Lawmakers hear plea to boost SBDC base funding to secure federal match

Members of the Vermont House Committee on Commerce and Economic Development heard testimony May 7 urging lawmakers to prioritize base funding for the Vermont Small Business Development Center so the SBDC can meet a federally required 1-to-1 nonfederal match and accept full federal grant funds.

The request centers on a $300,000 increase proposed in S.122. "The increase in S.122 of $300,000 for the Vermont SBDC will allow us to accept the full federal funds. It'll allow us to avoid cutting staff, and it'll allow us to serve our small businesses so they have the greatest chance of survival at this crucial time," Linda Rossi, state director of the Vermont Small Business Development Center, told the committee.

Why it matters: Rossi said the SBDC is required by federal SBDC program rules to demonstrate a 1-to-1 nonfederal match, at least half of which must be cash. The SBDC's host, the Vermont State College System/Vermont State University, has historically waived a portion of the indirect-cost match; Rossi testified she expects the host will no longer waive roughly $150,000 of that amount, and that the indirect calculation for 2025 is "roughly $400,000." She said the loss of that waived match would prevent the SBDC from drawing down the full federal allocation and could force staff reductions.

Supporters at the hearing recommended sequencing priorities within Section 2 of S.122. Ellen Kaler of the Vermont Sustainable Jobs Fund said the committee could, if funding is constrained, give top priority to Section 2(c) — the additional SBDC funding — and next priority to expanded legal services at Vermont Law and Graduate School. Kaler also noted that the House had restored $50,000 for the Vermont Professionals of Color Network to $250,000 in the budget; she said Section 2(b) had proposed an additional $100,000 for that network.

Rossi described the SBDC funding model as a partnership among three stakeholders — federal, state and higher education — and said the organization cannot charge clients for its one-on-one advising. She said an ongoing base increase is needed rather than one-time money because the SBDC must present an annual signed match to obtain each year's federal allocation. Rossi told legislators an increase of $300,000 in state cash would allow the SBDC to serve about 200 more Vermont small-business owners in one-on-one advising.

Committee members asked how the base increase, versus one-time funds, affects the federal drawdown. Rossi explained that the federal award requires the nonfederal match to be in place and documented annually; a one-time appropriation previously led to hiring an adviser and later letting that adviser go when the one-time money ended.

The committee said it will continue discussions with appropriations conferees now that members have more detailed information on the program's funding needs.