[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.)