Rural Economic Development: Collaboration between SBA and USDA	 
Could Be Improved (18-SEP-08, GAO-08-1123).			 
                                                                 
The Small Business Administration (SBA) and the Rural Development
offices of the U.S. Department of Agriculture both work in rural 
areas to foster economic development by promoting		 
entrepreneurship and community development. This report discusses
(1) the complementary nature of some SBA and Rural Development	 
programs and the extent to which it provides a rationale for the 
agencies to collaborate, (2) past and current efforts by SBA and 
Rural Development to work together and with other agencies, and  
(3) opportunities for the agencies to improve their collaborative
efforts. In completing its work, GAO analyzed agency		 
documentation and prior reports on collaboration, conducted site 
visits at locations where SBA and Rural Development were working 
together, and interviewed agency and selected economic		 
development officials.						 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-1123					        
    ACCNO:   A84282						        
  TITLE:     Rural Economic Development: Collaboration between SBA and
USDA Could Be Improved						 
     DATE:   09/18/2008 
  SUBJECT:   Accountability					 
	     Agency missions					 
	     Agricultural programs				 
	     Business assistance				 
	     Business development loans 			 
	     Community development				 
	     Community development programs			 
	     Economic development				 
	     Economic growth					 
	     Economically depressed areas			 
	     Financial management				 
	     Interagency relations				 
	     Lending institutions				 
	     Program evaluation 				 
	     Program management 				 
	     Rural economic development 			 
	     Small business					 
	     Small business assistance				 
	     Small business loans				 
	     State-administered programs			 
	     Development assistance programs			 
	     Interagency agreements				 
	     Program coordination				 
	     Program implementation				 
	     REA Rural Economic Development Loan and		 
	     Grant Program					 
                                                                 
	     Rural Business Investment Program			 
	     SBA 7(a) Guaranteed Loan Program			 
	     SBA Small Business Development Center		 
	     Program						 
                                                                 
	     SBA Small Business Investment Companies		 
	     Program						 
                                                                 
	     USDA Business and Industry Loan Program		 
	     USDA Intermediary Relending Loan Program		 
	     USDA Rural Business Opportunity Grants		 
	     Program						 
                                                                 

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GAO-08-1123

   

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Report to Congressional Requesters: 

United States Government Accountability Office: 
GAO: 

September 2008: 

Rural Economic Development: 

Collaboration between SBA and USDA Could Be Improved: 

GAO-08-1123: 

GAO Highlights: 

Highlights of GAO-08-1123, a report to congressional requesters. 

Why GAO Did This Study: 

The Small Business Administration (SBA) and the Rural Development 
offices of the U.S. Department of Agriculture both work in rural areas 
to foster economic development by promoting entrepreneurship and 
community development. This report discusses (1) the complementary 
nature of some SBA and Rural Development programs and the extent to 
which it provides a rationale for the agencies to collaborate, (2) past 
and current efforts by SBA and Rural Development to work together and 
with other agencies, and (3) opportunities for the agencies to improve 
their collaborative efforts. In completing its work, GAO analyzed 
agency documentation and prior reports on collaboration, conducted site 
visits at locations where SBA and Rural Development were working 
together, and interviewed agency and selected economic development 
officials. 

What GAO Found: 

The complementary nature of some SBA loan programs and Rural 
Development business programs provides a rationale for the agencies to 
collaborate. SBA and Rural Development have similar economic 
development missions, and their programs provide financing for similar 
purposes, including start-up and expansion projects, equipment 
purchases, and working capital for small businesses. According to SBA 
and Rural Development officials currently involved in collaborative 
working relationships, working together allows the agencies to leverage 
the unique strengths of each otherï¿½s programs, increase the number of 
financing options available to borrowers in rural areas, and ultimately 
better promote economic development in these areas. 

However, collaboration between SBA and Rural Development to date has 
been sporadic and mostly self-initiated by officials in field offices. 
GAO found that the extent of the collaborative efforts and use of 
formal agreements such as memorandums of understanding (MOU) varied 
across locations. The two agencies worked together frequently in a few 
locations, infrequently in others, and not at all in many locations. 
The SBA and Rural Development offices in North Dakota that GAO visited 
collaborated frequently and had formal agreements in place. Officials 
there established an MOU with other community development organizations 
to provide ï¿½one-stopï¿½ shopping assistance to borrowers at a single 
location. The SBA and Rural Development offices in Nebraska and New 
Mexico that GAO visited worked with each other less frequently and more 
informally, conducting community outreach sessions and holding periodic 
meetings and joint training sessions. But many other locationsï¿½about 
half of SBA and Rural Developmentï¿½s field officesï¿½did not appear to be 
collaborating at all or to have an established framework to facilitate 
collaboration. 

Opportunities exist for SBA and Rural Development to improve their 
collaborative efforts. In an October 2005 report, GAO identified key 
practices that could help federal agencies enhance and sustain their 
collaborative efforts. In comparing SBA and Rural Developmentï¿½s efforts 
with these criteria, GAO found that the agencies could take steps to 
improve their efforts by implementing a more formal approach to 
encourage collaboration. This approach would provide the agencies with 
a mechanism that reflected several of GAOï¿½s key practicesï¿½to define and 
articulate a common outcome, agree on roles and responsibilities, 
monitor key progress and results, and reinforce accountability for 
collaborative efforts. With such an approach, SBA and Rural Development 
could more effectively leverage each otherï¿½s unique strengths and help 
to improve small business opportunities in rural communities. 

What GAO Recommends: 

To improve SBA and Rural Developmentï¿½s efforts to work together, GAO 
recommends that the agencies establish a formal approach to encourage 
further collaboration. Both agencies provided technical comments on a 
draft of this report, which have been incorporated into GAOï¿½s final 
report where appropriate. 

To view the full product, including the scope and methodology, click on 
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-1123]. For more 
information, contact William B. Shear at (202) 512-8678 or 
[email protected]. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

The Complementary Nature of Some SBA and Rural Development Programs 
Provides a Rationale for Collaboration: 

SBA and Rural Development's Collaborative Efforts Have Been Sporadic: 

SBA and Rural Development Could Take Steps to Establish a Formal 
Approach to Collaboration: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments: 

Appendix I: Scope and Methodology: 

Appendix II: Description of SBA's and USDA Rural Developments' Primary 
Loan and Business Programs: 

Appendix III: Comparison of SBA and Rural Development Primary Business 
Loan and Grant Programs: 

Appendix IV: Recent Congressional Proposals That May Require 
Collaboration between Rural Development and Other Federal Agencies: 

Appendix V: GAO Contact and Staff Acknowledgments: 

Figures: 

Figure 1: SBA's Primary Loan Programs: 

Figure 2: Rural Development's Business Programs: 

Figure 3: SBA District Offices and Rural Development State Offices, by 
Location: 

Figure 4: Summary of Programs Included in Our Scope: 

Abbreviations: 

B&I: Business and Industry: 

CDC: certified development company: 

ECND: Entrepreneur Centers of North Dakota: 

FCA: Farm Credit Administration: 

HUD: Department of Housing and Urban Development: 

IRP: Intermediary Relending Program: 

MOU: memorandum of understanding: 

NMVC: New Markets Venture Capital: 

RBEG: Rural Business Enterprise Grant: 

RBIP: Rural Business Investment Program: 

RBOG: Rural Business Opportunity Grant: 

RBS: Rural Business and Cooperative Service: 

REDLG Rural Economic Development Loan and Grant Program: 

RHS: Rural Housing Service: 

RUS: Rural Utilities Service: 

SBA: Small Business Administration: 

SBDC: Small Business Development Center: 

SBIC: Small Business Investment Company: 

SBLC: small business lending company: 

USDA: U.S. Department of Agriculture: 

[End of section] 

United States Government Accountability Office:
Washington, DC 20548: 

September 18, 2008: 

Congressional Requesters: 

More than 80 programs administered by several different federal 
agencies target rural economic development.[Footnote 1] Of these 
agencies, the Small Business Administration (SBA) and the Rural 
Development offices of the U.S. Department of Agriculture (USDA) share 
a mission of attending to underserved markets, fostering economic 
development, and improving the quality of life in America through the 
promotion of entrepreneurship and community development. Both agencies 
offer business loans and grant programs for rural development and play 
vital roles in spurring economic growth in rural areas.[Footnote 2] In 
the past, these agencies have developed collaborative working 
relationships to help manage their loan and grant programs. They have 
also entered into a joint agreement under the Rural Business Investment 
Program (RBIP) to create investment companies that would provide equity 
for rural small businesses.[Footnote 3] 

Congress has long expressed interest in increasing collaboration among 
federal agencies. Collaboration that cuts across more than one federal 
agency is one way for the federal government to deliver results more 
efficiently--that is, in a way that utilizes limited resources to 
better address multiple demands. Congress has been enacting laws for 
more than a decade mandating that federal agencies coordinate their 
rural policies and programs. These laws have authorized the 
establishment of interagency agreements, cooperative agreements, and 
interagency working groups for specific collaborative purposes. For 
example, a provision of the Federal Agriculture Improvement and Reform 
Act of 1996 required the Secretary of Agriculture to establish and 
chair a rural development interagency working group to establish rural 
policy, coordinate assistance, and evaluate the performance of federal 
rural assistance programs.[Footnote 4] Additionally, the Farm Security 
and Rural Investment Act of 2002 formally established the National 
Rural Development Partnership so that USDA, other federal agencies 
including SBA, state and local entities, and businesses could better 
collaborate in delivering services to rural communities.[Footnote 5] 

Increasingly, Congress has also focused attention on businesses and 
entrepreneurs in rural areas and small communities with underserved 
financial needs that could benefit from joint efforts between SBA and 
Rural Development offices. In an effort to ensure that SBA and Rural 
Development programs provide maximum benefit to rural communities, on 
November 14, 2007, the House Small Business Subcommittee on Rural and 
Urban Entrepreneurship held a hearing on interagency collaboration and 
on SBA's and Rural Development's ability to work together to better 
serve small businesses in rural areas. We testified at that hearing and 
provided preliminary views on collaborative efforts between these 
agencies. We also were requested to review the agencies' programs to 
determine whether coordination among them could be improved. 

As agreed, this report examines SBA and Rural Development's efforts to 
work collaboratively and the degree to which their efforts could be 
improved. Specifically, the report discusses (1) the complementary 
nature of some SBA and Rural Development loan and business programs and 
the extent to which it provides a rationale for collaboration, (2) past 
and current efforts at collaboration between SBA and Rural Development 
and between SBA and Rural Development and other agencies, and (3) 
opportunities to facilitate more effective collaboration between SBA 
and Rural Development. 

Although there is no commonly accepted definition for collaboration, in 
this report we define collaboration as any joint activity that is 
intended to produce more public value than can be produced when the 
agencies act alone, including activities that others have previously 
defined as cooperation, coordination, integration, or networking. To 
determine the extent to which SBA and Rural Development's primary loan 
and business programs are complementary and to identify the rationale 
for the agencies to work together, we examined laws, regulations, and 
policies on each agency's loans, grants, and other business products 
and services, and interviewed officials from both agencies. We reviewed 
prior reports that defined collaboration and identified key practices 
that could help enhance and sustain collaboration.[Footnote 6] We also 
sought input from SBA resource partners, lenders, and select nonprofit 
organizations involved in the rural economic development process. To 
determine the types of collaborative efforts that are currently taking 
place between SBA and Rural Development, we requested that both SBA and 
Rural Development conduct a query of their respective district office 
Directors and state office Directors regarding all formal or informal 
efforts to work collaboratively with the other agency. We received 
responses from about half of the SBA district offices and all of the 
Rural Development state offices. We conducted site visits at three 
locations where SBA and Rural Development were working together: 
Lincoln, Nebraska; Albuquerque, New Mexico; and Bismarck, North Dakota. 
We also reviewed internal agency documents, interagency agreements, and 
training documentation and obtained detailed information from both 
agencies' district and state field offices regarding formal and 
informal efforts to work together. To identify past collaborative 
efforts, we reviewed documentation and examined the mechanisms (e.g., 
contractual work agreements, memorandums of understanding, statutory 
provisions, etc.) the agencies used to collaborate. Finally, to 
determine opportunities to improve collaboration between SBA and Rural 
Development, we reviewed our prior work in this area and conducted 
interviews with agency officials, select SBA resource partners, and 
nonprofit organizations. Appendix I contains a more detailed 
description of our scope and methodology. 

We conducted this performance audit from October 2007 to September 
2008, in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. 

Results in Brief: 

The complementary nature of some SBA loan programs and Rural 
Development business programs provides a rationale for the agencies to 
collaborate. SBA and Rural Development have similar economic 
development missions and programs that provide financing for start-up 
or expansion projects, equipment purchases, and working capital for 
rural small businesses. The programs also have different strengths--for 
example, some SBA loan products have shorter loan processing times 
while, in some cases, Rural Development offers higher levels of 
financial assistance. According to SBA and Rural Development officials 
involved in ongoing collaborative relationships, working together has 
allowed each agency to leverage the other agency's unique strengths, 
which has increased the number of financing options available to 
borrowers in rural areas, improved service, and enhanced efforts to 
promote economic development in rural areas. A Rural Development 
official in New Mexico said that collaboration with SBA allowed Rural 
Development to tap into SBA's preexisting constituency of banks, 
increasing the number of banks that might consider making Rural 
Development loans in the future. Similarly, SBA officials in New Mexico 
said that collaboration with Rural Development allowed SBA to provide 
additional assistance to small businesses after Rural Development 
provided initial financing for a community's infrastructure. Officials 
in North Dakota said some SBA and Rural Development loan products were 
complementary and had been bundled together in loan packages used to 
finance individual projects. Where such collaboration has occurred, it 
appears that SBA and Rural Development have been able to better meet 
the needs of borrowers who were not able to obtain financing elsewhere 
on reasonable terms and through normal lending channels. 

SBA and Rural Development's collaborative efforts have been sporadic. 
They have been initiated mostly by officials at the local level and 
have often depended on established working relationships among the 
officials involved. A query by SBA and USDA officials asking their 
offices whether collaborative efforts were under way also suggested 
that such efforts were sporadic. We found that the extent of the 
collaboration and the use of formal mechanisms such as memorandums of 
understanding (MOU) to facilitate collaboration varied across 
locations. The two agencies collaborated frequently in some locations 
and infrequently or not at all in others. For example, the SBA and 
Rural Development offices in North Dakota that we visited collaborated 
frequently and had formal agreements in place. Officials there 
communicated at least weekly, conducted joint quarterly meetings, 
sponsored at least eight joint lender training sessions yearly, and 
participated in each other's annual meetings. SBA and Rural Development 
officials in North Dakota had established an MOU with other state and 
local entities to establish "one-stop" shopping to deliver financing, 
business management, counseling, and other technical assistance at one 
location. The SBA and Rural Development offices in Nebraska and New 
Mexico that we visited worked with each other less frequently and more 
informally, conducting a few community outreach sessions to build 
support for their programs and holding periodic joint meetings and 
training sessions. In other locations, such as Arizona, Colorado, and 
Georgia, SBA and Rural Development offices did not collaborate at all. 
We also identified instances in which SBA and Rural Development 
collaborated with each other and with other agencies in the past. For 
example, the agencies collaborated with each other under the Rural 
Business Investment Program, allowing SBA to share its expertise on 
venture capital programs that could provide equity investments to rural 
small businesses. Similarly, both SBA and Rural Development have 
partnered with the Farm Credit Administration (FCA), allowing each 
agency to take advantage of FCA's expertise in conducting safety and 
soundness examinations of specialized financial institutions. 
Additionally, Rural Development and the Department of Housing and Urban 
Development (HUD) worked together to create a voucher program modeled 
after HUD's Housing Choice Voucher program that provides rental 
assistance to families in rural areas. Generally, these efforts have 
enabled all agencies to achieve greater results than they could have 
achieved by acting alone. 

Opportunities exist to better facilitate the agencies' collaborative 
efforts. In our October 2005 report, we identified key practices that 
could help enhance and sustain collaboration among federal agencies and 
identified other factors such as leadership, trust, and organizational 
culture that are necessary elements of an effective working 
relationship.[Footnote 7] In comparing the agencies' efforts against 
these criteria, we found that SBA and Rural Development could take 
steps to facilitate more effective collaboration. First, they could 
make more extensive use of cooperative agreements such as MOUs that 
help establish a framework for and demonstrate leadership commitment to 
collaboration. In December 2000, for example, SBA and Rural Development 
entered into an MOU that incorporated three of the key practices we 
identified in our October 2005 report. The MOU defined and articulated 
a common outcome; specified roles and responsibilities; and provided a 
mechanism to monitor, evaluate, and report on the results of 
collaboration. The MOU expired in 2003, but SBA and Rural Development 
did not appear to have implemented it when it was active. Second, SBA 
and Rural Development do not have formal incentives to encourage 
collaboration and do not track the results, or impact, of collaborative 
efforts. As a result, the agencies are unable to share information on 
the benefits of working together and encourage additional efforts to do 
so in the future. Without a formal approach to encourage further 
collaboration, the likelihood that the agencies will be able to fully 
leverage each other's unique strengths to help improve small business 
opportunities and promote economic development in rural communities is 
reduced. 

To improve SBA and Rural Development's collaborative efforts, we 
recommend that the Administrator of SBA and Secretary of Agriculture 
take steps to adopt a formal approach to encourage further 
collaboration in support of common economic development goals in rural 
areas. 

We provided a draft of this report to SBA and USDA for review and 
comment. Both agencies provided technical comments, which we 
incorporated into the final report where appropriate. 

Background: 

SBA is charged with providing support to the nation's small businesses, 
including those in urban and rural areas. Its support takes several 
forms. First, it ensures access to credit, primarily by guaranteeing 
loans through various loan guarantee programs. Second, it provides 
entrepreneurial assistance through partnerships with private entities 
that offer small business counseling and technical assistance. Third, 
SBA administers various small business development and procurement 
programs that are designed to assist small and disadvantaged businesses 
in obtaining federal contracts. Finally, SBA makes loans to businesses 
as well as individuals trying to recover from major disasters. Although 
most SBA disaster loans are processed at the SBA loan processing center 
in Sacramento, California, SBA has a network of 68 field offices 
nationwide. 

SBA administers several business loan programs, including the Basic 
7(a) Loan Guaranty Program, 504/CDC Loan Program , 7(m) Micro Loan 
Program, and the Small Business Investment Company (SBIC) Program. 
Recently, it added the Small/Rural Lender Advantage Pilot Program, 
under its 7(a) Program, specifically for small businesses in rural 
areas (see fig. 1). Appendix II provides a more detailed description of 
each program. 

Figure 1: SBA's Primary Loan Programs: 

[See PDF for image] 

SBA's Primary Loan Programs, as follows: 

SBA: 
U.S. Small Business Administration Programs: 

Basic 7(a) Loan Guaranty Program: 
Basic 7(a) Loan Guaranty Program allows SBA to guarantee up to 85 
percent of the loan amount made by private lenders to small businesses 
for a variety of general business purposes including, working capital, 
machinery, equipment, land and buildings, and certain debt refinancing. 
The 7(a) is SBA's largest loan program. In fiscal year 2007, the 
program provided more than 99,000 loans totaling nearly $14 billion. 

504/CDC Loan Program: 
504/CDC Loan Program provides long-term, fixed-rate financing to small 
businesses to acquire real estate, machinery, or equipment for 
expansion or modernization. It typically includes a loan secured by a 
certified development company of up to 40 percent of the total loan 
amount. In fiscal year 2007, the 504 program provided about 11,000 
loans, totaling approximately $6 billion. 

7(m) Micro Loan Program: 
7(m) Micro Loan Program provides short-term loans of up to $35,000 to 
small businesses. SBA makes funds available to an intermediary lender, 
who in turn, makes the microloan to the applicant. The program provided 
about $19 million in microloans during fiscal year 2007. 

Small Business Investment Company (SBIC) Program: 
Small Business Investment Company (SBIC) Program provides equity 
capital, long-term loans, and management assistance to small businesses 
that are either starting up or growing. SBICs, licensed by SBA, are 
privately owned and managed investment firms that partner with the 
federal government to make capital available to small businesses 
through investments or loans. SBICs use their own funds as well as 
funds obtained with SBA guarantees. In fiscal year 2007, the SBIC 
program provided over $2.5 billion in venture capital funding to more 
than 2,000 small businesses. 

Rural Lender Advantage Pilot Program: 
Rural Lender Advantage Pilot Program, announced in September 2007, is a 
new loan initiative designed to stimulate economic growth in rural 
areas. It is aimed at encouraging rural lenders to finance small 
businesses by offering a simplified application form for loans of 
$350,000 or less, and a streamlined loan approval process. It also 
offers lenders the ability to apply online with limited documentation 
requirements. SBA guarantees 85 percent of loan amounts up to $150,000, 
and 75 percent of loan amounts above $150,000. It is part of a broader 
initiative to boost economies in areas that face unique challenges due 
to factors such as declining population or high unemployment. 

Source: SBA. 

[End of figure] 

In addition to its loan programs, SBA offers grant programs that 
support nonprofit organizations. These grant programs are generally 
designed to expand and enhance nonprofit organizations that provide 
small businesses with management, technical, or financial assistance. 
For example, SBA's Women's Business Development Center Program is an 
SBA grant program available to private, nonprofit organizations to run 
women's business centers. The program was established by the Women's 
Business Ownership Act of 1988 after Congress found that existing 
assistance programs for small business owners were not addressing 
women's needs. The program, which specifically targets economically and 
socially disadvantaged women, provides long-term training, counseling, 
networking, and mentoring to women who own businesses or are potential 
entrepreneurs. The program's ultimate goal is to add more well-trained 
women entrepreneurs to the U.S. business community. 

Additionally, SBA's Small Business Development Center (SBDC) Program, 
which was created by Congress in 1980, provides management and 
technical assistance to individuals and small businesses. SBDC services 
include, but are not limited to, assisting prospective and existing 
small businesses with financial, marketing, production, organization, 
engineering, and technical problems and feasibility studies. Each state 
and U.S. territory has a lead organization that sponsors and manages 
the SBDC program there. The lead organization coordinates program 
services offered to small businesses through a network of centers and 
satellite locations at colleges, universities, vocational schools, 
chambers of commerce, and economic development corporations. 
Nationwide, 63 lead SBDCs and more than 1,000 satellite locations have 
contracted to conduct SBDC services.[Footnote 8] 

USDA's Rural Development is responsible for leading and coordinating 
federal rural development assistance. Rural Development administers 
over 40 development programs for rural communities, most of which 
provide assistance in the form of loans, loan guarantees, and grants, 
through a network of 47 state offices and about 500 area or local field 
offices.[Footnote 9] Rural Development has three agencies: Rural 
Housing Service (RHS), Rural Utilities Service (RUS), and Rural 
Business and Cooperative Service (RBS). RHS helps rural communities and 
individuals by providing loans, grants, and technical assistance for 
housing and community facilities. It provides funding for single-family 
homes; apartments for low-income persons, the elderly, and farm 
laborers; and various community facilities such as fire and police 
stations, hospitals, libraries, and schools. RUS is responsible for 
administering electric, telecommunications, and water programs that 
help finance the infrastructure necessary to improve the quality of 
life and promote economic development in rural areas. 

RBS administers programs that provide business planning and financial 
and technical assistance to rural businesses and cooperatives.[Footnote 
10] Specifically, RBS' guaranteed loans and other loan and grant 
programs work in partnership with private sector and community-based 
organizations to meet the business and credit needs of rural 
businesses. Recipients of RBS' services include individuals, farmers, 
producers, corporations, partnerships, public bodies, nonprofits, 
American Indian tribes, and private companies. The primary business 
programs include the Business and Industry (B&I) Guaranteed Loan 
Program, Intermediary Relending Program (IRP), Rural Business 
Enterprise Grant Program (RBEG), Rural Business Opportunity Grant 
Program (RBOG), Rural Economic Development Loan and Grant Program 
(REDLG), and the Renewable Energy Systems and Energy Efficiency 
Improvements Guaranteed Loan and Grant Program (see fig. 2)[Footnote 
11]. Appendix II provides a more detailed description of each program. 

Figure 2: Rural Development's Business Programs: 

[See PDF for image] 

This figure is an illustration of USDA's Rural Development's Business 
Programs, as follows: 

USDA Programs: 

Business and Industry (B&I) Guaranteed Loan Program: 
Business and Industry (B&I) Guaranteed Loan Program provides financial 
assistance to rural businesses in the form of a loan guaranty. The B&I 
Guaranteed Loan Program, which provided over $836 million in loan 
guarantees during fiscal year 2007, is Rural Developmentï¿½s largest 
business program. 

Intermediary Relending Program (IRP): 
Intermediary Relending Program (IRP) finances business facilities and 
community development projects in rural areas. Under the IRP program, 
loans are provided to local organizations such as state agencies and 
authorities, and private nonprofit corporations (intermediaries) for 
the establishment of revolving loan funds. IRP spending in fiscal year 
2007 totaled about $34 million. 

Rural Business Enterprise Grant Program (RBEG): 
Rural Business Enterprise Grant Program (RBEG) provides grants for 
rural projects that finance and facilitate development of small and 
emerging rural businesses, and help fund employment related adult 
education programs. Approximately $43 million in grants were provided 
in fiscal year 2007. 

Rural Business Opportunity Grant Program (RBOG): 
Rural Business Opportunity Grant Program (RBOG) provides grants for 
technical assistance, business development, and planning to improve 
economic conditions in rural areas. Under this program, about $7 
million in funding was provided during fiscal year 2007. 

Rural Economic Development Loan and Grant Program (REDLG): 
Rural Economic Development Loan and Grant Program (REDLG) provides 
loans and grants, which can be used for business start-up or expansion 
projects that create rural jobs. The loans and grants are made to local 
utility groups (i.e., phone and electric borrowers), and the maximum 
loan and grant amount is established on an annual basis. In fiscal year 
2007, about $26 million in loans and about $10 million in grants were 
provided to eligible recipients. 

Renewable Energy Systems & Energy Efficiency Improvements Guaranteed 
Loan and Grant Program: 
Renewable Energy Systems & Energy Efficiency Improvements Guaranteed 
Loan and Grant Program (also referred to as the Section 9006 program) 
provides grants, loans, and loan guarantees to rural small businesses 
for assistance in developing renewable energy systems and making energy 
efficiency improvements. Approximately $48 million in energy loans and 
$11 million in energy grants were provided during fiscal year 2007. 
Additionally, recipients received over $18 million in joint funding 
from the program during the same period. 

Source: USDA. 

[End of figure] 

Rural Development business programs are available in areas that meet 
the program's definition of rural--for example, for the B&I program, 
any area other than a city or town with a population of 50,000 or less 
and the area contiguous and adjacent to such a city or town. As a 
result, in general, only individuals and businesses in identified areas 
with 50,000 or fewer people are eligible for most of these programs. 
One exception is the Intermediary Relending Program, which is available 
only to businesses in rural areas with 25,000 or fewer people.[Footnote 
12] 

The Complementary Nature of Some SBA and Rural Development Programs 
Provides a Rationale for Collaboration: 

Some SBA loan programs and Rural Development business programs are 
complementary, providing a rationale for the agencies to collaborate. 
Both types of programs can fund start-up and expansion projects, 
equipment purchases, and working capital to rural borrowers and, in 
some cases, the eligibility requirements for the programs are 
comparable. However, the various programs have different and sometimes 
unique strengths--for example, larger loan amounts, shorter processing 
times, or targeting of different market segments. According to SBA and 
Rural Development officials, collaborative efforts could allow each 
agency to leverage the strengths of the other. For example, Rural 
Development can finance larger projects than SBA and lend to nonprofit 
organizations, something SBA cannot do. However, SBA can offer 
entrepreneurs a faster turnaround time in loan processing. Similarly, 
officials noted that certain SBA and Rural Development loan products 
complemented one another and were used jointly to finance individual 
projects. To the extent that SBA's resource partners are considered 
part of SBA's rural presence, both agencies have a strong rural 
presence that provides another rationale for the agencies to 
collaborate. 

Some SBA and Rural Development Programs Serve the Same Areas and 
Groups, Offer Comparable Products, and Have Similar Eligibility 
Requirements: 

SBA and Rural Development, which share a similar mission of increasing 
economic opportunity and improving the quality of life for people in 
underserved markets, including rural America, serve the same rural 
geographic areas and communities and have some programs that offer 
similar products to borrowers for comparable purposes. For example, 
SBA's 504 Loan Program and Rural Development's Intermediary Relending 
Program both offer economic development loans that can support the 
growth of rural small businesses and help enhance rural communities 
through business expansion and job creation. The 504 and Intermediary 
Relending programs both also provide financing for the acquisition and 
improvement of land, buildings and equipment, particularly when such 
funding will help create or retain jobs. 

Both agencies' loan and business programs are designed to help local 
entrepreneurs start up or expand their businesses. For instance, SBA's 
7(a) Loan Guaranty Program and Rural Development's Business and 
Industry Guaranteed Loan Programs both provide financing that can be 
used to establish a new business or to assist in the operation, 
acquisition, or expansion of an existing business. Specifically, the 
7(a) program provides funding for business start-ups, expansion, 
equipment, working capital, and real estate acquisition. Similarly, the 
Business and Industry Guaranteed Loan Program provides funding for 
start-ups and expansion purposes, including acquisition, inventory, 
real estate, working capital, equipment, construction, and enlargement 
or modernization of rural businesses. These programs are provided 
through loan guarantees that limit the risk to lenders. Private lenders 
underwrite and service the loans and make the decisions to approve or 
not approve loan requests, and SBA and Rural Development decide whether 
to guarantee a portion of the outstanding loan balance if the borrower 
defaults. 

Further, both agencies offer programs that provide technical assistance 
to eligible borrowers and, while SBA does not offer grants to start or 
grow a business, it has resource partners, such as its SBDCs and 
Women's Business Centers, which provide management and technical 
assistance to prospective small business owners. Rural Development 
offers grant programs that provide management and technical assistance 
to rural borrowers. The Rural Business Enterprise Grant and Rural 
Business Opportunity Grant programs provide technical assistance for 
business development and to conduct economic planning in rural areas. 

In addition, some of the loan and business programs have similar 
eligibility requirements. For example, in administering its Renewable 
Energy Systems and Energy Efficiency Improvements Guaranteed Loan and 
Grant Program, Rural Development relies on SBA's definition of eligible 
small businesses, including sole proprietorships, partnerships, 
corporations, and cooperatives. Borrowers must also meet SBA's small 
business standards for the type of industry, number of employees, or 
annual revenue. Moreover, some of SBA's and Rural Development's 
programs have established comparable credit criteria for the borrower. 
SBA's 7(a) Loan Guaranty, 504, and Micro Loan programs and Rural 
Development's Business and Industry Guaranteed Loan Program all use 
similar criteria that are based on the type of project being funded and 
the borrower's ability to meet normal commercial lending standards and 
provide a personal guaranty, if necessary. 

Examples of Assistance SBA and USDA Rural Development Provide to 
Businesses: 

According to SBA, the agency provided a 504 loan to the owners of a 
health care business to purchase a new $7.2 million headquarters 
building. Two Native American sisters from Lumberton, North Carolina, 
launched the business in 2000 and were named the 2007 National Small 
Business Persons of the Year. When it first opened, the health care 
business had only one cell phone, two patients, and a certified nursing 
assistant. Today, according to SBA, the business provides a broad range 
of services, employing 301 professionals and serving 760 patients 
daily, with annual sales over $9 million. According to USDA, the 
Southeast Iowa Regional Planning Commission sought financing for a 
revolving loan fund to serve Des Moines, Henry, Lee, and Louisa 
counties in Southeast Iowa. In response to this request, Rural 
Development, through its Intermediary Relending Program, awarded the 
commission $600,000 to provide low-interest loans to public and 
nonprofit organizations that, in turn, would relend those funds to 
support business and community development. As a result of the project, 
according to USDA, 7 businesses were assisted, 200 jobs were created, 
and 259 jobs were saved. 

SBA and Rural Development Programs Have Several Key Differences: 

SBA and Rural Development officials we spoke to stated there was little 
overlap or duplication between the two agencies' loan and business 
programs, in part because of several key differences. First, Rural 
Development can finance larger projects than SBA. The maximum loan 
amount for SBA's 7(a) loan is $2 million, compared with a maximum loan 
amount for Rural Development's Business and Industry loan of $25 
million.[Footnote 13] Second, the 7(a) and Business and Industry 
programs also offer different loan guaranties. The maximum guaranty for 
7(a) loans is 85 percent for loans up to $150,000 and 75 percent for 
loans over $150,000. The maximum guaranty percentage for Business and 
Industry loans is 80 percent for loans up to $5 million, 70 percent for 
loans between $5 million and $10 million, and 60 percent for loans of 
more than $10 million. Third, the costs, fees, and loan terms differ 
for the two types of loans. For example, SBA charges a guaranty fee of 
2 percent for loans up to $150,000, 3 percent for loans between 
$150,000 and $700,000, and 3.5 percent for loans up to $1 million. SBA 
also charges an additional quarter of a percent of the guaranteed 
portion over $1 million. Rural Development charges an initial guaranty 
fee not to exceed 2 percent of the guaranteed portion of the loan. 
[Footnote 14] The maximum loan terms for SBA 7(a) loans are determined 
by the following: (1) the shortest appropriate term, depending on the 
borrower's ability to repay; (2) 10 years or less, unless it finances 
or refinances real estate or equipment with a useful life exceeding 10 
years; and (3) a maximum of 25 years, including extensions.[Footnote 
15] However, the maximum loan terms for Rural Development's Business 
and Industry loans are 7 years for working capital, 15 years for 
equipment, and 30 years for real estate loans. 

Each program also offers some unique strengths. While Rural 
Development's fees tend to be lower than SBA's, SBA usually processes 
its loans faster. In general, the average processing time by SBA for 
SBA loans is 5 to 7 business days and for Rural Development business 
programs 10 to 60 days, depending on the scope of the project and 
completeness of the application. SBA can offer shorter turnaround in 
loan processing, particularly for its 7(a) program (which sometimes 
takes as little as 2 business days), because of its various express 
loan options, preapproved lenders, and consolidated loan processing 
center. Rural Development makes credit and underwriting decisions 
itself rather than relying on preapproved lenders, and its loans can 
take as long as 60 days to process. Moreover, Rural Development has 
certain restrictions on the maximum dollar amount of loans that can be 
approved by field offices--typically varying by state based on the loan 
approval authority. Therefore, Business and Industry loans above a 
state's loan approval limit must be approved by Rural Development 
headquarters officials, resulting in additional loan processing times. 

While both agencies serve rural areas, their programs differ in the 
types of entities they serve. SBA's loan programs only serve the for- 
profit sector, focusing on individual entrepreneurs and small 
businesses. However, Rural Development's business programs focus on 
individual entrepreneurs and small and mid-size businesses, as well as 
nonprofits. Appendix III further illustrates some of the similarities 
and differences between SBA's and Rural Development's loan and business 
programs. 

Collaboration Allows SBA and Rural Development to Leverage Each 
Agency's Strengths and Increase Financing Options in Rural Areas: 

According to SBA and Rural Development officials who are engaged in 
collaborative relationships, collaboration allows the agencies to 
leverage the unique strengths of each agency's programs and increase 
the number of financing options to better promote economic development. 
For instance, SBA and USDA officials in North Dakota said that SBA's 
504 program and Rural Development's Intermediary Relending programs 
were frequently coupled in loan packages. In those cases, the 504 
program provided funding for land and buildings, and the Intermediary 
Relending program provided funding for machinery, equipment, working 
capital, and other uses. The officials estimated that about one of 
every four 504 loans in rural communities in North Dakota with 
populations of less than 25,000 residents had been used jointly with 
Intermediary Relending loans to finance individual projects. Examples 
of businesses in North Dakota that have received joint financing from 
SBA and Rural Development include an agricultural retail service that 
sells chemicals and fertilizer and employs 7 workers and a manufacturer 
of electric thermal storage heating equipment that employs 140 workers. 
In each of these examples, the businesses used SBA's 504 program to 
acquire a building and used the IRP program to acquire machinery and 
equipment. 

Other officials with whom we spoke cited further rationale for the 
agencies to collaborate. In one instance, a Rural Development official 
in New Mexico noted that collaboration with SBA allowed him to tap into 
SBA's preexisting constituency of banks, expanding the number of 
lenders that could help provide Rural Development loans to potential 
borrowers. Similarly, SBA officials in New Mexico said that 
collaboration with Rural Development allowed SBA to provide additional 
assistance to small businesses after Rural Development provided initial 
financing for a community's infrastructure.[Footnote 16] 

The officials involved in the limited instances of collaboration that 
we identified acknowledged that working together allowed both agencies 
to coordinate the delivery of their loan and business programs to solve 
specific credit needs. SBA and Rural Development officials in North 
Dakota also told us that by collaborating they were able to provide 
borrowers with more financing options than they could by acting alone, 
thereby improving service to borrowers. Moreover, according to 
officials in North Dakota and New Mexico, collaboration also created a 
synergistic effect to better promote economic development in rural 
areas. 

Finally, while some consolidation has occurred over time, both agencies 
have a strong presence in rural areas. Prior to its 1994 
reorganization, USDA had field staff in almost every rural county. 
Consistent with its reorganization, and as we reported in September 
2000, USDA closed or consolidated about 1,500 county offices into USDA 
service centers and transferred more than 600 Rural Development field 
positions to the St. Louis Centralized Servicing Center. The number of 
Rural Development offices across the nation is now closer to the number 
of SBA offices--47 Rural Development state offices and 68 SBA district 
offices (see fig.3). 

Figure 3: SBA District Offices and Rural Development State Offices, by 
Location: 

[See PDF for image] 

This figure is a map of the United States indicating the locations of 
the following: 
* USDA Rural Development State Office; 
* SBA District Office; 
* Cities with both types of offices. 

Source: SBA and USDA (data); Art Explosion (map). 

[End of figure] 

In addition to its state offices, Rural Development also has about 500 
field offices, including area, subarea, and other local offices in 
rural areas. SBA officials we spoke to in headquarters believe that SBA 
has a similar presence in rural communities because of its more than 
950 SBDC locations in the 50 states, U.S. territories, and the District 
of Columbia. In contrast to SBA's view, Rural Development officials 
believe that the presence of its 500 field offices in rural areas is 
unique because each office is staffed by USDA employees. Although SBA's 
SBDCs may provide services that differ from services provided by Rural 
Development field offices, to the extent that SBDCs are considered part 
of SBA's rural presence, both agencies have a strong rural presence 
that provides another rationale for the agencies to collaborate. 

SBA and Rural Development's Collaborative Efforts Have Been Sporadic: 

Overall, in the areas where SBA and Rural Development were 
collaborating, the efforts were sporadic, were initiated and 
administered at local levels, and appeared to be dependent on 
established working relationships among those involved. The results of 
a query by Rural Development and SBA officials asking their offices 
whether collaborative efforts were under way also indicated that such 
efforts were sporadic. We found that the extent of the collaboration 
that was taking place and the level of formality--that is, the use of 
cooperative agreements, such as MOUs and other mechanisms to 
collaborate--varied across the agencies' field offices. For example, in 
North Dakota, SBA and Rural Development collaborated frequently and on 
a relatively formal basis by communicating at least weekly, hosting 
several joint lender training sessions yearly, and establishing an MOU 
to deliver financing and technical assistance at one location. In other 
states we visited, such as Nebraska and New Mexico, SBA and Rural 
Development worked with each other less frequently and on a more 
informal basis. In a number of other states, such as Arizona, Colorado, 
and Georgia, no collaborative efforts appeared to be under way. 

Most of the Current Collaborative Efforts between SBA and Rural 
Development Have Been Initiated at the Local Level: 

Federal agencies that are involved in collaborative efforts are 
generally required by statute to collaborate, but no such specific 
requirement exists for SBA and Rural Development. As a result, we found 
that most ongoing collaborative efforts between the agencies had been 
initiated at the local level and were based on established working 
relationships among the involved individuals. For example, some SBA and 
Rural Development field office officials at the three sites we visited 
told us that they frequently collaborated with each other because they 
had held the same job positions, within their respective agencies, and 
worked together for many years and thus had established a rapport. 
Other officials told us that they were involved in collaborative 
efforts because they had initiated the efforts on their own or had 
prior experience in partnering with other agencies and had chosen to 
continue similar efforts. 

SBA and Rural Development headquarters officials conducted a query of 
their respective field office staff to determine the extent to which 
these offices were involved in any formal or informal collaborative 
efforts. In addition to information we obtained from the three 
locations we visited, the query results showed that collaborative 
efforts developed sporadically among a limited number of offices. For 
example, of SBA's 68 district offices, only about half reported having 
ongoing collaborative efforts with Rural Development. Similarly, only 
about half of Rural Development's 47 state offices reported having 
ongoing collaborative efforts. Of those Rural Development offices that 
reported not having any ongoing efforts, a few indicated that they had 
partnered with SBA in the past. Each agency's query also showed that 
some SBA and Rural Development field offices seemed to have good 
working relationships that had been established over the years by the 
specific individuals involved. 

A Few SBA and Rural Development Field Offices Have Established Formal 
Collaborative Efforts: 

Our site visits and the results of the query of field offices 
identified a few SBA and Rural Development offices, such as those in 
North Dakota, Ohio, and Washington state that appeared to be 
collaborating frequently. These offices used formal mechanisms such as 
MOUs to establish a framework for their efforts. In North Dakota, for 
example, SBA and Rural Development offices offered at least eight joint 
lender trainings each year and held quarterly meetings. In addition, in 
North Dakota the agencies had established an MOU that created the 
Entrepreneur Centers of North Dakota (ECND), a single entity involving 
SBA, Rural Development, and other state and local stakeholders. 
[Footnote 17] According to officials at the center, the ECND provides 
"one-stop" access to a variety of products and services, a concept that 
has been widely used by USDA in its service centers for over 10 years 
and that was a cornerstone of the agency's reorganization efforts. 
[Footnote 18] 

Through the ECND, a prospective small business borrower in North Dakota 
can work with the five ECND partners to obtain financing and technical 
assistance from any of the more than 15 programs that are offered. ECND 
partners work with the borrower from the initial point of contact and 
continue their assistance through the process of securing the 
appropriate financing and may stay involved until a project is 
completed. Borrowers can also work with "resource partners," including 
SBA's SBDC and the North Dakota Women's Business Center (i.e., Center 
for Women and Technology) to obtain technical assistance in areas such 
as business management, marketing, production, and the development of 
feasibility studies. According to SBA and Rural Development officials 
in North Dakota, the ECND is one of the best examples of teamwork and 
has proven to be beneficial in helping to provide a high level of 
customer service to rural borrowers. 

The SBA and Rural Development offices in Ohio also reported ongoing 
collaborative efforts. The officials reported having an MOU, which was 
established in the late 1990s, to guide various joint activities and to 
promote the use of each other's programs in marketing and outreach 
efforts. Under the MOU, which is still used today, the offices provide 
referrals, conduct periodic meetings to update program information, and 
engage in forums and joint lender training sessions to educate lenders 
on their programs. The SBA and Rural Development offices in Washington 
reported having annual forums to share updated program information. 
They also said that they had sponsored three joint lender training 
sessions and a regional lender conference to educate lenders on the 
various aspects of their loan and business programs. The SBA and Rural 
Development offices plan to conduct a series of joint lender workshops 
in 2008 and to establish an MOU that will guide their efforts and cover 
advertising for the workshops. 

SBA and Rural Development Collaborated Less Frequently, Informally, or 
Not At All in Many Locations: 

The two agencies reported several other instances of collaboration, but 
these were less extensive and formal than those in North Dakota, Ohio, 
and Washington state. For example, Nebraska SBA and Rural Development 
officials reported conducting joint lender training sessions to educate 
loan officers on the agencies' various loan and business programs and 
provide information on the technical resources that are available to 
small businesses throughout the state. In New Mexico, SBA and Rural 
Development officials reported conducting joint monthly meetings and 
community outreach sessions, or "Access to Capital" forums. The forums 
are 1-day events during which Rural Development, SBA, and SBDC 
officials and other local economic development professionals make 
presentations on the various types of loan programs that are available 
to small businesses. The forums' goal is to involve local economic and 
political leaders in assisting small businesses in rural areas of the 
state and to obtain their buy-in and support for SBA and Rural 
Development programs. 

SBA and Rural Development officials in other locations reported that 
they were involved in informal collaborative efforts. In Arkansas, 
Missouri, and Virginia, these activities were based on referrals. 
According to officials in these areas, SBA and Rural Development field 
personnel often refer applicants in need of financing to each other's 
agency if the other agency's programs seem better suited to the 
applicants' needs. SBA and Rural Development offices in Massachusetts 
also reported that they had recently sponsored a joint educational 
event on renewable energy and energy efficiency grants and loans and 
had held meetings to exchange program information. Additionally, in New 
Hampshire, Rhode Island, and Vermont, the offices reported that they 
had informal relationships and generally kept each other up to date on 
their respective programs. 

In many states, however, SBA and Rural Development do not appear to be 
collaborating at all or to have formal or informal mechanisms to 
facilitate collaboration. These states include, among others, Arizona, 
Colorado, Georgia, Maine, North Carolina, Utah, and West Virginia. 
Because of this lack of collaboration, SBA and Rural Development 
offices in these states may be missing out on opportunities to work 
together to better serve entrepreneurs and small businesses in their 
local communities. 

SBA and Rural Development have Collaborated with Each Other and Other 
Agencies in the Past: 

SBA and Rural Development have collaborated in the past with each other 
and with other agencies. Generally speaking, these efforts enabled the 
agencies to achieve results that they could not have achieved acting 
alone. For example, SBA and Rural Development collaborated with each 
other under the RBIP. Section 6029 of the Farm Security and Rural 
Investment Act of 2002 required USDA to establish the RBIP.[Footnote 
19] The purpose of the program was twofold: first, to promote economic 
development and create jobs in rural areas by encouraging investments 
of venture capital to help develop small rural businesses; and second, 
to establish a developmental venture capital program to address the 
unmet equity investment needs of small rural businesses. 

RBIP was modeled after SBA's Small Business Investment Company program 
and its New Markets Venture Capital program, and Rural Development was 
expected to draw upon the experience that SBA had gained in 
administering these programs.[Footnote 20] Under an interagency 
agreement required by the act, Rural Development had oversight 
responsibility for RBIP, and SBA had the day-to-day responsibility for 
managing and operating the program using its own staff, procedures, and 
forms. According to both SBA and Rural Development officials, the 
success of RBIP was limited due to a lack of funding, in part because 
the Deficit Reduction Act of 2005 rescinded fiscal year 2007 and 
subsequent funding for the program. Both agencies also encountered 
challenges during planning and implementation. For instance, it took 
about 2 years from the time that the law was enacted in 2002 to 
finalize and sign the operating agreements, establish interim final 
rules, and announce funding availability in 2004. Prior to the loss of 
funding in 2006, only one company was able to raise the necessary 
capital (i.e., private equity matching dollars) for full approval to 
become licensed as a rural business investment company under RBIP. 
[Footnote 21] 

According to SBA and Rural Development officials, the agencies have 
also collaborated with other agencies, and the results have reportedly 
been beneficial for both SBA and USDA. For instance, both SBA and Rural 
Development each collaborated with FCA to examine specialized lending 
institutions. Specifically, SBA oversees small business lending 
companies (SBLC), which are nondepository lending institutions licensed 
by SBA that play a significant role in SBA's 7(a) Loan Guaranty 
Program. However, SBLCs are not generally regulated or examined by 
financial institution regulators. SBA entered into a contractual 
agreement with FCA in 1999 that tasked FCA with conducting safety and 
soundness examinations of the SBLCs. Under the agreement, FCA would 
conduct examinations of SBLCs on a full cost-recovery basis, and the 
agencies would have the option to terminate or extend the agreement 
after 1 year.[Footnote 22] Rural Development also collaborated with FCA 
under an Economy Act agreement to conduct examinations of its 
nontraditional lenders (i.e., lenders that provide loans to borrowers 
that do not meet the traditional credit criteria) that participate in 
Rural Development's B&I, Renewable Energy Systems and Energy Efficiency 
Improvements, and Community Facilities Guaranteed Loan Programs. 
[Footnote 23] Under the agreement, FCA conducts, on a full cost-
recovery basis, examinations of the lending institutions' safety and 
soundness, lending practices, and regulatory compliance. These 
agreements have allowed both SBA and Rural Development to take 
advantage of FCA's expertise in examining specialized financial 
institutions and offered FCA the opportunity to broaden its experience 
through exposure to different lending environments. 

Additionally, Rural Development and FEMA collaborated in providing 
disaster assistance to Hurricane Katrina victims. Through this 
collaborative effort, Rural Development assisted victims of Katrina by 
(1) making multifamily rental units available nationwide; (2) providing 
grants and loans for home repair and replacement; and (3) providing 
mortgage relief through a foreclosure moratorium and mortgage payment 
forbearance. Over the years, Rural Development's Housing and Community 
Facilities Program and HUD have routinely collaborated with each other 
to provide affordable housing assistance in rural communities, and the 
working relationship still exists today. Rural Development and HUD have 
together created a voucher program, modeled after HUD's Housing Choice 
Voucher program that provides rental assistance to families in rural 
areas. They have also developed cooperative agreements for their 
multifamily housing assistance programs that allow tenants to use HUD 
vouchers in USDA subsidized multifamily housing units. We were told 
that each of the collaborative efforts allowed the agencies to 
establish common approaches to working together, clarify priorities as 
well as roles and responsibilities, and align their resources to 
accomplish common outcomes. 

SBA and Rural Development Could Take Steps to Establish a Formal 
Approach to Collaboration: 

SBA and Rural Development have not had a lasting approach to guide them 
in collaborating with one another more effectively. Our October 2005 
report on key practices that can help enhance and sustain collaboration 
among federal agencies identified a number of practices critical to 
successful collaboration and identified other factors such as 
leadership, trust, and organizational culture that are necessary 
elements of an effective working relationship.[Footnote 24] In December 
2000, SBA and Rural Development entered into an MOU that provided an 
approach to collaboration. The MOU incorporated three of the key 
practices we have identified. The MOU expired in 2003 and SBA and Rural 
Development do not appear to have implemented the MOU when it was 
active. The ineffective implementation of the MOU has likely 
contributed to the sporadic and limited amount of collaboration that is 
taking place between the two agencies. SBA and Rural Development also 
do not have formal incentives focused on collaboration and do not track 
the results or impact of collaborative efforts. As a result, the 
agencies are unable to share information on the benefits of working 
together and encourage additional efforts to do so. Without a formal 
approach to encourage further collaboration, the agencies will be less 
likely to fully leverage each other's unique strengths to help improve 
small business opportunities and encourage economic development in 
rural communities. 

SBA and Rural Development Do Not Have A Current Cooperative Agreement 
to Facilitate Collaboration: 

In our October 2005 report, we identified eight key practices federal 
agencies could undertake to enhance and sustain their collaborative 
efforts.[Footnote 25] These practices included the following: 

* Define and articulate a common outcome--to overcome significant 
differences in agency cultures and established ways of doing business, 
collaborating agencies must have a clear and compelling rationale to 
work together. 

* Establish mutually reinforcing or joint strategies--to achieve a 
common outcome, collaborating agencies need to establish strategies 
that work in concert with those of their partners or are joint in 
nature. 

* Identify and address needs by leveraging resources--collaborating 
agencies should identify the human, information technology, physical, 
and financial resources needed to initiate or sustain their 
collaborative effort. By assessing their relative strengths and 
limitations, agencies can look for opportunities to address resource 
needs by leveraging each others' resources. 

* Agree on agency roles and responsibilities--collaborating agencies 
should work together to define and agree on their respective roles and 
responsibilities, including how the collaborative effort will be led. 

* Establish compatible policies, procedures, and other means to operate 
across agency boundaries--to facilitate collaboration, agencies need to 
address the compatibility of standards, policies, procedures, and data 
systems that will be used in the collaborative effort. 

* Develop mechanisms to monitor, evaluate, and report on results-- 
agencies involved in collaborative efforts need to create the means to 
monitor and evaluate their efforts to enable them to identify areas for 
improvement. 

* Reinforce agency accountability for collaborative efforts through 
agency plans ands reports--collaborating agencies should ensure that 
goals are consistent and, as appropriate, program efforts are mutually 
reinforced through tools such as strategic and annual performance 
plans; and: 

* Reinforce individual accountability for collaborative efforts through 
performance management systems--collaborating agencies should use their 
performance management systems to strengthen accountability for 
results, specifically by placing greater emphasis on fostering the 
necessary collaboration both within and across organizational 
boundaries to achieve results. 

In comparing SBA and Rural Development's efforts to these key 
practices, we found that the agencies have taken steps in the past that 
were consistent with three of the key practices. In particular, the 
agencies entered into a cooperative agreement--an MOU--in December 2000 
that (1) defined and articulated a common outcome; (2) reached 
agreement on roles and responsibilities; and (3) established a 
mechanism to monitor, evaluate, and report on results.[Footnote 26] 

Specifically, the MOU defined and articulated a common purpose, 
including to better serve rural areas by coordinating the delivery of 
programs; increase the number of small business loans guaranteed by 
both agencies; and develop relationships with federal, state, county, 
and local agencies, private organizations, and commercial and financial 
institutions to facilitate and support the development of strong rural 
businesses. In addition, the MOU described the respective roles and 
responsibilities each agency would maintain in providing training on 
their programs, credit analysis techniques, and processing and 
servicing policies. Finally, the MOU stated that, at least annually, 
SBA's Associate Administrator for Field Operations, SBA's Associate 
Administrator for Financial Assistance, and Rural Development's Deputy 
Administrator for Business Programs, or their designees, would monitor 
and evaluate the previous year's joint activities and plan any future 
work. 

The MOU, signed in December 2000, was to become active on the date of 
execution and remain in effect for 3 calendar years at which time the 
two agencies had the option to extend it for an additional 2 years by 
written agreement. SBA's Deputy Administrator and USDA's Undersecretary 
for Rural Development signed the MOU and it expired in 2003. Both SBA 
and Rural Development officials recently confirmed that the MOU was not 
renewed. 

SBA and Rural Development Do Not Appear to Have Implemented the 
December 2000 MOU When it Was Active: 

Although SBA and Rural Development's December 2000 MOU contained 
provisions that are consistent with some of our key practices as 
described above, the agencies do not appear to have implemented the MOU 
when it was active. Based on our analysis, there are two potential 
reasons for this lack of implementation. 

First, SBA and Rural Development may not have implemented the 2000 MOU 
when it was active because of a lack of direction and focus from high 
levels of each agency emphasizing the need for and importance of 
collaboration. Rural Development officials confirmed that a change in 
USDA administration occurred after the 2000 MOU was signed, and the 
officials who signed the MOU were no longer in the positions they 
occupied at the time of the signing. This explanation is consistent 
with what others told us about barriers to more effective collaboration 
between federal agencies. For example, a representative of a rural 
community development organization with whom we spoke stated that the 
initial momentum for some collaborative efforts may come from officials 
in management level positions of a federal agency, but after the 
responsible officials leave the agency, or a change in administration 
occurs, the momentum for a collaborative effort may drop off and not be 
resumed by the officials' successors. 

Second, the 2000 MOU may not have been fully implemented because 
neither agency appeared to be actively monitoring the extent to which 
collaboration was ongoing. For instance, when we began our work for 
this review, we asked SBA and Rural Development officials in 
headquarters to provide examples of formal or informal efforts the 
agencies have undertaken to work together. The officials were not able 
to provide any descriptions of such efforts and told us that ongoing 
collaborative efforts were likely to be sporadic and occurred only as 
needed in the agencies' field offices. Because we could not obtain 
information on the extent and nature of SBA and Rural Development's 
collaborative efforts, we asked each agency to query its field offices 
to provide us with this information. As discussed previously, based on 
the results of each agency's query, we found a few locations where SBA 
and Rural Development are involved in frequent and formal collaborative 
efforts, some locations where the agencies are involved in informal 
efforts, and many locations where the agencies appear not to be working 
together at all. 

SBA and Rural Development officials did not cite the December 2000 MOU 
when we began work for this review and, for a period of months, the 
agencies did not appear to be in agreement as to whether the MOU was 
active. In March 2008, Rural Development officials informed us that 
they were operating as though the MOU was active, even though it had 
expired. However, when we asked about the December 2000 MOU during some 
of our visits to locations where SBA and Rural Development were 
collaborating, some officials in the locations were unfamiliar with it. 
During the course of our review, neither SBA nor Rural Development 
officials cited actions taken, past or present, in response to the 
provisions contained in the MOU. Had SBA and Rural Development 
implemented the MOU, the agencies would have had a framework to guide 
them and improve upon their collaborative efforts. 

SBA and Rural Development Lack Incentives for Collaboration and Do Not 
Track the Results of Collaborative Efforts: 

Based on our analysis, we found that SBA and Rural Development field 
offices do not have formal incentives to encourage collaboration and do 
not track the results of their efforts. As mentioned, as we reported in 
our 2005 report, one of the key practices that can help agencies to 
enhance and sustain their collaborative efforts involved ensuring that 
the agencies' goals are consistent and that their program efforts are 
mutually reinforced through strategic and annual performance plans. 
[Footnote 27] Specifically, federal programs contributing to the same 
or similar results should collaborate and use their strategic and 
annual performance plans as tools to drive their efforts to work 
together. Such plans can reinforce accountability for the collaboration 
by establishing complementary goals and measures for achieving results 
and aligning them with the goals and measures of the collaborative 
efforts. SBA and Rural Development's performance goals and measures do 
not focus on their efforts to work together collaboratively. 
Specifically, in describing their performance goals for district 
offices, SBA officials stated that each office has goals for technical 
assistance, including activities such as training, marketing, and 
outreach. The officials noted that each SBA district office also has 
goals and measures for the number of loans to be made in underserved 
markets, which may include rural areas. While these goals and measures 
focus on participation in SBA's programs and may encourage offices to 
partner with others, they do not focus specifically on collaboration 
with Rural Development. Similarly, Rural Development's program 
performance measures, particularly for the B&I program, do not focus on 
collaboration with another agency. Rural Development's goals and 
measures focus on employment opportunities (i.e., jobs created or 
saved) and community economic benefits (i.e., value added to a 
community as a result of the economic impact of Rural Development's 
programs). Both SBA and Rural Development officials stated that 
performance goals and measures focused on collaboration could provide 
an incentive to collaborate. Once established, such goals and measures 
could provide both agencies a mechanism to encourage interagency 
working relationships and reward those efforts already occurring. 

Additionally, SBA and Rural Development officials at the three 
locations we visited said that they are not currently tracking the 
results of some collaborative efforts, such as the joint training of 
lenders and community outreach sessions. The officials did view these 
collaborative efforts as beneficial in increasing awareness of each 
agency's respective programs. According to Rural Development officials 
in New Mexico, while they are satisfied with the attendance at their 
"Access to Capital" forums targeted at local economic and political 
leaders and lenders, they have not been able to document a loan 
resulting from the forums. Rural Development officials in Nebraska said 
that they have received phone calls from some lenders after the lenders 
have attended a joint training session. In these cases, according to 
the officials, Rural Development has been active in meeting with 
lenders one-on-one to provide assistance. However, the officials said 
that they could do a better job of proactively contacting the lenders 
after the training to solicit feedback and determine if the lender has 
initiated any new loans as a result of having attended the training 
session. 

SBA and Rural Development officials stated that one way to document the 
benefits of collaboration would be to prepare "success stories" of 
ventures that SBA and Rural Development had jointly undertaken. The 
officials further stated that because each agency already prepared 
success stories that are based upon participation in their individual 
programs, this practice could be used to document positive benefits 
stemming from collaborative efforts between the two agencies. Moreover, 
the officials said that those locations where SBA and Rural Development 
were not currently working together were more likely to begin doing so 
if they were made aware of specific, tangible benefits that could be 
realized through collaboration. 

Conclusions: 

The complementary nature of some SBA loan programs and Rural 
Development business programs provides a rationale for the agencies to 
collaborate. SBA and Rural Development officials engaged in 
collaborative working relationships said that they have been able to 
work together to offer rural borrowers more financing options and 
better services, as well as to improve efforts to promote economic 
development in rural areas when collaboration has occurred. However, 
SBA and Rural Development's collaborative efforts to date have been 
sporadic and mostly self-initiated by specific officials in each 
agency's field offices. Officials of each agency worked together 
frequently in some locations and infrequently in others. In many areas, 
SBA and Rural Development neither appear to be collaborating at all nor 
have formal or informal mechanisms to guide their collaboration. 

For SBA and Rural Development, working together to encourage economic 
development in rural areas is not a new or novel concept. Both agencies 
entered into earlier cooperative agreements to work collaboratively. 
However, when comparing these past efforts with our criteria for 
effective interagency collaboration, we found that the agencies could 
take further steps to facilitate collaboration by establishing and 
implementing a formal approach. Such an approach could help SBA and 
Rural Development establish the guidance, direction, and incentive 
structure needed to bring about a productive working relationship on a 
more systematic basis. Our previous work in this area shows that 
adopting key practices--such as defining and articulating a common 
outcome; specifying roles and responsibilities; establishing a 
mechanism to monitor, evaluate, and report on results; and reinforcing 
agency accountability for collaborative efforts--can help federal 
agencies enhance and sustain their collaborative efforts. One way SBA 
and Rural Development can adopt these key practices is to enter into a 
written cooperative agreement and, just as important, implement that 
agreement and take appropriate steps to monitor and report on results. 
Moreover, by creating formal incentives, such as performance goals and 
measures specifically focused on collaboration or, similarly, preparing 
success stories to document the benefits of their collaborative 
efforts, SBA and Rural Development can share and publicize information 
that would help encourage the two agencies to work together. Such an 
approach can help SBA and Rural Development to effectively leverage 
each other's unique strengths to help improve small business 
opportunities and promote economic development in rural communities. 

Recommendations for Executive Action: 

To improve SBA and Rural Development's collaborative efforts, we 
recommend that the Administrator of SBA and Secretary of Agriculture: 
take steps to adopt a formal approach to encourage further 
collaboration in support of common economic development goals in rural 
areas. Such steps could include establishing and implementing a written 
agreement; defining and articulating a common outcome for rural 
economic development; specifying roles and responsibilities to ensure 
proper coordination; establishing mechanisms to monitor, evaluate, and 
report on results; and reinforcing accountability for collaborative 
efforts. 

Agency Comments: 

We provided a copy of our draft report to the Acting Administrator of 
the Small Business Administration and the Secretary of Agriculture for 
review and comment. Both agencies provided technical comments, which we 
incorporated into the final report where appropriate. 

We are sending copies of this report to other interested congressional 
committees as well as the Administrator of the Small Business 
Administration and the Secretary of Agriculture. We also will make 
copies of this report available to others upon request. In addition, 
this report will be available at no charge on the GAO Web site at 
[hyperlink, http://www.gao.gov]. 

Please contact me at (202) 512-8678 or [email protected] if you or your 
staff have any questions about this report. Contact points for our 
Office of Congressional Relations and Public Affairs may be found on 
the last page of this report. Key contributors to this report are 
listed in appendix V. 

Signed by: 

William B. Shear: 
Director, Financial Markets and Community Investment: 

List of Congressional Requesters: 

The Honorable John F. Kerry: 
Chairman, Committee on Small Business and Entrepreneurship: 
United States Senate: 

The Honorable Steve Chabot: 
Ranking Member: 
Committee on Small Business: 
House of Representatives: 

The Honorable Heath Shuler: 
Chairman, Subcommittee on Rural and Urban Entrepreneurship: 
Committee on Small Business: 
House of Representatives: 

The Honorable Jeff Fortenberry: 
Ranking Member: 
Subcommittee on Rural and Urban Entrepreneurship: 
Committee on Small Business: 
House of Representatives: 

The Honorable Vern Buchanan: 
House of Representatives: 

[End of section] 

Appendix I: Scope and Methodology: 

The Small Business Administration (SBA) programs in our scope (see fig. 
4) include the major business loan programs--Basic 7(a) Loan Guaranty, 
504/Community Development Corporation Loan and the 7(m) Micro Loan, as 
well as the Small Business Investment Company (SBIC) and the Rural 
Lender Advantage Pilot programs. The Department of Agriculture (USDA) 
Rural Development programs in our scope include the primary business 
programs including the Business and Industry Guaranteed Loan, 
Intermediary Relending, Rural Business Enterprise Grant, Rural Business 
Opportunity Grant, Rural Economic Development Loans and Grants, and the 
Renewable Energy Systems and Energy Efficiency Improvements Guaranteed 
Loan and Grant programs. 

Figure 4: Summary of Programs Included in Our Scope: 

[See PDF for image] 

This figure is an illustration of the following information: 

Summary of Programs Included in Our Scope: 

Small Business Administration (SBA) (5 programs): 
* Basic 7(a) Loan Guaranty Program[A]; 
* 504/CDC Loan Program[A]; 
* 8(m) Micro Loan Program[A]; 
* Small Business Investment Company (SBIC) Program[A]; 
* Rural Lender Advantage Pilot Program[A]. 

United States Department of Agriculture Rural Development (USDA) (6 
programs): 
* Rural Business-Cooperative Service; 
- Business and Industry (B&I) Guaranteed Loan Program[A]; 
- Intermediary Relending Program (IRP)[A]; 
- Rural Business Enterprise Grant Program (RBEG)[A]; 
- Rural Business Opportunity Grant Program (RBOG)[A]; 
- Rural Economic Development Loan and Grant Program (REDLG)[A]; 
- renewable Energy Systems and Energy Efficiency Improvements 
Guaranteed Loan and Grant Program[A]; 
* Rural Housing Service; 
* Rural Utilities Service. 

[A] Programs covered by GAO. 

Source: SBA; USDA. 

[End of figure] 

In this report, we define collaboration as any joint activity that is 
intended to produce more public value than can be produced when the 
agencies act alone. It can include interagency activities that others 
have previously defined as cooperation, coordination, integration, or 
networking. 

To determine the extent to which SBA and Rural Development's primary 
loan and business programs are complementary and to identify the 
rationale for SBA and Rural Development to collaborate, we reviewed the 
mission and structure of SBA and Rural Development offices. We reviewed 
relevant agency documents and examined laws, regulations and policies 
on each agency's loans, grants, and other business programs. We 
reviewed eligibility requirements and the type of assistance (i.e., 
direct loan, loan guaranty, grant, etc.), funding levels, and eligible 
use of program funds, as well as information about each agency's loan 
processes and procedures, participation requirements, number of awarded 
loans and grants, and loan process times. We also interviewed agency 
officials on the similarities and differences between the two agencies' 
primary loan and business programs, and whether the similarities may 
have an effect on collaboration. We reviewed our prior work on 
interagency collaboration and key practices that can help enhance and 
sustain collaborative efforts. We obtained input from SBA and USDA 
agency officials, SBA resource partners, lenders, and nonprofit 
organizations involved in the rural economic development process on the 
goals and common outcomes they envision from increased collaboration 
between the SBA and Rural Development. Also, using information 
collected on the mission and structure of SBA and Rural Development 
offices, and the purpose, eligible use, and terms/conditions of their 
primary business programs, we assessed whether factors such as 
complementary mission or task, compatible geographic location and 
organizational structure, common client base, program overlap and 
duplication, or similarities and differences in statutory authority, 
provide a rationale for the two agencies to work together. As 
collaboration between SBA and USDA Rural Development is not 
specifically required by law or regulation, we relied on established 
practices and agency officials' and stakeholder views in examining the 
rationale for why SBA and USDA should collaborate. 

To determine the types of collaborative efforts currently taking place 
and that have taken place in the past between SBA and Rural 
Development, we reviewed internal documents, such as memorandums of 
understanding (MOU) and training documentation, showing ongoing and 
past collaborative efforts between SBA and Rural Development. We 
requested that both SBA and Rural Development conduct a query of their 
respective district offices and state offices regarding all formal or 
informal efforts to work collaboratively with the other agency. We 
received responses from about half the SBA district offices and all of 
the Rural Development state offices that either described the extent of 
their collaborative efforts with the other agency, or reported that 
there were no collaborative efforts ongoing. Of those SBA and Rural 
Development district and state offices that reported they were working 
together, we selected three locations and conducted site visits and 
interviews with knowledgeable staff at each location to obtain a 
thorough understanding of ongoing collaborative efforts. We selected 
the sites to visit based on the reported amount of collaboration and 
degree of formality of the effort. We defined formality by the presence 
of a written document, such as an MOU, that served as a guide for 
collaborative efforts. The goal of our selection approach was to obtain 
information on a range of collaborative efforts, from frequent and 
formal to infrequent and informal. The locations that we selected and 
visited were Lincoln, Nebraska; Bismarck, North Dakota; and 
Albuquerque, New Mexico. For two of these locations, we also spoke with 
lenders that have participated in both SBA and Rural Development 
programs. 

To determine the types of collaborative efforts that have taken place 
between SBA and other agencies, and Rural Development and other 
agencies, we reviewed documentation describing the collaborative 
effort. We examined the mechanisms (e.g., contractual work agreement, 
MOU or other cooperative agreement, statutory provision, etc.) the 
agencies used to collaborate. Additionally, we interviewed agency 
officials on their knowledge of any past collaborative effort. 

To determine the opportunities to facilitate and remove barriers to 
more effective collaboration between SBA and Rural Development, we 
reviewed our prior work on key practices that can help enhance and 
sustain collaboration and address barriers to more effective 
collaboration. We also obtained the views and experience of agency 
officials, SBA resource partners, lenders, and select nonprofit 
organizations, regarding rural economic issues, and opportunities and 
barriers to more effective collaboration. We used certain 
characteristics, such as personnel at both agencies, budget, training, 
and management, to evaluate opportunities or barriers to collaboration. 
We also assessed the potential that may be present for Rural 
Development offices to help market SBA programs and services by making 
information available through their field offices and whether SBA can 
play a similar role for Rural Development programs. Finally, we 
compared SBA and Rural Development's policies, practices, and 
performance goals with key practices that can help federal agencies 
enhance and sustain their collaborative efforts. 

We conducted this performance audit from October 2007 to September 
2008, in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: Description of SBA's and USDA Rural Developments' Primary 
Loan and Business Programs: 

Both SBA and USDA Rural Development have several loan and business 
programs that provide funds to start or expand businesses in rural 
areas. Through these programs, the two agencies work with individual 
entrepreneurs, existing or start-up small businesses, state, local, and 
tribal governments, as well as cooperatives and nonprofit agencies to 
increase economic opportunity and improve the quality of life for 
people in rural communities across the country. 

The following sections describe the primary SBA loan programs and Rural 
Development business programs. 

SBA Loan Programs: 

Basic 7(a) Loan Guaranty Program: serves as the primary business loan 
program to help qualified small businesses obtain financing. It can be 
used for a variety of general business purposes including, working 
capital, machinery and equipment, land and building (including 
purchase, renovation, and new construction), leasehold improvements, 
and certain debt refinancing. SBA sets the guidelines for the loans and 
backs the loan with a guaranty, while lenders make the loans to the 
small businesses. SBA offers multiple variations of the Basic 7(a) Loan 
Program to accommodate targeted needs. For example, the Patriot Express 
Loan Program, which is specifically geared toward veterans, members of 
the military community and their spouses, and the Community Express 
Loan Program, which is aimed at women, minorities, and veterans in 
underserved communities who want to start or expand a small business, 
are both expedited versions of the Basic 7(a) Loan Program. 

504/Certified Development Company (CDC) Loan Program: provides long- 
term, fixed-rate financing to small businesses to acquire real estate, 
machinery, or equipment for expansion or modernization. The 504/CDC 
Loan Program cannot be used for working capital or inventory, 
consolidating or repaying debt, or refinancing. Typically a 504/CDC 
project includes a loan secured by a lien from a private-sector lender, 
a loan secured by an additional lien from a certified development 
company (CDC) (covering up to 40 percent of the total cost) and a 
contribution of at least 10 percent equity from the borrower. CDCs are 
private, nonprofit corporations set up to contribute to the economic 
development of their communities or regions. The program is designed to 
enable small businesses to create and retain jobs--the CDC's portfolio 
must create or retain one job for every $35,000 provided by the SBA. 

7(m) Micro Loan Program: provides short-term loans of up to $35,000 to 
small businesses and not-for-profit child-care centers for working 
capital or the purchase of inventory, supplies, furniture, fixtures, 
machinery, or equipment. The average loan size is about $13,000, and 
proceeds can be used for typical business purposes such as working 
capital, machinery and equipment, inventory, and leasehold 
improvements. The proceeds cannot be used to pay existing debts or to 
purchase real estate. Under this program, SBA makes funds available to 
intermediaries (nonprofit community-based organizations with experience 
in lending) that, in turn, make the loan directly to the entrepreneur. 
The intermediary lenders also provide entrepreneurs with management and 
technical assistance. 

SBIC Program: provides venture capital to small independent businesses, 
both new and already established. The structure of the program is 
unique in that SBICs are privately owned and managed investment funds, 
licensed and regulated by SBA, that use their own capital plus funds 
borrowed with an SBA guarantee to make equity capital and long-term 
loans to qualifying small businesses. In addition to investments and 
loans, SBICs also provide management assistance to small businesses. 

Small/Rural Lender Advantage Pilot Program: a part of SBA's 7 (a) loan 
program, is aimed at encouraging rural lenders to finance small 
businesses by streamlining the application and approval processes. 
Specifically, the Small/Rural Lender Advantage offers a simplified 
application form for loans of $350,000 or less, the ability to apply 
online, expedited loan processing, and limited documentation 
requirements. SBA will guarantee 85 percent of the loan amount for 
loans of $150,000 and less, and 75 percent of loans above $150,000. It 
is part of a broader initiative to boost economies in areas that face 
unique challenges due to factors such as declining population or high 
unemployment. The pilot program was initiated and tested in SBA's 
Region VIII (North Dakota, South Dakota, Colorado, Wyoming, Utah, and 
Montana) in January 2008. Following enhancements to further streamline 
it, SBA is now extending the initiative to Region V, which covers 
Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin. SBA also 
plans to expand the initiative nationwide by the end of fiscal year 
2008. 

Rural Development Loan and Grant Programs: 

Business and Industry (B&I) Guarantee Loan Program: (often referred to 
as the B&I program) provides financial assistance to rural businesses 
in the form of a loan guarantee for up to 80 percent of the loan 
amount. Borrowers work with a local lending agency (e.g., bank or 
credit union), which in turn seeks a guarantee from Rural Development. 
A borrower may be an individual; a cooperative organization, 
corporation, partnership, or other legal entity organized on a profit 
or nonprofit basis; an American Indian tribe or other federally 
recognized tribal group; or a public body (i.e., town, community, state 
agency, and authority). Loan purposes must be consistent with the 
purpose of the program, which is to improve, develop, or finance 
business, industry, and employment and improve the economic climate in 
rural communities. They include, but are not limited to, the following: 

* business and industrial acquisitions under certain conditions; 

* business conversion, enlargement, repair, modernization, or 
development; 

* purchase and development of land, easements, buildings, or 
facilities; and: 

* purchase of equipment, leasehold improvements, machinery, supplies, 
or inventory or working capital. 

The total loan amount available to any one borrower under this program 
is limited to $25 million. An exception to the limit for loans up to 
$40 million may be granted for rural cooperative organizations that 
process value-added agricultural commodities. B&I loans are available 
to borrowers in rural areas, which include all areas other than cities 
or towns of more than 50,000 people and the contiguous and adjacent 
urbanized area of such cities or towns. The B&I Guaranteed Loan 
Program, with a fiscal year 2007 funding level of $953 million, is 
Rural Development's largest business program. 

Intermediary Relending Program (IRP): finances business and economic 
development activities that seek to create or retain jobs in 
disadvantaged and remote communities. Under the IRP program, loans are 
provided to local organizations (intermediary lenders) for the 
establishment of revolving loan funds that provide loans to ultimate 
recipient borrowers. The revolving loan funds are used to assist the 
borrower with financing business facilities and community development 
projects. Projects must be located in a rural area, which for this 
program excludes cities with a population of 25,000 or more. Some 
examples of eligible projects are as follows: 

* business and industrial acquisitions under certain conditions; 

* business construction, conversion, enlargement, and repair; 

* purchase and development of land, easements, rights-of-way, 
buildings, or facilities; 

* purchase of equipment, leasehold improvements, machinery, and 
supplies; 

* start-up operating costs and working capital; 

* transportation services, and; 

* debt refinancing. 

Intermediary lenders may first borrow up to $2 million and then up to 
$1 million each time thereafter, not to exceed the total aggregate loan 
amount of $15 million. An ultimate recipient borrower may borrow the 
lesser of $250,000 or 75 percent of the total cost of the ultimate 
recipient's project for which the loan is being made. Private nonprofit 
corporations, public entities (i.e., towns, communities, state 
agencies, and authorities), American Indian tribes or other federally 
recognized tribal groups, and some cooperatives are eligible to 
intermediaries. Borrowers that are generally eligible to apply for 
loans from intermediary lenders include individuals, corporations or 
partnerships, trusts or other profit-oriented or nonprofit 
organizations, and public entities. 

Rural Business Enterprise Grant Program (RBEG): provides grants to 
public bodies, including American Indian tribes and other federally 
recognized tribal groups, and private nonprofit corporations, to 
finance and facilitate the development of small and emerging private 
businesses in rural areas (i.e., any area other than a city or town 
that has a population of greater than 50,000 and the urbanized area 
contiguous and adjacent to such a city or town. Small and emerging 
private businesses are those that will employ 50 or fewer new employees 
and have less than $1 million in projected gross revenues. Grants may 
be used for: 

* easements, and rights of way; 

* construction, conversion, or modernization of buildings, facilities, 
machinery, roads, parking areas, utilities, and pollution control and 
abatement; 

* loans for start-up operating costs and working capital; 

* technical assistance for private business enterprises; 

* training, when necessary, in connection with technical assistance; 
and: 

* production of television programs to provide information on issues of 
importance to farmers and rural residents. 

There is no maximum level of grant funding under RBEG. However, smaller 
projects are given higher priority. 

Rural Business Opportunity Grant Program: provides grants to public 
entities, nonprofit corporations, cooperatives, and American Indian 
tribes and other federally recognized tribal groups for training, 
technical assistance, and planning activities in rural areas (i.e., any 
area other than a city or town that has a population of greater than 
50,000, and the urbanized area contiguous and adjacent to such a city 
or town). Grants may be used to: 

* identify and analyze business opportunities that will use local rural 
materials or human resources; 

* identify, train, and provide technical assistance to existing or 
prospective rural entrepreneurs and managers; 

* establish business support centers; 

* conduct local community or multicounty economic development planning; 

* establish centers for training, technology, and trade; and: 

* conduct leadership development training. 

The maximum grant for a project serving a single state is $50,000. The 
maximum grant for a project serving two or more states is $150,000. 

Rural Economic Development Loan and Grant Program (REDLG): provides 
funding to rural projects through local utility organizations. Under 
the loan program, Rural Development provides zero interest loans to 
lending utility organizations that, in turn, pass make loans to for- 
profit or nonprofit businesses and public entities (i.e., ultimate 
recipient borrowers), for projects that will create and retain 
employment in rural areas. The ultimate recipient borrower must repay 
the lending utility directly, and the lending utility is responsible 
for repayment to Rural Development. Under the grant program, Rural 
Development provides grant funds to local utility organizations, which 
may only use the funding to establish revolving loan funds. Loans are 
made from the revolving loan fund to projects that will create or 
retain jobs in rural areas. When the revolving loan fund is terminated, 
the grant is then repaid to Rural Development. Eligible project costs 
include: 

* start-up venture costs, including working capital; 

* business expansion; 

* business incubators; 

* technical assistance; 

* project feasibility studies and; 

* advanced telecommunications services and computer networks for 
medical, educational, and job training services. 

The maximum loan and grant to any eligible recipient under the Rural 
Economic Development Loan and Grant Program is established on an annual 
basis. 

Renewable Energy Systems and Energy Efficiency Improvements Guaranteed 
Loan and Grant Program: (renamed Rural Energy for America Program) 
provides loan guarantees and grants to eligible small businesses, 
farmers, and ranchers to assist in developing renewable energy systems 
and to make energy efficiency improvements. The types of energy 
projects include biofuel, wind, solar, geothermal, and hydrogen-based 
projects. They must be located in a rural area (i.e., any area other 
than cities or towns of greater than 50,000 population and the 
immediate and adjacent urbanized areas of the cities or towns). Under 
the loan program, borrowers work with local lenders in applying for a 
loan guaranty up to 85 percent of the loan, depending on the amount of 
the loan. The loan cannot exceed 50 percent of the project cost, and 
the project must use commercially proven technology. The maximum loan 
amount is $10 million per project, and the minimum is $5,000. Grants 
are limited to a maximum of $500,000 and a minimum of $2,500 for 
renewable energy systems, and a maximum of $250,000 and a minimum of 
$1,500 for energy efficiency improvements. Eligible applicants are 
agricultural producers or rural small businesses. Small businesses must 
meet SBA's small business size standards. 

[End of section] 

Appendix III: Comparison of SBA and Rural Development Primary Business 
Loan and Grant Programs: 

Program title: Borrower; 
SBA loan programs: Basic 7(a) Loan Guaranty Program: Any creditworthy 
start-up or existing business that cannot obtain financing on 
reasonable terms through normal lending channels; 
SBA loan programs: 504/CDC Loan Program: Small business, for profit 
corporation, partnership, or proprietorship that will create and/or 
retain jobs through long-term financing; 
SBA loan programs: 7(m) Micro Loan Program: Start-up and existing micro 
business that can meet basic lending requirement. Borrowers may be 
required to attend meetings/classes with technical assistance 
providers; 
Rural development loan and grant programs: Business and Industry Loan 
Guaranteed Program: Any legal entity including individual, cooperative, 
corporation, partnership, tribal group, government entity, and agency; 
Rural development loan and grant programs: Intermediary Relending 
Program: Any legal entity including individual, public, and private 
organization, government entity, and agency; 
Rural development loan and grant programs: Rural Economic Development 
Loan and Grant Program: Rural electric cooperatives and rural telephone 
cooperatives; 
Rural development loan and grant programs: Renewable Energy Systems & 
Energy Efficiency Improvements Guaranteed Loan and Grant Program: Rural 
small business, individual, agricultural producer, or group of 
agriculture producers. Must meet SBA's small business size standards; 

Program title: Funding limit; 
SBA loan programs: Basic 7(a) Loan Guaranty Program: SBA can guaranty a 
maximum of $1,500,000. The maximum guaranty is 85% for loans up to 
$150,000, and 75% for loans over $150,000; 
SBA loan programs: 504/CDC Loan Program: Through CDCs, SBA can fund up 
to 40% of the total project costs, from $50,000 to $1,500,000, or in 
certain cases up to $2,000,000; 
SBA loan programs: 7(m) Micro Loan Program: Maximum loan amount is 
$35,000; 
Rural development loan and grant programs: Business and Industry Loan 
Guaranteed Program: Rural Development can guarantee up to $25 million; 
80%-to $5 million; 70%-$5 to $10 million; 60%-over $10 million; No 
minimum loan; 
Rural development loan and grant programs: Intermediary Relending 
Program: Intermediaries can make loans to qualified applicants for up 
to 75% of eligible project. Maximum loan is $250,000; 
Rural development loan and grant programs: Rural Economic Development 
Loan and Grant Program: Maximum loan amount is $740,000; Maximum grant 
amount is $300,000; Subject to change annually; 
Rural development loan and grant programs: Renewable Energy Systems & 
Energy Efficiency Improvements Guaranteed Loan and Grant Program: 
Maximum renewable energy grant is $500,000; Maximum energy efficiency 
grant is $250,000; Minimum for both grants is $10,000; Maximum loan is 
$10,000,000. 

Program title: Use of proceeds; 
SBA loan programs: Basic 7(a) Loan Guaranty Program: Business start-
ups, expansion, equipment, working capital, inventory of real estate 
acquisition; 
SBA loan programs: 504/CDC Loan Program: Long-term financing of real 
estate and equipment; 
SBA loan programs: 7(m) Micro Loan Program: Working capital, inventory, 
and small equipment; 
Rural development loan and grant programs: Business and Industry Loan 
Guaranteed Program: Permanent working capital, hard asset acquisition, 
real estate, equipment and limited refinancing. Up to 50% of loan; 
Rural development loan and grant programs: Intermediary Relending 
Program: New and existing business, equipment purchase, or lease and 
working capital; 
Rural development loan and grant programs: Rural Economic Development 
Loan and Grant Program: Business start-up or expansion projects that 
create rural jobs. Grants may only establish a revolving loan fund; 
Rural development loan and grant programs: Renewable Energy Systems & 
Energy Efficiency Improvements Guaranteed Loan and Grant Program: 
Purchase equipment, construction energy audits, feasibility studies, 
business plans, and permit/professional service fees. 

Program title: Average processing time; 
SBA loan programs: Basic 7(a) Loan Guaranty Program: 5-7 business days 
for loans processed by SBA; 
SBA loan programs: 504/CDC Loan Program: 10-45 business days; 
SBA loan programs: 7(m) Micro Loan Program: 10-45 business days; 
Rural development loan and grant programs: Business and Industry Loan 
Guaranteed Program: 10-60 business days depending on scope of project. 
Subject to in-state loan approval limit; 
Rural development loan and grant programs: Intermediary Relending 
Program: 10-45 business days; 
Rural development loan and grant programs: Rural Economic Development 
Loan and Grant Program: 3 months to 1 year. Subject to national funding 
competition; 
Rural development loan and grant programs: Renewable Energy Systems & 
Energy Efficiency Improvements Guaranteed Loan and Grant Program: 
Subject to national funding competition. 

Program title: Cost & fees; SBA loan programs: Basic 7(a) Loan Guaranty 
Program: Guaranty fee of 2% for loans up to $150,000; 3% between 
$150,000 and $700,000; 3.5% up to $1 million; and additional .25% of 
guaranteed portion over $1 million; 
SBA loan programs: 504/CDC Loan Program: CDC origination fee of 2.25% 
portion and .5% on bank portion; 
SBA loan programs: 7(m) Micro Loan Program: Nominal fees to cover costs 
of loan closing; 
Rural development loan and grant programs: Business and Industry Loan 
Guaranteed Program: Typically, initial guaranty fee not to exceed 2% of 
guaranteed portion of the loan and .25% annual renewal fee; 
Rural development loan and grant programs: Intermediary Relending 
Program: 1% origination fee of intermediary loan amount plus closing 
costs; 
Rural development loan and grant programs: Rural Economic Development 
Loan and Grant Program: Varies and is negotiated with cooperatives; 
Rural development loan and grant programs: Renewable Energy Systems & 
Energy Efficiency Improvements Guaranteed Loan and Grant Program: 
Typically, 1% of guaranteed portion of the loan and .125% annual 
servicing fee. 

Program title: Participation requirements; SBA loan programs: Basic 
7(a) Loan Guaranty Program: Available anywhere. An SBA-approved lender 
(commercial lending institution) is required; 
SBA loan programs: 504/CDC Loan Program: Available anywhere. An SBA 
program administered by a CDC. Commercial lender required; 
SBA loan programs: 7(m) Micro Loan Program: Available anywhere. A 
direct loan from an SBA intermediary; 
Rural development loan and grant programs: Business and Industry Loan 
Guaranteed Program: Available only in rural areas with a population of 
less than 50,000. Generally negotiated between the commercial lending 
institution and the borrower; 
Rural development loan and grant programs: Intermediary Relending 
Program: Available only in rural areas with a population of less than 
25,000; 
Rural development loan and grant programs: Rural Economic Development 
Loan and Grant Program: Rural areas with populations of 2,500 or less 
are given priority. The rural utility cooperatives provide loans to 
small businesses; 
Rural development loan and grant programs: Renewable Energy Systems & 
Energy Efficiency Improvements Guaranteed Loan and Grant Program: 
Available only in rural areas with a population of less than 50,000. 
Requires 75% minimum applicant match for grants, and 50% maximum 
project level for guaranteed loans. 

Sources: GAO analysis of SBA and USDA Rural Development data. 

[End of table] 

[End of section] 

Appendix IV: Recent Congressional Proposals That May Require 
Collaboration between Rural Development and Other Federal Agencies: 

H.R. 6124, the Food, Conservation, and Energy Act of 2008, (the 2008 
Farm Bill) became law on June 18, 2008[Footnote 28]. The 2008 Farm Bill 
contains 15 titles covering, among other things, support for commodity 
crops, horticulture and livestock production, conservation, nutrition, 
trade and food aid, agricultural research, farm credit, rural 
development, energy, forestry, and other related programs. The 2008 
Farm Bill guides most federal farm and food policies through fiscal 
year 2012. 

Section 6028 of the 2008 Farm Bill requires the Secretary of 
Agriculture to establish a new Rural Collaborative Investment Program 
to support comprehensive regional investment strategies for achieving 
rural competitiveness. The purpose of the program is to: 

* provide rural areas with a flexible investment vehicle, allowing for 
local control with federal oversight, assistance, and accountability; 

* provide rural areas with incentives and resources to develop and 
implement comprehensive strategies for achieving regional 
competitiveness, innovation, and prosperity; 

* foster multisector collaborations that will optimize the asset-based 
competitive advantages of rural regions, with particular emphasis on 
innovation, entrepreneurship, and the creation of quality jobs; 

* foster collaborations necessary to provide the professional technical 
expertise, institutional capacity, and economies of scale that are 
essential for the long-term competitiveness of rural regions; and: 

* better use USDA and other federal, state, and local governmental 
resources, and to leverage those resources with private, nonprofit, and 
philanthropic investments, in order to achieve measurable community and 
economic prosperity, growth, and sustainability. 

The Act also directed the Secretary to establish within USDA the 
National Rural Investment Board. The Board's duties are to provide 
advice to regional boards on issues, best practices, and emerging 
trends relating to rural development; to provide advice to the 
Secretary and the National Institute on Regional Rural Competitiveness 
and Entrepreneurship, also created by the Act, on the development and 
execution of the program; and to provide advice to the Secretary and 
subsequently review the design, development, and execution of the 
National Rural Investment Plan. The National Rural Investment Plan is 
expected to, among other things, create a framework to encourage and 
support a more collaborative and targeted rural investment portfolio in 
the United States; and cooperate with state and local governments, 
organizations, and entities to create and enhance the pool of resources 
committed to rural community and economic development. 

Section 6028 of the 2008 Farm Bill is one of many actions taken by 
Congress over the years to encourage the coordination of rural policies 
and programs. It also further demonstrates Congress' commitment to 
promoting rural entrepreneurship and community development through 
collaboration across federal, state, and local agencies. A total of 
$135 million in funding has been authorized for the new program. 

[End of section] 

Appendix V: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

William B. Shear (202) 512-8678 or [email protected]: 

Staff Acknowledgments: 

In addition to the individual named above, Paul Schmidt, Assistant 
Director; Charles Adams; Michelle Bowsky; Tania Calhoun; Emily 
Chalmers; Elizabeth Curda; Ronald Ito; Marc Molino; and Carl Ramirez 
made key contributions to this report. 

[End of section] 

Footnotes: 

[1] See GAO, Rural Economic Development: More Assurance Is Needed That 
Grant Funding Information Is Accurately Reported, [hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-06-294] (Washington, D.C.: Feb. 
24, 2006). 

[2] SBA does not offer grants to start or expand small businesses but 
offers grant programs that generally support nonprofit organizations in 
providing management, technical, or financial assistance to small 
businesses. 

[3] Section 6029 of the Farm Security and Rural Investment Act of 2002, 
Pub. L. No. 107-171, 116 Stat. 134, 387 (2002), codified at 7 U.S.C. ï¿½ï¿½ 
2009cc et seq., amended the Consolidated Farm and Rural Development Act 
by requiring the Secretary of USDA to establish RBIP. 

[4] Pub. L. No. 104-127, ï¿½ 761, 110 Stat. 888, 1139, 1146 (1996). 

[5] Pub. L. No. 107-171, ï¿½ 6021, 116 Stat. 134, 363 (2002). 

[6] GAO, Results-Oriented Government: Practices That Can Help Enhance 
and Sustain Collaboration among Federal Agencies, [hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-06-15] (Washington, D.C.: Oct. 
21, 2005). GAO, Financial Market Regulation: Agencies Engaged in 
Consolidated Supervision Can Strengthen Performance Measurement and 
Collaboration, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-
154] (Washington, D.C.: Mar. 15, 2007). GAO, Electronic Government: 
Potential Exists for Enhancing Collaboration on Four Initiatives, 
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-04-6] (Washington, 
D.C.: Oct. 10, 2003). See E. Bardach, Getting Agencies to Work 
Together: The Practice and Theory of Managerial Craftsmanship 
(Washington, D.C.: Brookings Institution, 1998). 

[7] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-15]. 

[8] The 63 lead SBDCs include one in every state (Texas has 4 and 
California 6), the District of Columbia, Guam, Puerto Rico, Samoa and 
the U.S. Virgin Islands. 

[9] The 47 state offices include one in every state except Connecticut 
and Rhode Island (which are combined with the Massachusetts state 
office), New Hampshire (which is combined with the Vermont state 
office), and Maryland (which is combined with the Delaware state 
office). 

[10] For purposes of this report, we are focusing on the business 
programs administered by Rural Development's Business and Cooperative 
Programs area. We have excluded cooperative programs, including the 
Value-Added Producer Grants, Rural Cooperative Development Grants, 
Cooperative Stock Purchase Program, and the Biomass Research and 
Development Grant Program. 

[11] Under the 2008 Farm Bill, the Renewable Energy Systems and Energy 
Efficiency Improvements Guaranteed Loan and Grant Program has been 
renamed the Rural Energy for America Program. 

[12] Section 6018 (a) of the Food, Conservation and Energy Act of 2008, 
Pub. L. No. 110-246, 122 Stat. 923 (2008), enacted in June 2008, 
generally revises the definition of rural and rural area, but allows 
for consideration of population density in some situations and adds 
some definitions that are specific to certain programs. Section 6018(b) 
directs the Secretary to assess the various definitions of the terms 
"rural" and "rural area" that are used with respect to USDA programs; 
describe the effects that the variations in those definitions have on 
those programs; make recommendations for ways to better target funds 
provided through rural development programs; and determine the effect 
of changing the definitions, as directed by section 6018(a), on the 
level of rural development funding and participation in those programs 
in each state. 

[13] Subject to additional credit criteria, Rural Development may 
approve guaranteed loans in excess of $25 million, up to $40 million, 
for rural cooperative organizations that process value-added 
agricultural commodities. 

[14] See 7 C.F.R. ï¿½ 4279.107(a). Rural Development's guaranty fees are 
subject to change annually. Rural Development operates the B&I Loan 
Guaranty Program at an estimated subsidy rate of about 4 percent. SBA's 
7(a) Loan Guaranty is a zero-subsidy program, which requires no 
appropriated funding to operate, but tends to carry higher costs and 
fees associated with the program. 

[15] See 13 C.F.R. ï¿½ 120.212. 

[16] While collaborative efforts can benefit borrowers in rural areas, 
such actions can also lead to a higher concentration of federal loan 
guarantees in individual projects. As a result, when choosing to 
jointly fund projects, SBA and Rural Development need to work together 
to appropriately manage the financial risks associated with jointly 
funding a project. 

[17] These entities include the Dakota Certified Development 
Corporation, the state Department of Commerce, and the Bank of North 
Dakota. The ECND, which is located in Bismarck, delivers financing, 
business management, counseling, and other technical assistance at one 
location as part of these groups' ongoing activities to enhance 
economic development and increase services to rural communities and 
small businesses. 

[18] The Department of Agriculture Reorganization Act of 1994 gave the 
Secretary of Agriculture authority to reorganize USDA headquarters and 
field structures. USDA consolidated many field offices into service 
centers that were collocated with its other farm service agencies, 
including Rural Development, the Natural Resources Conservation 
Service, and the Farm Services Agency. USDA service centers, which 
provide one-stop shopping for services such as farming, business, and 
housing loans, have streamlined service delivery and helped field 
offices establish partnerships with other federal agencies, state and 
local governments, and community organizations. 

[19] Pub. L. No. 107-171, ï¿½ 6029, 116 Stat. 134, 387 (2002). 

[20] In December 2000, to address the unmet equity needs of low-income 
communities, Congress passed new legislation creating the New Markets 
Venture Capital (NMVC) Program. The NMVC program was designed to 
promote economic development and create wealth and job opportunities in 
low-income areas by making equity-type investments in smaller 
enterprises located in those areas, and by providing operating 
assistance (in the form of grants) to such enterprises. 

[21] Rural Development officials told us that in March 2007 they began 
exploring ways to continue RBIP. Recently, as part of its 2008 Farm 
Bill, Congress acted to restore the program. The Food, Conservation and 
Energy Act of 2008 reauthorized the appropriation of $50 million in 
funding for RBIP through fiscal year 2012. Pub. L. No. 110-246, ï¿½ 6027, 
122 Stat. 1944, 1651 (2008). 

[22] As of July 2008, FCA had conducted 14 examinations of SBLCs on 
SBA's behalf. 

[23] The Economy Act is a general statutory provision that permits 
federal agencies to enter into mutual agreements with other agencies to 
purchase goods or services and take advantage of specialized experience 
or expertise. 

[24] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-15]. 

[25] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-15]. 

[26] SBA and Rural Development had entered into agencywide MOUs before: 
once in 1977 and again in 1988. 

[27] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-15]. 

[28] Pub. L. No. 110-246, 122 Stat. 923 (2008). 

[End of section] 

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