CHART 6.

3. The Wholesome Meat Act of 1967 provided for substantial upgrading of meat inspection for more than 15,000 firms which are mostly very small businesses.

The SBA recently completed a study to ascertain: (1) The extent to which small business concerns engaged in meat processing operations need financial assistance in complying with the act, (2) the extent to which such financial assistance may be obtained for such purpose from commercial sources, and (3) the extent to which such financial assistance is available under Federal programs. Results of the study are currently under review.

4. A new study is designed to examine the impact of crime on small business and to develop proposals for measures to reduce its cost.

This is a follow-on to an earlier study which

was undertaken by the SBA in response to the Small Business Protection Act of 1967. That study found that the losses due to robbery, burglary, vandalism, shoplifting, employee theft, and bad checks aggregated $3 billion for all business in 1968. Of this amount, $2 billion was borne by small business (defined for the purposes of the study as those with annual gross receipts of $1 million or less).

Losses varied inversely with the size of the firm. Businesses with gross receipts of over $5 million suffered losses relative to receipts of 9 percent of the average for all businesses; businesses with receipts under $100,000 had loss rates which were three times the average. Relative to receipts, losses were highest in urban ghettos and in the retail trade sectors of industry. The study examined numerous countermeasures to reduce crime, including a thorough review of measures small firms could themselves take through improved management practices.

In 1970, there was a record 17,425 business loans in all categories for a total of $864 million, compared to 14,006 and $674 million the previous year (see appendix for detail on loans approved.).

Of these, there were 10,562 regular 7(a) business loans made, totaling $686 million, another new high. In 1969, there were 8,677 such loans for $515 million.

Some 89 percent of the funds for regular business loans were furnished by banks under the immediate participation plan whereby banks and the SBA initially share in the loan, or under the guaranty plan in which the banks fund the entire loan with a guarantee by SBA

The agency implemented two legislative programs during the year. Two loans were made to a firm economically injured by the provisions of a U.S. trade agreement, utilizing the Trade Expansion Act, originally authorized in 1962 but never activated.

The second program implemented a portion of the Coal Mine Health and Safety Act of 1969, which provided for SBA loans to small firms needing assistance to meet standards established by that act. The agency made its first loan of this type in October.

Two other innovative programs were begun. The 3-day automatic plan went into effect, under which a participating bank can submit an application under the guaranty plan to an SBA field office, whereupon the loan is considered automatically approved if not declined by the agency within 3 days.

Some 321 banks in 21 cities have signed agreements with the SBA to participate in the plan, and it has met with great enthusiasm among banks and small firms alike.

Through November 1970, 325 loans had been approved under the plan, totaling nearly $12 million. Further expansion is planned for 1971.

Loans to Disadvantaged

1970 was a year in which new records were set in the Economic Opportunity Loan program, intended by the Economic Opportunity Act to assist the economically disadvantaged in starting a small business or to expand or improve an existing one.

In 1970 there was a total of 6,057 such loans, a sizable increase over the 4,483 approved the previous year. Total dollars were $83 million, compared to $56 million in 1969. While the percentage of bank participation is not as high as in the regular business loan program, banks did put up 30 percent of the total, both in the immediate participation and guaranty plans.

Displaced Businesses

SBA increased the number of loans made under the displaced business loan program, authorized by section 7(b) (3) of the Small Business Act to assist small firms economically injured by federally assisted construction programs.

In 1970, the agency made 368 such loans as opposed to 317 in 1969. However, the total dollars involved were approximately the same, $38 million, which meant that the average loan size was somewhat lower.