A BRIEF HISTORY OF THE SBDC PROGRAM
In 2004, the Small Business Development Center Program provided management and technical
assistance counseling and training to more than 700,000 clients, including both small business
owners and pre-venture clients. An estimated 1.3 million individuals received some form of
assistance from America’s Small Business Development Center Network that year.
Stressing client education, the SBDC program is the federal government’s largest and most
successful management and technical assistance program for small businesses. The nationwide
SBDC network, with roughly 1,000 full time service centers, operates with an overall annual
budget of approximately $200,000,000. Of that sum, $88 million is from the federal government
and the remainder matching dollars, both cash and in kind, comes from the program’s many
partners including state and local governments, institutions of higher learning and private
enterprise and local nonprofit economic development organizations.
The story of how the SBDC network grew in 25 years from a small pilot program to an $88
million congressional investment in the future of America’s small business community is a
unique one. It chronicles the commitment of key federal lawmakers, training professionals,
college and university officials, state and local policy makers, private and public sector partners,
and most of all the millions of small business men and women of every race, creed and color who
have come to America’s small business development centers seeking to improve their lives
through America’s free enterprise system.
The exact genesis of the Small Business Development Program concept is difficult to pinpoint.
As early as the 1940’s, there had been legislation introduced in the Congress to establish
University-based business extension services. By 1953 the Small Business Administration was
established. This action reflected awareness at the federal level of the importance of small
business to the nation’s economy and the need for federal government involvement in fostering a
climate in which small businesses could flourish.
Educators, government officials and small business owners at varying points in time no doubt
ruminated on the concept of combining the resources of institutions of higher learning and
government to assist small businesses. One obvious model for such cooperation was the
Cooperative Extension Service at the nation’s land grant institutions.
As appreciation for the important role small business plays in the nation’s economy increased,
several initiatives were launched to assist small business owners with management problems.
These initiatives included the establishment in 1964 of the Service Corps of Retire Executives
(SCORE), and the formation in 1969 of the Active Corps of Retired Executives (ACE). In 1971
the Small Business Institute (SBI) was founded.
Senator Gaylord Nelson of Wisconsin introduced legislation (S. 4020) in September1974,
creating federal revenue sharing grants to states for the development of small business enterprise
centers that would provide technical and management assistance. However, this forward thinking
legislation died in committee.
In 1975, William Flewellen, Dean of the College of Business Administration at the University of
Georgia and incoming President of the American Assembly of Collegiate Schools of Business,
was appointed to the SBA’s National Advisory Board. Reed Powell, of the California State
Polytechnic University at Pomona, chaired the SBA National Advisory Board at that time.
Subsequent conversations between Flewellen and Powell, according to Dean Flewellen,
“convinced the two men that every state -- and in turn the nation as a whole -- would benefit from
a small business program that offered the resources of higher education, small business and
government.”
Flewellen and Powell approached SBA officials with their idea. SBA Administrator Thomas
Kleppe, SBA Deputy Administrator for Management Assistance Henry Warren, and Kleppe’s
successor, Mitchell Kobelinski, embraced the concept. In May of 1976, during Small Business
Week, Administrator Kobelinski formally announced plans for a University Business
Development Center (UBDC) program, calling it a “bold new proposal.” The structure and goals
of the program were detailed in an SBA press release issued at the time.
The release stated that, “Much along the line of what land grant colleges have been able to do to
help agriculture, the plan envisions that universities establishing these Centers would make
available to small business, not only the services of the School of Business, but the full
capabilities of the universities. Combined with SBA’s growing Service Corps of Retired
Executives, Active Corps of Executives, and Small Business Institute programs, the new UBDC
concept could increase substantially the leverage SBA can provide in counseling and advising
small business concerns.”
The SBA implemented the UBDC program by funding a pilot initiative at California State
Polytechnic University at Pomona in December of 1976. Seven more universities in seven states
were funded in the first half of 1977, including California State University at Chico, the
University of Georgia, the University of Missouri at St. Louis, the University of Nebraska at
Omaha, Rutgers University, the University of Southern Maine and the University of West
Florida. According to Dean Flewellen, SBA Deputy Administrator Henry Warren selected
schools that already were providing business services to their communities.
The UBDC program received $350,000 from the SBA in FY 1977. Each pilot school received
$40,000 with the exception of Rutgers University, which received $70,000. In FY 1978, SBA
funding support for the UBDC program increased to $900,000 and in 1979 funding of $2.4
million was provided to 16 Small Business Development Centers with the addition of Arkansas,
the District of Columbia, Minnesota, Pennsylvania, South Carolina, Utah and Washington to the
SBDC program, as it was now called. Assistance to any one state was capped at $300,000.
In August of 1979, an evaluation of the SBDC program by an outside SBA contractor, BentleyClark, indicated that the program had considerable potential as a means of providing assistance to
small business. The study pointed out that there was insufficient faculty participation in the
program and an over-reliance on students. The Bentley-Clark study also contended that there was
insufficient outreach to minorities and women. However, SBA officials in the fall of 1980 noted
that there was a higher level of participation by minorities and women in the program than there
were women and minorities in the actual business population. The study concluded that threefourths of SBDC clients surveyed ranked the program “good” or higher, with over one-half of
respondents rating the program “very good” or “excellent.” A contemporaneous GAO study
found that small business persons served by SBDCs favored expanding the program, even at the
cost of increasing taxes.
As the SBDC pilot program grew, support was growing on Capitol Hill for a Congressionally
authorized program. Senator Gaylord Nelson, Chairman of the Senate Small Business
Committee, introduced the Small Business Development Center Act of 1977 on March 22, 1977.
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Original cosponsors were Senator William Hathaway of Maine and Senator Sam Nunn of
Georgia. Twenty-nine senators ultimately cosponsored the bill. Drafted by Chairman Nelson’s
staff assistant, Allen Neece, the bill was intended: To make grants to support the development
and operation of small business development centers in order to provide small business with
management development, technical information, product planning and development, and
domestic and international market development, and for other purposes.
The legislation moved through the Senate relatively intact, receiving formal Senate approval on
August 5, 1977. Several House members introduced similar bills. The proposal was incorporated
in an omnibus House bill, H.R. 11445, authored by Congressman Neil Smith of Iowa. The
omnibus bill passed both chambers but was ultimately vetoed by President Carter in October of
1978, for reasons unrelated to the SBDC program.
Chairman Nelson reintroduced his legislation early in 1979 as S. 918 and the Senate adopted the
measure in April of that year. Congressman Neal Smith introduced a companion measure, H.R.
7250, in the House with 24 cosponsors. Ultimately, S. 918, as amended, was adopted by the
House and then incorporated as Title II of S. 2698. President Carter signed this bill into law (P.L.
96-302) on July 2, 1980. Title II, The Small Business Development Act of 1980, authorized the
SBDC program at an initial annual funding level of $8.5 million. The new law specifically
provided for federal funding to be matched one-for-one with non-federal funds and also required
an evaluation of the program to be submitted to Congress by January 31, 1983.
During FY 1979, the 11 operating pilot SBDCs provided counseling to more than 7,000
businesses and trained 16,000 clients, utilizing 700 training programs.
In 1979, the Association of Small Business Development Centers was formed. Larry Bramlett,
Director of the Georgia SBDC, was the Association’s first president. The following year, the first
formal, joint ASBDC/SBA meeting was held in Hilton Head, South Carolina. In 1980,
Massachusetts and Alabama were added to the program.
Less than a year after the program was authorized by Congress, its future was placed in doubt. In
November of 1980, Ronald Reagan was elected president on a platform that called for sharply
reducing the size of government and the growth of federal spending. The FY 1982 Budget
proposal submitted to Congress by the Reagan White House in early 1981 provided no funds for
the SBDC program. Indeed, the Office of Management and Budget was seriously considering
spending rescissions for FY 1981.
Senior SBA officials, in communications to the Congress and SBA field personnel, expressed
opposition to continuation of the program, reflecting official White House and OMB policy.
With official opposition to continuation of the program at the highest levels of the agency,
opposition from management assistance field staff (who feared for their future employment) was
commonplace within the SBA. There was also widespread animosity toward the new program
from SCORE and ACE participants. Animosity towards, and lack of cooperation with, the SBDC
program became so severe that in August of 1981, SBA Associate Administrator for
Management Assistance, James Saunders, was forced to send the following official memo to
SBA Regional Administrators, District Directors , Management Assistance officers, and others,
stating: “ to overcome any uncertainties arising from correspondence not authorized or
emanating from the Administration, it should be clearly understood by all employees of the Small
Business Administration and the various SBDC’s that the SBDC Programs are considered an
integral part of the delivery system of the Management Assistance Division of the Small Business
Administration.”
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Congress, ignoring the requests of the Reagan Administration to discontinue funding of the
program, appropriated $11.5 million for FY 1982, signaling bipartisan congressional support for
continuation of the program. Representative Neal Smith, Chairman of the House Small Business
Committee and Chair of the Appropriations Committee’s Commerce Justice State subcommittee,
was in the forefront of Congressional supporters.
During FY 1981 and 1982, Connecticut, Mississippi Kentucky, Iowa, Vermont, West Virginia
and Delaware were approved for funding and joined the program. In 1982, in accordance with the
authorizing legislation, the SBA SBDC National Advisory Board was established. The Board’s
first meeting was held in late October of 1982, in Washington, D.C.
In April of 1983, a Deputy Associate Administrator for Management Assistance was appointed.
The sole responsibility of this position was to administer the SBDC program. Prior to the creation
of this position, the Director of the Small Business Development Center Program had various
other responsibilities within the management assistance organization of the SBA. SBA oversight
of the SBDC program was “decentralized” in 1983 to SBA field offices.
During 1983, two studies of the Small Business Development Center program, the Centaur and
Berkley Reports, were conducted. Both studies had been mandated by Congress.
In June of 1984, in an effort to improve the working relationship between SBA officials and the
SBDC program, a joint SBDC/SBA meeting was held in Alexandria, Virginia. The result was a
joint commitment to a “partnership” and a genuine negotiation of the annual cooperative
agreement. Representing the program at this conference were Susan Garber of Pennsylvania,
President of the ASBDC, John Ciccarelli of Massachusetts, Warren Purdy of Maine, Bob Smith
of Mississippi, Bob Pricer of Wisconsin, Bill Littlejohn of South Carolina, Charles Maas of
Delaware, Jerry Cartwright of Minnesota, Paul McGinnis of Arkansas, and Kumen Davis of
Utah. Pricer and Littlejohn were former association presidents, and Ciccarelli and Purdy would
later lead the Association.
In another major step for the program, on-site Peer Reviews were initiated in 1984. These Peer
Reviews were the forerunners of the modern-day SBDC accreditation program.
Thirteen more programs were added to the rapidly growing network during FY 1983 and 1984.
These included Rhode Island, Michigan, Louisiana, Kansas Illinois, Tennessee, Texas-Arlington,
Oregon, New Hampshire, New York (SUNY), Oklahoma, Texas-Houston and North Carolina.
Congressional funding in FY 1984 rose to $22 million.
In June of 1983, Senate Small Business Committee Chairman Lowell Weicker of Connecticut
introduced S. 1429, the Small Business Development Center Improvement Act. Cosponsors of
the measure included Senators Rudy Boschwitz (MN), Sam Nunn (GA), Slade Gorton (WA),
Walter Huddleston (KY), James Sasser (TN), Paul Tsongas (MA), Alan Dixon (IL) and Dale
Bumpers (AR). President Reagan signed the legislation into law on July 21, 1984 as Public Law
98-395. The Weicker bill authorized appropriations for FY 1985, 1986 and years thereafter. It
also extended the authorization for the Small Business Development Center program through
October 1, 1990.
The measure also required that, as a condition to the award of any grant to assist in the
establishment of a small business development center, a matching amount equal to the grant
amount would be provided by non-federal sources and be comprised of not less than 50 percent
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cash and not more than 50 percent indirect costs and in-kind contributions. The measure also
required that the facilities and staff of each small business development center be located in such
places as to provide maximum accessibility and benefits to small businesses. It further required
centers to have a full-time director who would have the authority to make expenditures under the
center's budget.
Additional provisions required the SBA, within six months of the date of enactment of S. 1429, to
develop and implement a program for onsite evaluation of each small business development
center. The new law required such evaluation to be conducted at least once every two years (at
the time, evaluations were conducted annually).
The SBA in a 1985 report noted that, “Several SBDC’s have established separate International
Trade Centers (ITC) as part of their state-wide operations. These international trade centers are
currently located in Alabama, Georgia, Mississippi, Arkansas, Louisiana and Pennsylvania.” The
report also noted that, “The North Carolina SBDC successfully persuaded the State Legislature to
provide, through the State Economic Council, 50 million dollars in venture capital for the small
businesses of the state.” The report went on to note that, with an appropriation of $28,500,000
for FY 1985, the SBDC program leveraged an additional $40,645,000 to serve the small business
community. The overall creativity of the SBDC program was noted in an August 1986 SBA
report which noted that SBDCs were operating Inventors Programs, offering counseling and
training to assist their clients obtain SBIR research and development competitive funding
agreements from various federal agencies, linking their small business assistance services with
business incubators, and implementing statewide procurement assistance systems..
In 1985, the future of the program once again was in doubt as several bills were introduced in
Congress to abolish the Small Business Administration. Reagan administration budget cutters at
OMB in 1985 sought once again to zero out the program. The Administration’s budget for FY
1986, as well as FY 1987, proposed no funding for the SBDC program. In both fiscal years,
Congress increased funding for the program.
Fourteen SBDCs were added to the nearly nationwide network during fiscal years 1985, 1986 and
1987, including Indiana, Nevada, NY (Downstate) North Dakota, Puerto Rico, South Dakota, the
Virgin Islands, Wyoming, Texas-Dallas , Texas-Lubbock, Texas-San Antonio, Ohio, Idaho and
Alaska.
On August 23, 1988, President Reagan signed into law an omnibus trade bill, H.R. 4848, to
Enhance the Competitiveness of American industry and for other purposes (Public Law 100-418).
Included in the bill was language authorizing appropriations for FY 1988 and FY 1989 for the
Small Business Development Center program.
Public Law 100-418 also required the Small Business Development Center program to work with
the SBA’s regional and local offices, the Department of Commerce, appropriate federal, state and
local agencies, and the small business community, to disseminate and deliver mechanisms for
existing trade promotion, trade finance, trade adjustment, trade remedy, and trade data collection
programs of particular utility for small businesses.
During fiscal years 1988, 1989, and 1990, seven more states were added to the network, including
Arizona, Colorado, Maryland, Montana, New Mexico, Hawaii and Virginia.
In his second full year in office, President George Bush submitted to Congress a budget for FY
1990 that called for elimination of the SBDC program. Once again Congress responded to the
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President’s budget by increasing funding for the program to $50 million -- a figure that would be
reduced to $49.3 million by the Gramm-Rudman-Hollings Act.
Congressman John LaFalce of New York, in May of 1990, introduced H.R.4793, the Small
Business Reauthorization and Amendments Act of 1990. The measure would become Public Law
101-574 in November of that year when signed into law by President George Bush. The new law
extended the list of services to be provided by a small business development centers to include
rural small business export promotion, marketing, technical and managerial assistance, and tourist
trade development.
In 1991, the SBDC program returned to California after an absence of several years, establishing
for the first time an SBDC program in every state in the nation.
In January of 1992, Congressman LaFalce introduced HR 4111, The Small Business Credit and
Business Opportunity Enhancement Act of 1992. President George Bush signed the measure into
law on September 4, 1992 as Public Law 102-366. Included among the new law’s provisions was
language authorizing small business development centers to form an association to pursue matters
of common concern. The law also required the SBA Administrator to consult with the association
and develop documents concerning the operation of the center program if more than a majority of
such centers were members of such an association.
The legislation also addressed a longstanding and contentious issue between the program, the
association and the SBA, regarding whether SBA could promulgate regulations for the SBDC
program. The new law specifically provided that “Not later than 180 days after the date of
enactment of this Act [Sept. 4, 1992], the Administrator of the Small Business Administration
shall submit to the Committees on Small Business and the Committees on Appropriations of the
Senate and the House of Representatives, proposed regulations for the Small Business
Development Center Program authorized by section 21 of the Small Business Act.” The measure
also prohibited SBA from publishing proposed regulations in the Federal Register, a prohibition
that was subsequently lifted. The issue of program regulations came to an end when proposed
regulations were published in the Federal Register in December of 1994 and formally adopted in
June of 1995. In August of 1995, SBA published a Project Officers Handbook laying out the
responsibilities of the SBDC Project Officers.
Budget cutters at OMB again proposed elimination of the SBDC program when they crafted the
President’s budget for FY 1993. And once again, Congress responded by increasing the
program’s annual appropriation to $67 million dollars.
Senator Dale Bumpers, in May of 1994, introduced S. 2060, the Small Business Reauthorization
and Amendment Act of 1994. President Clinton signed S. 2060 into law on October 22, 1994 as
Public Law 103-403. The new law increased the authorized funding level of the SBDC program
to $70 million through FY 1996, to $77.5 million for FY 1997, and to $85 million for FY 1998.
The new law also required the SBA to develop and implement a biennial programmatic and
financial examination of each SBDC established.
In 1995, an SBDC was established in Guam.
In January of 1997, Congressman Jerry Solomon of New York introduced H.R. 96. This measure
authorized a program of regulatory compliance assistance for small businesses, to be delivered by
the Small Business Development Center program. Senator Conrad Burns of Montana and
Congressman John Sweeney of New York initiated similar legislative efforts.
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Late in 1997, the SBDC program was reauthorized for three more years, FY 1998, 1999, and
2000, when Congress approved S.1139. Senator Christopher Bond of Missouri, Chairman of the
Senate Small Business Committeee, authored the measure. A companion measure, H.R. 2261,
authored by House Small Business Committee Chairman Jim Talent of Missouri, had been
introduced in the House of Representatives. President Clinton signed S. 1139 into law (Public
Law 105-135) on December 2, 1997. The statute increased the SBDC program’s authorized
funding level to $85 million for FY 1998, $90 million for FY 1999 and $95 million for FY 2000.
In May of 2000, the 58th SBDC program was established when the SBA funded an SBDC
program for American Samoa.
In 2004, federal lawmakers reauthorized the SBDC program for two additional years, at a funding
level of $135,000,000.
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