What the GAO found

The Economic Development Administration (EDA) of the Department of Commerce (Commerce) has not taken any action or planned to implement the Federal Innovative Technologies in Manufacturing (ITM) Loan Guarantee Program since January 2020, when at which the GAO last reported on the program. EDA has therefore not issued any loan guarantees under the program. EDA officials provided several reasons for not implementing the program:

  • Perceived lack of demand. EDA officials told GAO they expect limited demand from small and medium-sized manufacturers for loans under the ITM program. However, they said it would be useful to assess the potential demand for loans, as the United States entered an economic recession around 2020 and the recent coronavirus disease 2019 (COVID-19) pandemic caused changing conditions in manufacturing and the world. Supply Chain.
  • Alternative loan programs. EDA officials said it would be difficult to run the ITM program without duplicating alternative loan programs available to help businesses, including those in innovative manufacturing, such as ITM’s 7(a) loan program. the Small Business Administration (SBA).
  • Uncertainty regarding the participation of lenders. EDA officials expressed uncertainty about the level of interest and participation that potential lenders would have in the ITM program if the EDA were to implement it, for example, because potential lenders know and could be more likely to continue participating in SBA loan programs.

Why GAO Did This Study

Manufacturing plays a key role in the US economy as a source of economic growth, well-paying jobs, and technological innovation. Small and medium-sized manufacturers make up the majority of the nation’s manufacturers, but may lag behind large corporations in Manufacturing plays a key role in the U.S. economy as a source of economic growth, well-paying jobs, and technological innovation. Small and medium-sized manufacturers represent the majority of manufacturers in the country, but may lag behind larger companies in innovation and adoption of new technologies. To invest in innovative manufactured goods and processes, improve the competitiveness of the United States, and help meet the capital needs of American manufacturers, the Reauthorization of America Act of 2010 creating opportunities to promote excellence in Technology, Education and Science (COMPETES) directed the Secretary of Commerce to establish the ITM program. The ITM program aimed to provide loan guarantees to small and medium manufacturers for the use or production of innovative technologies. The EDA du Commerce is responsible for the implementation of the program.

The America COMPETES Reauthorization Act of 2010 also included a provision allowing the GAO to conduct a biennial review of program performance by the Secretary of Commerce. The January 2020 GAO report found that the EDA had not taken additional steps to implement the program after ceasing implementation in October 2017 due to uncertainties about demand for the program, among other reasons. This report examines all actions taken by the EDA to implement the ITM program since the GAO’s January 2020 report. GAO analyzed applicable laws and program documents, interviewed EDA officials and the SBA and collected information from other stakeholders.

For more information, contact Candice N. Wright at (202) 512-6888 or [email protected]