It was a tough week for the Small Business Administration as top administrator Philip Lader watched the agency's budget struggle through Congress.

But Mr. Lader got lucky. A white knight in the form of Sen. Mark Hatfield, R-Ore., managed to restore $30 million that had been whacked out of the SBA budget by Sen. Phil Gramm, R-Tex.

Mr. Lader said he felt the SBA had done a fairly good job of suggesting its own cuts before Sen. Gramm's appropriations subcommittee got hold of it. "We proposed a 30% reduction in our own budget," Mr. Lader said.

"Apple, Federal Express, and Intel all received critical SBA help when they were small - and their taxes last year were larger than the entire SBA budget," he said.

The SBA has a more complicated lobbying job than many other federal agencies because its budget depends on a "subsidy rate" set by one congressional committee and a staff and expenses allocation determined by another.

The subsidy rate is the amount of money the SBA must put aside to cover the loans it guarantees - somewhat like a loan-loss reserve at a bank.

In the current fiscal year, the SBA had to put aside $2.74 for every $100 it guaranteed. The congressional appropriation this year covered $8 billion worth of loans in the agency's largest and most popular loan program, 7(a), and $1.5 billion in its 504 program, which guarantees loans for fixed assets, such as land, buildings, machinery, and equipment.

It cost the taxpayers $215 million to guarantee the 7(a) program this year, and $9 million for the 504 program. The SBA's total 1995 appropriation was $813 million. What was left over after guarantee set- asides was the money Mr. Lader could use to pay his staff and run the agency.

But whenever the SBA's budget is under consideration in Congress, it is the subsidy rate that gets adjusted, which has a fairly direct impact on the agency's ability to keep or lose staff.

Mr. Lader said the agency proposed eliminating the subsidy altogether and passing on the cost of the loan-loss reserve to borrowers and banks.

He said the agency had cut 500 staff people in this fiscal year, a move that enabled it to ask for a new appropriation 30% less than it got in fiscal 1995.

But Congress only went for that idea halfway. The House agreed to a $104.5 million appropriation to cover 7(a) guarantees, which would guarantee $9.3 billion in loans. That means the SBA would be putting aside between $1.10 and $1.40 per $100 it covers.

The total House appropriation for the agency was $590 million.

Mr. Lader was pleased. He called it "a great victory for America's small business."

But a tough fight went on in the Senate. In the early part of the week, no matter how eloquently Mr. Lader made his pleas, Sen. Gramm's subcommittee was only willing to appropriate $558 million for the agency.

And Mr. Lader was convinced this would mean even more severe cuts in his staff.

"Even though we've cut the number of SBA employees, the Senate subcommittee's mark would require that we cut another 36% of our staff while we're also growing the programs," he said.

But by Friday afternoon, Sen. Hatfield, chairman of the powerful Senate Appropriations Committee, had worked his magic. His press secretary, Julie MacGregor, said the senator wanted to ensure that the SBA would be able to keep funding loans at its current level. And the $30 million restoration made that possible.

Even though there's still a chance the bill can be further amended and the SBA could lose the restoration, as of late Friday afternoon, Mr. Lader was pleased.

"Sen. Hatfield has proven himself to be a friend of small businesses," he said. "His actions on this bill insure that the SBA will have the muscle and the firepower to deliver loans to tens of thousands of entrepreneurs efficiently and responsibly."

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