obligations:
          Unpaid obligations, start of year:

    72.90   Obligated balance: Fund balance.          54          44          11
    72.95   Receivables from program account           5           4           1
                                               ---------   ---------  ----------
    72.99     Total unpaid obligations,
                start of year...............          59          48          12
    73.10 New obligations...................          16          32          49
    73.20 Total financing disbursements
            (gross).........................         -28         -68         -41
          Unpaid obligations, end of year:

    74.90   Obligated balance: Fund balance.          44          11          17
    74.95   Receivables from program account           4           1           2
                                               ---------   ---------  ----------
    74.99     Total unpaid obligations, end
                of year.....................          48          12          19
    87.00 Total financing disbursements
            (gross).........................          28          68          41
    ----------------------------------------------------------------------------

    [[Page 994]]

        Offsets:
          Against gross financing authority and
              financing disbursements:

            Offsetting collections (cash)
                from:
    88.00     Federal sources: Payments from
                program account.............         -12          -2          -4
              Non-Federal sources:
    88.40       Repayments of principal, net         -14          -8         -11
    88.40       Interest received on loans..          -6          -9          -8
    88.40       Proceeds from loan asset
                  sale......................                                 -23
                                               ---------   ---------  ----------
    88.90       Total, offsetting
                  collections (cash)........         -32         -19         -46
    88.95 Change in receivables from program
            accounts........................           1           3          -1
    ----------------------------------------------------------------------------

        Net financing authority and financing
            disbursements:
    89.00 Financing authority...............         -16          14           3
    90.00 Financing disbursements...........          -4          49          -5
    ---------------------------------------------------------------------------

                   Status of Direct Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-4148-0-3-376      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------
        Position with respect to appropriations act
                    limitation on obligations:
    1111  Limitation on direct loans........
    1131  Direct loan obligations exempt
            from limitation.................           9          24          19
                                               ---------   ---------  ----------
    1150    Total direct loan obligations...           9          24          19
    ----------------------------------------------------------------------------

        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........         167         161         155
    1231  Disbursements: Direct loan
            disbursements...................          12          12          13
    1251  Repayments: Repayments and
            prepayments.....................         -14         -14         -28
    1264  Write-offs for default: Other
            adjustments, net................          -4          -4          -8
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........         161         155         132
    ---------------------------------------------------------------------------

        As required by the Federal Credit Reform Act of 1990, this non-
    budgetary account records all cash flows to and from the Government
    resulting from direct loans obligated in 1992 and beyond (including
    modifications of direct loans that resulted from obligations in any
    year). The amounts in this account are a means of financing and are not
    included in the budget totals.

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   73-4148-0-3-376    1995 actual    1996 actual     1997 est.      1998 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
          Investments in US securities:

    1106    Federal assets: Receivables, net           3            302           310            319
          Net value of assets related to
              post-1991 direct loans
              receivable:

    1401    Direct loans receivable, gross..         126            120           123            127
    1405    Allowance for subsidy cost (-)..          -8            -53           -54            -56
                                            ------------ --------------  ------------  -------------
    1499      Net present value of assets
                related to direct loans.....         118             67            69             71
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................         121            369           379            390
        LIABILITIES:
    2104  Federal liabilities: Resources
            payable to Treasury.............         118            369           379            390
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............         118            369           379            390
        NET POSITION:
    3100  Appropriated capital..............           3
                                            ------------ --------------  ------------  -------------
    3999    Total net position..............           3
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position         121            369           379            390
    -----------------------------------------------------------------------------------------------

                   Business Guaranteed Loan Financing Account

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-4149-0-3-376      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.01 Default claims....................         399         552         701
    00.02 Payment of downward reestimate to
            receipt account.................          16         188
    00.03 Payment to liquidation account....                                 188
    00.04 Negative subsidy from loan asset
            sales...........................                                  50
                                               ---------   ---------  ----------
    10.00   Total obligations...............         415         740         939
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.90 Unobligated balance available,
            start of year: Fund balance.....       1,076       1,376       1,461
    22.00 New financing authority (gross)...         716         826       1,017
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......       1,792       2,202       2,478
    23.95 New obligations...................        -415        -740        -939
    24.90 Unobligated balance available, end
            of year: Fund balance...........       1,376       1,461       1,539
    ----------------------------------------------------------------------------

        New financing authority (gross), detail:
          Spending authority from offsetting
              collections:

    68.00   Offsetting collections (cash)...         755         826       1,037
    68.10   Change in receivables from
              program account...............         -39                     -20
                                               ---------   ---------  ----------
    68.90     Spending authority from
                offsetting collections
                (total).....................         716         826       1,017
                                               ---------   ---------  ----------
    70.00   Total new financing authority
              (gross).......................         716         826       1,017
    ----------------------------------------------------------------------------

        Change in unpaid obligations:
    72.95 Unpaid obligations, start of year:
            Receivables from program account         125          86          86
    73.10 New obligations...................         415         740         939
    73.20 Total financing disbursements
            (gross).........................        -455        -741        -959
    74.95 Unpaid obligations, end of year:
            Receivables from program account          86          86          66
    87.00 Total financing disbursements
            (gross).........................         455         741         959
    ----------------------------------------------------------------------------

        Offsets:
          Against gross financing authority and
              financing disbursements:

            Offsetting collections (cash)
                from:
              Federal sources:
    88.00       Payments from program
                  account...................        -205        -225        -179
    88.00       Payment from program
                  account--Reestimates......        -274        -199
    88.25     Interest on uninvested funds..         -36         -65         -65
              Non-Federal sources:
    88.40       Fees........................        -153        -169        -183
    88.40       Proceeds from loan asset
                  sales.....................                                -386
    88.40       Recoveries..................         -87        -168        -224
                                               ---------   ---------  ----------
    88.90       Total, offsetting
                  collections (cash)........        -755        -826      -1,037
    88.95 Change in receivables from program
            accounts........................          39                      20
    ----------------------------------------------------------------------------

        Net financing authority and financing
            disbursements:
    89.00 Financing authority...............
    90.00 Financing disbursements...........        -299         -85         -78
    ---------------------------------------------------------------------------

                 Status of Guaranteed Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-4149-0-3-376      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------
        Position with respect to appropriations act
                    limitation on commitments:
    2111  Limitation on guaranteed loans
            made by private lenders.........
    2131  Guaranteed loan commitments exempt
            from limitation.................      10,154      10,641      11,887
                                               ---------   ---------  ----------
    2150    Total guaranteed loan
              commitments...................      10,154      10,641      11,887
    ----------------------------------------------------------------------------

        Cumulative balance of guaranteed loans
                    outstanding:
    2210  Outstanding, start of year........      20,907      24,630      28,452
    2231  Disbursements of new guaranteed
            loans...........................       6,773       6,955       7,143
    2251  Repayments and prepayments........      -2,651      -2,723      -2,796
    2261  Adjustments: Terminations for
            default that result in loans
            receivable......................        -399        -410        -421
                                               ---------   ---------  ----------
    2290    Outstanding, end of year........      24,630      28,452      32,378
    ----------------------------------------------------------------------------

    [[Page 995]]

        Memorandum:
    2299  Guaranteed amount of guaranteed
            loans outstanding, end of year..      20,193      23,282      26,455
    ----------------------------------------------------------------------------

        Addendum:
          Cumulative balance of defaulted guaranteed
              loans that result in loans receivable:

    2310    Outstanding, start of year......         393         628         870
    2331    Disbursements for guaranteed
              loan claims...................         399         410         421
    2351    Repayments of loans receivable..         -62         -63         -65
    2361    Write-offs of loans receivable..        -102        -105        -107
    2364    Other adjustments, net..........                                -512
                                               ---------   ---------  ----------
    2390      Outstanding, end of year......         628         870         607
    ---------------------------------------------------------------------------

        As required by the Federal Credit Reform Act of 1990, this non-
    budgetary account records all cash flows to and from the Government
    resulting from loan guarantees committed in 1992 and beyond (including
    modifications of loan guarantees that resulted from commitments in any
    year). The amounts in this account are a means of financing and are not
    included in the budget totals.

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   73-4149-0-3-376    1995 actual    1996 actual     1997 est.      1998 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
          Federal assets:

    1101    Fund balances with Treasury.....       1,258          1,257         1,291          1,326
            Investments in US securities:
    1106      Receivables, net..............          55            164           168            173
          Net value of assets related to
              post-1991 acquired defaulted
              guaranteed loans receivable:

    1501    Defaulted guaranteed loans
              receivable, gross.............         527            628           870            607
    1502    Interest receivable.............          23             45            46             47
    1505    Allowance for subsidy cost (-)..        -331           -331          -340           -349
                                            ------------ --------------  ------------  -------------
    1599      Net present value of assets
                related to defaulted
                guaranteed loans............         219            342           576            305
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................       1,532          1,763         2,035          1,804
        LIABILITIES:
    2204  Non-Federal liabilities:
            Liabilities for loan guarantees.       1,451          1,763         2,035          1,804
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............       1,451          1,763         2,035          1,804
        NET POSITION:
    3100  Appropriated capital..............          81
                                            ------------ --------------  ------------  -------------
    3999    Total net position..............          81
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position       1,532          1,763         2,035          1,804
    -----------------------------------------------------------------------------------------------

                     Business Loan Fund Liquidating Account

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-4154-0-3-376      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
          Capital expenses:

    00.02   Defaults on guarantee loans--...         335         327         318
    00.05   Other expenses..................         106         103          50
                                               ---------   ---------  ----------
    00.91     Total capital expenses........         441         430         368
    01.01 Operating expenses: Interest
            expense to Treasury.............          84          70          30
                                               ---------   ---------  ----------
    10.00   Total obligations...............         525         500         398
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
          Unobligated balance available, start of year:

            Fund balance:
    21.90     Committed.....................           1           1           1
    21.90     Uncommitted...................         339         337         347
                                               ---------   ---------  ----------
    21.99     Total unobligated balance,
                start of year...............         340         338         348
    22.00 New budget authority (gross)......         566         551         610
    22.60 Redemption of debt................         -43         -42         -41
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......         863         847         917
    23.95 New obligations...................        -525        -500        -398
          Unobligated balance available, end of year:

            Fund balance:
    24.90     Committed.....................           1           1           1
    24.90     Uncommitted...................         337         347         518
                                               ---------   ---------  ----------
    24.99   Total unobligated balance, end
              of year.......................         338         348         519
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
    68.00 Spending authority from offsetting
            collections (gross): Offsetting
            collections (cash)..............         566         551         610
    ----------------------------------------------------------------------------

        Change in unpaid obligations:
    72.90 Unpaid obligations, start of year:
            Obligated balance: Fund balance.         327         389         439
    73.10 New obligations...................         525         500         398
    73.20 Total outlays (gross).............        -463        -450        -348
    74.90 Unpaid obligations, end of year:
            Obligated balance: Fund balance.         389         439         488
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.97 Outlays from new permanent
            authority.......................         463         450         348
    ----------------------------------------------------------------------------

        Offsets:
          Against gross budget authority and outlays:

            Offsetting collections (cash)
                from:
    88.00     Federal sources...............                                -188
              Non-Federal sources:
                Loan repayments:

    88.40         Financing programs........        -175        -171        -153
    88.40         Investment programs.......         -38         -37         -28
    88.40         SBIC obligations..........          -6          -5
    88.40         Section 503 development
                    obligations.............         -27         -27         -26
                Interest income:

    88.40         Financing programs........        -123        -120        -117
    88.40         Investment programs.......         -50         -48         -23
    88.40         Other income..............        -137        -133         -65
    88.40         Section 503 Prepayments...         -10         -10         -10
                                               ---------   ---------  ----------
    88.90       Total, offsetting
                  collections (cash)........        -566        -551        -610
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................
    90.00 Outlays...........................        -104        -101        -262
    ---------------------------------------------------------------------------

                   Status of Direct Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-4154-0-3-376      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------
              BUSINESS LOAN FUND, DIRECT
                  LOANS
        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........       1,675       1,352       1,050
    1232  Disbursements: Purchase of loans
            assets from the public..........         152         117          90
    1251  Repayments: Repayments and
            prepayments.....................        -214        -208        -101
    1262  Adjustments: Discount on loan
            asset sales to the public or
            discounted......................                                -439
    1263  Write-offs for default: Direct
            loans...........................        -261        -211         -82
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........       1,352       1,050         518
    ----------------------------------------------------------------------------

              SMALL BUSINESS INVESTMENT
                  COMPANY, DIRECT LOANS
        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........           6
          Repayments:

    1251    Repayments and prepayments......          -6
    1252    Proceeds from loan asset sales
              to the public or discounted...
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........
    ----------------------------------------------------------------------------

              SECTION 503 DEVELOPMENT
                  COMPANY, DIRECT LOANS
        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........         356         319         281
          Repayments:

    1251    Repayments and prepayments......         -22         -23         -20
    1252    Proceeds from loan asset sales
              to the public or discounted...         -15         -15         -13
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........         319         281         248
    ---------------------------------------------------------------------------

    [[Page 996]]

                 Status of Guaranteed Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-4154-0-3-376      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------
              BUSINESS LOAN FUND, LOAN
                  GUARANTEES
        Cumulative balance of guaranteed loans
                    outstanding:
    2210  Outstanding, start of year........       7,675       6,383       5,341
    2231  Disbursements of new guaranteed
            loans...........................           1           1           1
    2251  Repayments and prepayments........      -1,078        -896        -750
          Adjustments:

    2261    Terminations for default that
              result in loans receivable....        -201        -135         -91
    2264    Other adjustments, net..........         -14         -12         -10
                                               ---------   ---------  ----------
    2290    Outstanding, end of year........       6,383       5,341       4,491
    ----------------------------------------------------------------------------

        Memorandum:
    2299  Guaranteed amount of guaranteed
            loans outstanding, end of year..       5,495       4,598       3,866
    ----------------------------------------------------------------------------

        Addendum:
          Cumulative balance of defaulted guaranteed
              loans that result in loans receivable:

    2310    Outstanding, start of year......       1,054       1,255       1,390
    2331    Disbursements for guaranteed
              loan claims...................         201         135          91
                                               ---------   ---------  ----------
    2390      Outstanding, end of year......       1,255       1,390       1,481
    ---------------------------------------------------------------------------

        As required by the Federal Credit Reform Act of 1990, this account
    records, for this program, all cash flows to and from the Government
    resulting from direct loans obligated and loan guarantees committed
    prior to 1992. This account is shown on a cash basis. All new activity
    in this program in 1992 and beyond (including modifications of direct
    loans or loan guarantees that resulted from obligations or commitments
    in any year) is recorded in corresponding program and financing
    accounts.

                            Statement of Operations (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   73-4154-0-3-376    1995 actual    1996 actual     1997 est.      1998 est.
    -----------------------------------------------------------------------------------------------
    0101  Revenue...........................         170            189           210            234
    0102  Expense...........................        -185            149           165            184
                                            ------------ --------------  ------------  -------------
    0109  Net loss..........................         -15            338           375            418
    -----------------------------------------------------------------------------------------------

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   73-4154-0-3-376    1995 actual    1996 actual     1997 est.      1998 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
          Federal assets:

    1101    Fund balances with Treasury.....         666            727           794            866
            Investments in US securities:
    1104      Agency securities, par........         120            160           214            286
    1107      Advances and prepayments......          12              9             7              5
          Non-Federal assets:

    1206    Receivables, net................         485            816           780            745
    1207    Advances and prepayments........           7              7             7              7
          Net value of assets related to
              pre-1992 direct loans
              receivable and acquired
              defaulted guaranteed loans
              receivable:

    1601    Direct loans, gross.............       2,036          1,671         1,331            766
    1603    Allowance for estimated
              uncollectible loans and
              interest (-)..................      -1,215         -1,114          -787           -401
                                            ------------ --------------  ------------  -------------
    1699      Value of assets related to
                direct loans................         821            557           544            365
    1901  Other Federal assets: Other assets          99             61            37             23
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................       2,210          2,337         2,383          2,297
        LIABILITIES:
          Federal liabilities:

    2101    Accounts payable................       1,445          1,667         1,670          1,610
    2102    Interest payable................         156             94            96             96
            Debt:
    2103      Debt to the FFB...............         361            318           325            327
    2103      SBIC and development company
                participation certificates..                          7             7              7
          Non-Federal liabilities:

    2201    Accounts payable................          11             15            15             15
    2204    Liabilities for loan guarantees.         200             71            72             73
            Other:
    2207      Unearned revenue (advances)...          37
    2207      Other Liabilities.............                        165           168            169
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............       2,210          2,337         2,353          2,297
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position       2,210          2,337         2,353          2,297
    -----------------------------------------------------------------------------------------------

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-4154-0-3-376      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------
    33.0  Investments and loans.............         441         430         368
    43.0  Interest and dividends............          84          70          30
    99.0  Subtotal, reimbursable obligations         525         500         398
                                               ---------   ---------  ----------
    99.9    Total obligations...............         525         500         398
    ---------------------------------------------------------------------------

                     Business Loan Fund Liquidating Account

                    (Legislative proposal, subject to PAYGO)

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-4154-4-3-376      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.90 Unobligated balance available,
            start of year: Uncommitted......
    23.95 New obligations...................
    24.90 Unobligated balance available, end
            of year: Uncommitted............                                  -1
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................
    90.00 Outlays...........................
    ---------------------------------------------------------------------------

                         Disaster Loans Program Account

        [For the cost of direct loans authorized by section 7(b) of the
    Small Business Act, as amended, $105,432,000, to remain available until
    expended: Provided, That such costs, including the cost of modifying
    such loans, shall be as defined in section 502 of the Congressional
    Budget Act of 1974.]
        [In addition, for] For administrative expenses to carry out the
    direct loan program, [$86,500,000, including not to exceed $500,000 for
    the Office of Inspector General of the Small Business Administration for
    audits and reviews of disaster loans and the disaster loan program]
    $173,200,000, [and said sums] which may be transferred to and merged
    with appropriations for Salaries and Expenses [and Office of Inspector
    General]. (Departments of Commerce, Justice, and State, the Judiciary,
    and Related Agencies Appropriations Act, 1997.)

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-1152-0-1-453      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.01 Direct loan subsidy...............         243         150          90
    00.09 Administrative expenses...........         164         177         173
                                               ---------   ---------  ----------
    10.00   Total obligations...............         407         327         263
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance available,
            start of year: Uninvested
            balance.........................          92          83          83
    22.00 New budget authority (gross)......         331         327         173
    22.10 Resources available from
            recoveries of prior year
            obligations.....................          67                      35
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......         490         410         291
    23.95 New obligations...................        -407        -327        -263
    24.40 Unobligated balance available, end
            of year: Uninvested balance.....          83          83          28
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
    40.00 Appropriation.....................         331         327         173
    ----------------------------------------------------------------------------

    [[Page 997]]

        Change in unpaid obligations:
    72.40 Unpaid obligations, start of year:
            Obligated balance: Appropriation         251         157         173
    73.10 New obligations...................         407         327         263
    73.20 Total outlays (gross).............        -434        -311        -263
    73.45 Adjustments in unexpired accounts.         -67                     -35
    74.40 Unpaid obligations, end of year:
            Obligated balance: Appropriation         157         173         138
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new current authority         228         232         133
    86.93 Outlays from current balances.....         206          79         130
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........         434         311         263
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................         331         327         173
    90.00 Outlays...........................         434         311         263
    ---------------------------------------------------------------------------

    Summary of Loan Levels, Subsidy Budget Authority and Outlays by Program (in
                                millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-1152-0-1-453      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------
        Direct loan levels supportable by subsidy
                    budget authority:
    1150  Direct Disaster Loans.............         867         747         785
                                               ---------   ---------  ----------
    1159    Total direct loan levels........         867         747         785
        Direct loan subsidy (in percent):
    1320  Disaster subsidy rate.............        0.00        0.00        0.00
                                               ---------   ---------  ----------
    1329    Weighted average subsidy rate...       28.08       20.02       11.44
        Direct loan subsidy budget authority:
    1330  Disaster subsidy budget authority.         243         150          90
                                               ---------   ---------  ----------
    1339    Total subsidy budget authority..         243         150          90
        Direct loan subsidy outlays:
    1340  Disaster subsidy outlays..........         270         134          90
                                               ---------   ---------  ----------
    1349    Total subsidy outlays...........         270         134          90
    ----------------------------------------------------------------------------

        Administrative expense data:
    3510  Budget authority..................         164         177         173
    3590  Outlays from new authority........         164         177         173
    ---------------------------------------------------------------------------

        As required by the Federal Credit Reform Act of 1990, this account
    records, for loans made pursuant to section 7(b) of the Small Business
    Act, as amended, the subsidy costs associated with the direct loans
    obligated in 1992 and beyond (including modifications of direct loans or
    loan guarantees that resulted from obligations or commitments in any
    year), as well as administrative expenses of this program. The subsidy
    amounts are estimated on a present value basis; the administrative
    expenses are estimated on a cash basis.

        Disaster loans made pursuant to Section 7(b) of the Small Business
    Act are the primary form of Federal assistance for non-farm, private
    sector disaster losses. For this reason, the program is the only form of
    SBA assistance not limited to small businesses. Through this program,
    SBA helps homeowners, renters, businesses of all sizes, and non-profit
    organizations pay for the cost of rebuilding. Pursuant to the Small
    Business Act, the government subsidizes borrowers who have incurred
    uninsured losses or economic injury as the result of a natural disaster.
    These loans are also a critical source of economic stimulation in
    disaster-ravaged communities, helping to spur employment and stabilize
    the local tax base. Eligibility is based on financial criteria. There
    are three loan programs: physical disaster loans to individuals,
    physical disaster loans to businesses of any size, and economic injury
    loans to small businesses without credit available elsewhere.

    Program Performance

        Over the 41 year history of the program, SBA has helped over 1.3
    million disaster victims by providing more than $24.1 billion in
    disaster assistance. Over 90 percent has been to borrowers that
    otherwise would not have been able to rebuild. During 1996 alone, SBA
    approved nearly 38,000 disaster loans for an amount of almost $1
    billion.

        Program Performance and Policy Goals.--The SBA program performance
    and policy goals are: 1) provide disaster assistance to victims in the
    most effective and cost efficient manner; 2) deliver an effective
    program that achieves its public policy objectives; 3) provide customer-
    focused assistance that satisfactorily accommodates the needs of all
    disaster victims; 4) simplify and streamline the loan-making process by
    re-engineering forms, procedures and processes; and, 5) effectively
    implement the proposed asset sales program.

        Performance Indicators.--A true assessment of program effectivess is
    a long-term process, and there is much to learn about the true extent
    that the disaster loan program contributes to effective recovery. In the
    short term, SBA is committed to providing cost-effective delivery and
    high satisfaction levels to the customers who use its services. In the
    long run, the agency's goal is to facilitate true economic recovery and
    assess how the program's business recovery assistance contributes to the
    rebuilding of a local or regional economy. Performance measures to be
    used in 1998 to assess progress in achieving the above goals follow.

    ------------------------------------------------------------------------
                      Outputs                       Intermediate Outcomes
    ------------------------------------------------------------------------
    Loan decision within 7 to 20 days--number,  Increased funds available at
     percent.                                    time of need
    Initial disbursement ordered 4 days after   Improved customer
     receipt of loan closing documents--         satisfaction due to
     number, percent.                            simplified and less
                                                 burdensome processes
    Loans approved--number, dollar amount.....  Reduced costs to Government
    ------------------------------------------------------------------------

    1998 Proposals

        Under current law, interest rates fluctuate according to statutory
    formulas: a lower rate, not to exceed four percent, is available to
    applicants without credit available elsewhere; a higher rate, not to
    exceed eight percent, is charged to borrowers who have credit available
    elsewhere. To reduce the subsidy in this program, the budget proposes to
    increase the interest rate for borrowers without credit available
    elsewhere to the cost to the U.S. Treasury for securities of comparable
    maturity. For borrowers with access to credit elsewhere, the interest
    rate would be pegged above the Treasury rate. This change would reduce
    the subsidy from 23.46 percent to 11.44 percent, enabling more loans to
    be made with the same amount of budget authority. Baseline loan levels
    would increase from $383 million to $785 million, a difference of $402
    million. In the schedules below, the effects of the legislative proposal
    should not be added to the regular budget schedules.

        Historically, SBA has approved approximately $785 million in loans
    for disaster relief annually, excluding the effect of the 1994
    Northridge Earthquake. No appropriation of loan subsidy budget authority
    is requested for the Disaster Loans Program Account for 1998. The 1998
    loan program will be fully funded from anticipated carryforward balances
    provided the recommended revisions to the disaster loan interest rates
    are enacted.

        This budget requests $5.8 billion in contingent funding for FY 1998,
    the 1991-1997 average emergency spending under the BEA. This fund will
    be available to this and other accounts as the need arises. Please see
    the Emergency Requirements for Natural Disasters account in the Funds
    Appropriated to the President Chapter for more detailed information. The
    requested amount for future years will be based on average emergency
    funding under the BEA.

        The base programs will have access to the proposed contingency fund
    once all available appropriations in the affected account/accounts have
    been obligated, and a Presidential decision has been made to make
    additional funds available. The fund is meant to be flexible enough to
    respond to a variety of disasters and thus does not reserve or dedicate
    specific

    [[Page 998]]

    amounts within the total for the eligible programs. The flexibility of
    the fund is essential to meet the full range of disaster funding
    requirements.

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-1152-0-1-453      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------
    41.0  Direct obligations: Grants,
            subsidies, and contributions....         243         150          90
    99.0  Reimbursable obligations:
            Subtotal, reimbursable
            obligations.....................         164         177         173
                                               ---------   ---------  ----------
    99.9    Total obligations...............         407         327         263
    ---------------------------------------------------------------------------

                         Disaster Loans Program Account

                  (Legislative proposal, not subject to PAYGO)

    Summary of Loan Levels, Subsidy Budget Authority and Outlays by Program (in
                                millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-1152-2-1-453      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------
        Direct loan levels supportable by subsidy
                    budget authority:
    1150  Direct Disaster Loans.............                                 402
                                               ---------   ---------  ----------
    1159    Total direct loan levels........                                 402
    ---------------------------------------------------------------------------

                     Disaster Direct Loan Financing Account

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-4150-0-3-453      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.01 Direct loans......................         867         747         785
    00.02 Interest on Treasury borrowing....         296         396         459
    00.03 Purchase of loans from liquidating                                 100
                                               ---------   ---------  ----------
    10.00   Total obligations...............       1,163       1,143       1,344
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    22.00 New financing authority (gross)...       1,163       1,143       1,345
    23.95 New obligations...................      -1,163      -1,143      -1,344
    ----------------------------------------------------------------------------

        New financing authority (gross), detail:
    67.15 Authority to borrow (indefinite)..       1,311       1,436       1,643
          Spending authority from offsetting
              collections:

            Offsetting collections (cash):
    68.00     Offsetting collections (cash).         807         760         728
    68.00     Proceeds from loan asset sales
                (cash)......................                                 100
    68.10   Change in receivables from
              program account...............         -86         -47         -29
    68.47   Portion applied to debt
              reduction (-).................        -869      -1,006      -1,097
                                               ---------   ---------  ----------
    68.90     Spending authority from
                offsetting collections
                (total).....................        -148        -293        -298
                                               ---------   ---------  ----------
    70.00   Total new financing authority
              (gross).......................       1,163       1,143       1,345
    ----------------------------------------------------------------------------

        Change in unpaid obligations:
          Unpaid obligations, start of year:

    72.90   Obligated balance: Fund balance:
              Unpaid obligations............       1,870       2,053       1,824
    72.95   Receivables from program account         207         121          74
                                               ---------   ---------  ----------
    72.99     Total unpaid obligations,
                start of year...............       2,077       2,174       1,898
    73.10 New obligations...................       1,163       1,143       1,344
    73.20 Total financing disbursements
            (gross).........................      -1,066      -1,419      -1,422
          Unpaid obligations, end of year:

    74.90   Obligated balance: Fund balance:
              Unpaid obligations............       2,053       1,824       1,775
    74.95   Receivables from program account         121          74          45
                                               ---------   ---------  ----------
    74.99     Total unpaid obligations, end
                of year.....................       2,174       1,898       1,820
    87.00 Total financing disbursements
            (gross).........................       1,066       1,419       1,422
    ----------------------------------------------------------------------------

        Offsets:
          Against gross financing authority and
              financing disbursements:

            Offsetting collections (cash)
                from:
    88.00     Payments from program account.        -243        -150         -90
              Non-Federal sources:
    88.40       Repayments of principal, net                                -100
    88.40       Repayments of principal, net         -88        -120        -154
    88.40       Interest received on loans..        -476        -490        -484
                                               ---------   ---------  ----------
    88.90       Total, offsetting
                  collections (cash)........        -807        -760        -828
    88.95 Change in receivables from program
            accounts........................          86          47          29
    ----------------------------------------------------------------------------

        Net financing authority and financing
            disbursements:
    89.00 Financing authority...............         442         430         546
    90.00 Financing disbursements...........         259         659         594
    ---------------------------------------------------------------------------

                   Status of Direct Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-4150-0-3-453      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------
        Position with respect to appropriations act
                    limitation on obligations:
    1111  Limitation on direct loans........
    1131  Direct loan obligations exempt
            from limitation.................         867         747         785
                                               ---------   ---------  ----------
    1150    Total direct loan obligations...         867         747         785
    ----------------------------------------------------------------------------

        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........       6,748       7,227       7,391
    1231  Disbursements: Direct loan
            disbursements...................         946         874         638
          Repayments:

    1251    Repayments and prepayments......        -408        -610        -638
    1252    Proceeds from loan asset sales
              to the public or discounted...
    1264  Write-offs for default: Other
            adjustments, net................         -59        -100        -106
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........       7,227       7,391       7,285
    ---------------------------------------------------------------------------

        As required by the Federal Credit Reform Act of 1990, this non-
    budgetary account records all cash flows to and from the Government
    resulting from direct loans obligated in 1992 and beyond (including
    modifications of direct loans that resulted from obligations in any
    year). The amounts in this account are a means of financing and are not
    included in the budget totals.

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   73-4150-0-3-453    1995 actual    1996 actual     1997 est.      1998 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
          Investments in US securities:

    1106    Federal assets: Program account.         466            227           232             93
          Net value of assets related to
              post-1991 direct loans
              receivable:

    1401    Direct loans receivable, gross..       6,748          7,227         7,389          7,278
    1405    Allowance for subsidy cost (-)..        -414           -248          -308           -142
                                            ------------ --------------  ------------  -------------
    1499      Net present value of assets
                related to direct loans.....       6,334          6,979         7,081          7,136
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................       6,800          7,206         7,313          7,229
        LIABILITIES:
    2104  Federal liabilities: Resources
            payable to Treasury.............       6,334          6,979         7,170          7,135
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............       6,334          6,979         7,170          7,135
        NET POSITION:
    3100  Appropriated capital..............         466            227           143             94
                                            ------------ --------------  ------------  -------------
    3999    Total net position..............         466            227           143             94
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position       6,800          7,206         7,313          7,229
    -----------------------------------------------------------------------------------------------

    [[Page 999]]

                  Disaster Loans Direct Loan Financing Account

                  (Legislative proposal, not subject to PAYGO)

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-4150-2-3-453      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.01 Direct loans......................                                 402
    00.02 Interest payment to Treasury......                                   1
                                               ---------   ---------  ----------
    10.00   Total obligations...............                                 403
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    22.00 New financing authority (gross)...                                 403
    23.95 New obligations...................                                -403
    ----------------------------------------------------------------------------

        New financing authority (gross), detail:
    67.15 Authority to borrow (indefinite)..                                 403
          Spending authority from offsetting
              collections:

    68.00   Offsetting collections (cash)...                                  17
    68.47   Portion applied to debt
              reduction (-).................                                 -17
                                               ---------   ---------  ----------
    68.90     Spending authority from
                offsetting collections
                (total).....................
                                               ---------   ---------  ----------
    70.00   Total new financing authority
              (gross).......................                                 403
    ----------------------------------------------------------------------------

        Change in unpaid obligations:
    73.10 New obligations...................                                 403
    73.20 Total financing disbursements
            (gross).........................                                -403
    87.00 Total financing disbursements
            (gross).........................                                 403
    ----------------------------------------------------------------------------

        Offsets:
          Against gross financing authority and
              financing disbursements:

            Offsetting collections (cash)
                from:
              Non-Federal sources:
    88.40       Repayments of principal, net                                  -2
    88.40       Interest received on loans..                                 -15
    88.45     Offsetting governmental
                collections.................
                                               ---------   ---------  ----------
    88.90       Total, offsetting
                  collections (cash)........                                 -17
    88.95 Change in receivables from program
            accounts........................
    ----------------------------------------------------------------------------

        Net financing authority and financing
            disbursements:
    89.00 Financing authority...............                                 386
    90.00 Financing disbursements...........                                 386
    ---------------------------------------------------------------------------

                   Status of Direct Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-4150-2-3-453      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------
        Position with respect to appropriations act
                    limitation on obligations:
    1131  Direct loan obligations exempt
            from limitation.................                                 403
                                               ---------   ---------  ----------
    1150    Total direct loan obligations...                                 403
    ----------------------------------------------------------------------------

        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........
    1231  Disbursements: Direct loan
            disbursements...................                                 403
    1251  Repayments: Repayments and
            prepayments.....................                                 -17
    1264  Write-offs for default: Other
            adjustments, net................                                 -16
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........                                 370
    ---------------------------------------------------------------------------

                     Disaster Loan Fund Liquidating Account

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-4153-0-3-453      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    01.01 Interest expense to Treasury......          78          70          63
    01.03 Other expenses....................          13          10           8
                                               ---------   ---------  ----------
    10.00   Total obligations...............          91          80          71
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
          Unobligated balance available, start of year:

            Fund balance:
    21.90     Committed.....................           4           2           4
    21.90     Uncommitted...................         207         175         144
                                               ---------   ---------  ----------
    21.99     Total unobligated balance,
                start of year...............         211         177         148
    22.00 New budget authority (gross)......         307         269         345
    22.40 Capital transfer to general fund..        -249        -218        -215
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......         269         228         278
    23.95 New obligations...................         -91         -80         -71
          Unobligated balance available, end of year:

            Fund balance:
    24.90     Committed.....................           2           4           2
    24.90     Uncommitted...................         175         144         205
                                               ---------   ---------  ----------
    24.99   Total unobligated balance, end
              of year.......................         177         148         207
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
    68.00 Spending authority from offsetting
            collections (gross): Offsetting
            collections (cash)..............         307         269         345
    ----------------------------------------------------------------------------

        Change in unpaid obligations:
    72.90 Unpaid obligations, start of year:
            Obligated balance: Fund balance.          93          79         159
    73.10 New obligations...................          91          80          71
    73.20 Total outlays (gross).............        -105
    74.90 Unpaid obligations, end of year:
            Obligated balance: Fund balance.          79         159         230
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.97 Outlays from new permanent
            authority.......................          91
    86.98 Outlays from permanent balances...          14
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........         105
    ----------------------------------------------------------------------------

        Offsets:
          Against gross budget authority and outlays:

            Offsetting collections (cash)
                from:
              Non-Federal sources:
    88.40       Loan repayments.............        -213        -200        -186
    88.40       Interest income.............         -80         -60         -52
    88.40       Other income................         -12          -9          -7
    88.40       Recovery on Loan
                  Cancellations.............          -2
    88.40       Proceeds from loan asset
                  sales.....................                                -100
                                               ---------   ---------  ----------
    88.90       Total, offsetting
                  collections (cash)........        -307        -269        -345
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................
    90.00 Outlays...........................        -202        -269        -345
    ---------------------------------------------------------------------------

                   Status of Direct Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-4153-0-3-453      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------
        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........       1,918       1,676       1,416
    1231  Disbursements: Direct loan
            disbursements...................
          Repayments:

    1251    Repayments and prepayments......        -213        -220        -186
    1252    Proceeds from loan asset sales
              to the public or discounted...                                -100
    1263  Write-offs for default: Direct
            loans...........................         -29         -40         -34
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........       1,676       1,416       1,096
    ---------------------------------------------------------------------------

        As required by the Federal Credit Reform Act of 1990, this account
    records, for this program, all cash flows to and from the Government
    resulting from direct loans obligated prior to 1992. This account is
    shown on a cash basis. All new activity in this program in 1992 and
    beyond (including modifications of direct loans or loan guarantees that
    resulted from obligations or commitments in any year) is recorded in
    corresponding program and financing accounts.

                            Statement of Operations (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   73-4153-0-3-453    1995 actual    1996 actual     1997 est.      1998 est.
    -----------------------------------------------------------------------------------------------
    0101  Revenue...........................          93             93            78            103
    0102  Expense...........................        -102           -102           -83            -74
                                            ------------ --------------  ------------  -------------
    0109  Net income or loss (-)............          -9             -9            -5             29
    -----------------------------------------------------------------------------------------------

    [[Page 1000]]

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   73-4153-0-3-453    1995 actual    1996 actual     1997 est.      1998 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
    1101  Federal assets: Fund balances with
            Treasury........................         304            256           269            255
    1206  Non-Federal assets: Receivables,
            net.............................         112            111            78             69
          Net value of assets related to
              pre-1992 direct loans
              receivable and acquired
              defaulted guaranteed loans
              receivable:

    1601    Direct loans, gross.............       1,918          1,677         1,415          1,096
    1603    Allowance for estimated
              uncollectible loans and
              interest (-)..................        -154           -129          -160           -135
                                            ------------ --------------  ------------  -------------
    1699      Value of assets related to
                direct loans................       1,764          1,548         1,255            961
          Other Federal assets:

    1801    Cash and other monetary assets..           1                            1              1
    1803    Property, plant and equipment,
              net...........................           6              5
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................       2,187          1,920         1,603          1,286
        LIABILITIES:
          Federal liabilities:

    2102    Interest payable................          89             78            70             63
    2104    Resources payable to Treasury...
    2201  Non-Federal liabilities: Accounts
            payable.........................       2,098          1,842         1,533          1,322
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............       2,187          1,920         1,603          1,385
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position       2,187          1,920         1,603          1,385
    -----------------------------------------------------------------------------------------------

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-4153-0-3-453      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------
    33.0  Investments and loans.............          13          10           8
    43.0  Interest and dividends............          78          70          63
    99.0  Subtotal, reimbursable obligations          91          80          71
                                               ---------   ---------  ----------
    99.9    Total obligations...............          91          80          71
    ---------------------------------------------------------------------------

              Pollution Control Equipment Fund Liquidating Account

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-4147-0-3-376      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    10.00 Total obligations (object class
            42.0)...........................           1           3           3
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
          Unobligated balance available, start of year:

            Fund balance:
    21.90     Committed.....................          11          14           9
    21.90     Uncommitted...................           3          -1           3
                                               ---------   ---------  ----------
    21.99     Total unobligated balance,
                start of year...............          14          13          12
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......          14          13          12
    23.95 New obligations...................          -1          -3          -3
          Unobligated balance available, end of year:

            Fund balance:
    24.90     Committed.....................          14           9           7
    24.90     Uncommitted...................          -1           3           3
                                               ---------   ---------  ----------
    24.99   Total unobligated balance, end
              of year.......................          13          12          10
    ----------------------------------------------------------------------------

        Change in unpaid obligations:
    73.10 New obligations...................           1           3           3
    73.20 Total outlays (gross).............          -1          -3          -3
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.98 Outlays from permanent balances...           1           3           3
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................
    90.00 Outlays...........................                       3           3
    ---------------------------------------------------------------------------

                 Status of Guaranteed Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 73-4147-0-3-376      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------
        Cumulative balance of guaranteed loans
                    outstanding:
    2210  Outstanding, start of year........         100          86          73
          Adjustments:

    2261    Terminations for default that
              result in loans receivable....                      -1          -1
    2264    Other adjustments, net..........         -14         -12         -10
                                               ---------   ---------  ----------
    2290    Outstanding, end of year........          86          73          62
    ----------------------------------------------------------------------------

        Memorandum:
    2299  Guaranteed amount of guaranteed
            loans outstanding, end of year..          86          73          62
    ----------------------------------------------------------------------------

        Addendum:
          Cumulative balance of defaulted guaranteed
              loans that result in loans receivable:

    2310    Outstanding, start of year......          46          47          43
    2331    Disbursements for guaranteed
              loan claims...................           1           1           1
    2351    Repayments of loans receivable..                      -5          -6
                                               ---------   ---------  ----------
    2390      Outstanding, end of year......          47          43          38
    ---------------------------------------------------------------------------

        Public Law 94-305 established this fund to alleviate the adverse
    impact of pollution regulations on small businesses. As a result of the
    elimination of tax exempt financing associated with the Pollution
    Control Guaranteed program, no new activity is anticipated for this
    program.

        During 1992, the Small Business Administration started the process
    of redeeming a large number of outstanding bonds on which it has taken
    over loan payments. Most of these targeted bonds are ten years old and
    voluntary redemption is now viable under the bond documents. Redemption
    of these obligations would preclude the SBA from paying excessive
    interest over the next ten years.

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   73-4147-0-3-376    1995 actual    1996 actual     1997 est.      1998 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
    1101  Federal assets: Fund balances with
            Treasury........................          14             13            12             10
    1206  Non-Federal assets: Receivables,
            net.............................           9              9            10              9
    1701  Net value of assets related to
            pre-1992 direct loans receivable
            and acquired defaulted
            guaranteed loans receivable:
            Defaulted guaranteed loans,
            gross...........................           6              6             7              8
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................          29             28            29             27
        LIABILITIES:
    2104  Federal liabilities: Resources
            payable to Treasury.............          15             28            26             27
    2201  Non-Federal liabilities: Accounts
            payable.........................
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............          15             28            26             27
        NET POSITION:
    3100  Appropriated capital..............
    3300  Cumulative results of operations..
    3600  Other.............................          14              1             3              2
                                            ------------ --------------  ------------  -------------
    3999    Total net position..............          14              1             3              2
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position          29             29            29             29
    -----------------------------------------------------------------------------------------------

            administrative provisions--small business administration

        Sec. 504. Not to exceed 5 percent of any appropriation made
    available for the current fiscal year for the Small Business
    Administration in this Act may be transferred between such
    appropriations, but no such appropriation shall be increased by more
    than 10 percent by any such transfers: Provided, That any transfer
    pursuant to this section shall be treated as a reprogramming of funds
    under section 605 of this Act and shall not be available for obligation
    or expenditure except in compliance with the procedures set forth in
    that section. (Departments of Commerce, Justice, and State, the
    Judiciary, and Related Agencies Appropriations Act, 1997.)