Letter to the President of the Senate and to the Speaker of the House Proposing To Amend the Small Business Act.

Dear Mr._________:

I am transmitting herewith for appropriate reference a bill to amend section 4(c) of the Small Business Act, as amended. This section deals with the revolving fund of the Small Business Administration, out of which are financed that agency's programs of financial assistance to the small business community.

This bill would place the fund on a more permanent basis and eliminate unnecessary duplication, by removing the statutory limitation on authorizations to appropriate to the fund and the separate limitations on the amounts of appropriated funds which may be utilized for each of the Small Business Administration's financial assistance programs. Utilization of funds for these programs would of course continue to be controlled by the Congress through the normal appropriation process, and the House and Senate Appropriations, Banking and Currency, and Small Business Committees would continue to exercise the same degree of cognizance as they do now regarding the operations of the Small Business Administration.

By making the Small Business Administration a permanent agency of the Government in 1958, the Congress wisely recognized the important role that this agency has played in assisting the small business sector of our economy, which comprises by far the greatest number of businesses in the United States and plays a key part in the economic life of our nation. Under the current administration, that agency has vigorously expanded its assistance to the small business community by increasing significantly the number of small businesses assisted by its programs of business loans, loans to small business investment companies and State and local development companies, procurement and technical assistance, and management assistance.

It is now time to remove the unnecessary statutory limitation on appropriations and on usage of appropriated funds which has resulted in uncertainty regarding the future of these programs and necessitated a double congressional review of funds.

In no respect would the proposed amendment diminish the controls which the Congress presently exercises over the size and character of the programs administered by the Small Business Administration, pursuant to the Small Business Act and the Small Business Investment Act of 1958. These two statutes and the operations of the agency are under frequent study in Congress. Since 1953, when the agency was established, amendments have been made to either or both of basic statutes in every year except two. Indeed, each has undergone numerous and substantial revisions. There is no reason to expect that this legislative activity with its attendant scrutiny of the agency's operations by the Banking and Currency Committees will diminish.

Moreover, the progress of the Small Business Administration in discharging its statutory duties is under the continuing observation of the Senate and House Small Business Committees. At least once a year each of these committees holds hearings at which the Administrator of the Small Business Administration testifies in detail concerning the operations of his agency. The resulting reports issued by the committees contain thorough reviews of the agency's programs and evaluations of its success in conducting them.

finally, in the course of the budgetary process, the agency's activities are reviewed annually by the Appropriations Committees and the Congress to determine the amount of additional capital for the revolving fund which the agency will require to carry out its financial assistance programs.

However, the necessity for obtaining statutory authorization for additional appropriations virtually every year before Congress can appropriate funds in the regular appropriation act creates unnecessary duplication and confusion. During the last session of the Congress four separate statutes provided increased authorizations to appropriate to the SBA revolving fund, in addition to the actual appropriations themselves contained in the regular appropriation act and a supplemental appropriation act. Sound budgetary procedures argue against this type of duplication and repetitive review over an agency which the Congress has declared to be a permanent one and over programs which serve such an important purpose in assisting our small business community.

The proposed legislation would also simplify the method of computing the interest payable from the revolving fund to the Treasury, and would effect a number of clarifications in the language of the Act. A detailed analysis of the bill is attached.

It is my hope that the Congress will consider this proposal promptly and that the bill will be enacted into law.

Sincerely,

JOHN F. KENNEDY