Federal advisory committees offer recommendations for SBA to improve the global competitiveness of US entrepreneurs
The United States’ global competitiveness rank, as calculated by the International Institute of for Management Development, fell three points from 9th in 2023 to 12th in 2024. The nation’s ranking for government efficiency had an even sharper drop of nine points, from 25th in 2023 to 34th in 2024. In timely response to these trends, two federal advisory committees recently submitted reports outlining ways for the U.S. Small Business Administration to sharpen its ability to assist companies in becoming more globally competitive while also improving the productivity of the agency’s work.
In its report, Enhancing U.S. Economic Competitiveness Through Support for Small Businesses and Innovators, the Invention, Innovation, and Entrepreneurship Advisory Committee (IIEAC) offers recommendations around three themes:
- better, more consistent, and transparent metrics;
- removing complexity while increasing accessibility; and
- broader sharing and, in the case of SBIR/STTR programs, adhering to, best practices aligned with congressional intent.”
In the area of metrics, one of the issues the report authors emphasized is the inconsistency of data gathering among programs in various departments, including the National Science Foundation’s (NSF) Regional Innovation Engines (Engines), the Economic Development Administration’s (EDA) Regional Technology and Innovation Hubs (Tech Hubs), the Advanced Research Projects Agency for Health (ARPA-H), and SBA’s GAFC and RIC Initiatives. “While cross-collaboration across these programs has been increasing, there is no consistency in the definition and measurement of the value and impact of regional economic ecosystem support,” note the authors. The report calls for the SBA to address the issue by developing standard measures for evaluating the impact on regional ecosystems.
The report notes that “(c)omplexity across federal programs creates significant barriers for small businesses, particularly those led by under-represented demographics and those engaging for the first time.” The recommendations are designed to “reduce the administrative burden on small businesses, streamline the application process, and ensure more consistent and efficient Phase III contracting across agencies.” Recommendations for addressing this issue include streamlining the requirements for accessing SBIR/STTR across the 11 agencies.
The advisory committee also highlighted a need for SBA to partner with Minority Serving Institutions to help individuals from historically underrepresented groups navigate the complexity of the innovation startup community.
It is additionally suggested that SBA reduce complexity by supporting the development of regional ecosystem maps to help entrepreneurs find resources specific to their region or sector. The committee felt SBA should “(l)ead a cross-agency effort to create a single, accurate, updated resource where an entrepreneur could become aware of all entrepreneurial resources and programming from the federal government with linkage to the sponsoring agency website.”
The Investment Capital Advisory Committee (ICAC) 2024 Report to the Administrator of the U.S. Small Business Administration purpose was to make recommendations for SBA to improve the flow of investment capital to undercapitalized small businesses. With the private market focused on fast returns, the report recommends SBA, diversify the portfolio of patient capital strategies and modernize its patient capital program management.
The committee advises SBA to “aim to identify and facilitate access to more diverse capital sources for entrepreneurs, including investment capital. “The SBA must … provide education and support to small businesses that are interested in exploring capital options beyond traditional debt instruments. This ensures that small businesses have the knowledge and resources to access the right type of capital, and the right amount of capital, at the right time,” the report notes. Additionally, the committee recommends the SBIC program be a key part of the agency's broader outreach and engagement strategy and detailed the agency's tactical options for doing so.
Diversifying SBA’s portfolio of patient capital strategies across both fund managers and financial instruments “will strengthen the stability of the program and align more closely with Congress’s intent for the mission of the SBA,” the committee concluded. They added recommendations to improve the SBIC program’s ability to maintain “a zero subsidy rate, reducing risk and providing better flexibility in economic cycles.”
In developing its recommendations to modernize SBA’s patient capital program management, the ICAC surveyed SBICs and learned that “regardless of the SBIC license, the top difficulties of being an SBIC were the regulatory and compliance burdens, and slow response times.” The committee concluded, after noting recent efforts within SBA to address these concerns, that SBA would require more staff, particularly from the private sector, and operational capacity to make significant additional improvements.
This article was prepared by SSTI using Federal funds under award ED22HDQ3070129 from the Economic Development Administration, U.S. Department of Commerce. The statements, findings, conclusions, and recommendations are those of the author(s) and do not necessarily reflect the views of the Economic Development Administration or the U.S. Department of Commerce.
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