Investment in Small Business Development Centers Yields Substantial Payoff for Government, Analysis Finds

More than $8 in New Taxes Returned to Treasury for Every $1 Invested

PHILADELPHIA, PA, June 26, 2006 – Government officials are finding their investments in the Pennsylvania Small Business Development Center program are providing generous returns.

In addition to the economic benefits of new jobs and businesses, the growing small firms assisted by the statewide network of 16 Small Business Development Centers (SBDC) contributed more than $80,000,000 in new taxes to the state and federal treasuries.

This represents a return of $8.33 for every $1.00 in government support for the program (Chart: Government Funding vs. Taxes Generated), up from $7.26 per dollar invested found in the previous year studied.
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The annual, independent analysis of the publicly funded SBDC program by Dr. James J. Chrisman of Mississippi State University found that SBDC services resulted in small businesses generating $51.2 million in new state sales and income taxes. These clients also contributed an additional $29 million in income taxes to the federal treasury.

“The Commonwealth will continue to see returns on the investment in the SBDC program as these small companies succeed and grow,” remarks Gregory L. Higgins, Jr., state director of the Pennsylvania SBDC program. “I think it is important to note that this impact extends well beyond just the one year studied. As these companies grow, Pennsylvania will continue to benefit from their expanded payrolls and sales.”

The additional tax revenues are the result of healthier bottom lines seen in SBDC-assisted companies. Chrisman’s research noted that SBDC clients increased sales by $977,197,390 – a 14% growth rate, which is triple that of the average Pennsylvania firm (Chart: Rate of Sales & Employment Growth). Much of this growth resulted from clients taking advantage of the SBDCs’ specialized consulting services, such as the International Business Assistance and Government Marketing Assistance programs which help clients identify new market opportunities.
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As the largest statewide provider of entrepreneurial services, the SBDCs play a unique and vital role in the Commonwealth's economic development initiatives as the only organization that, in utilizing the expertise and resources of 16 of the best colleges and universities in the state, assists entrepreneurs in all stages of business and in all industry sectors. Funding support from the Commonwealth of Pennsylvania, the U.S. Small Business Administration and the SBDC host institutions enables consulting services to be provided at no charge to the client.

Since 1990 alone, the SBDCs have helped Pennsylvania entrepreneurs start thousands of new businesses, create thousands of jobs, sell millions of dollars of products and services, and generate millions in new tax revenues. For more information on the Pennsylvania Small Business Development Centers’ services and impact, visit www.pasbdc.org.

CONTACT

Megan Schmidgal
(215) 898-1219
megands@wharton.upenn.edu

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