STEP Improvement Act of 2026
- Sponsor
- Sen. Shaheen, Jeanne [D-NH]
- Committees
- Small Business and Entrepreneurship Committee (primary)
- Last action
- Sep 30, 2026
Bottom line
This bill aims to modernize and improve the transparency, predictability, and accessibility of the SBA's STEP program, particularly for small businesses in underserved communities, by updating its funding allocation, application procedures, and reporting metrics.
What it actually does
The bill reauthorizes the Small Business Administration's (SBA) State Trade Expansion Program (STEP) for fiscal years 2027 through 2031. It significantly revises the program's application process, establishes a new funding formula for grants to states and territories, and sets limitations on grant reductions. It also mandates new reporting requirements for the SBA and grantees, streamlines application processes, and expands the definition of eligible small businesses to include "economically distressed" concerns.
Proponents argue
Proponents argue that the STEP program is vital for helping small businesses enter and expand into international markets, boosting U.S. exports and economic growth. They contend that the proposed changes will make the program more efficient, transparent, and equitable, ensuring that funding is distributed fairly and reaches a broader range of small businesses, including those in economically distressed and rural areas, and those owned by women. The new funding formula and application streamlining are expected to provide greater certainty and reduce administrative burden for states and applicants.
Opponents contend
Potential opponents might argue that the new, more rigid funding formula could reduce flexibility for the SBA to allocate funds based on specific needs or performance, potentially disadvantaging states that previously excelled under a competitive model. Concerns could also be raised about the administrative burden of implementing the new detailed reporting requirements and the potential for the new definitions of "economically distressed" to dilute the program's focus if not carefully managed.
The bill is moderately complex but relatively short, making it accessible for an informed reader to understand its core provisions within a reasonable timeframe.
Section 2(a), amending Section 22(l)(3) of the Small Business Act.
Enhanced Application Requirements and Streamlining
This provision mandates the SBA to publish grant application information by March 31 annually, set application deadlines (60 days after publication, but not later than May 31, or 120 days after appropriations if delayed), and announce recipients by September 30 (or 210 days after appropriations). It also requires a concise, streamlined application using common Federal forms and clear communication of program information, including feedback for unsuccessful applicants and explanations for grant amounts awarded. States can revise budget plans with notification, requiring SBA approval if reallocation is 10% or more, with a 30-day approval/denial window.
Supporters argue
Supporters argue these changes will bring much-needed clarity and efficiency to the STEP grant process, reducing uncertainty for state agencies and allowing them to better plan their export promotion activities. The streamlining of applications and clear communication will lower administrative hurdles and encourage more states to participate effectively.
Critics contend
Some might argue that rigid deadlines could be challenging for the SBA to meet consistently, especially in years with delayed appropriations, potentially leading to rushed processes or missed deadlines. The requirement for detailed feedback to unsuccessful applicants could also create an additional administrative burden for the agency.
Tradeoffs
Balances the need for administrative efficiency and predictability for states with the potential for increased workload for the SBA in managing strict timelines and detailed feedback mechanisms.
Section 2(b), amending Section 22(l) of the Small Business Act by striking paragraph (4) and inserting a new paragraph (4).
Grant Reduction Limitations and Adjustments
This provision limits the reduction of a state's STEP grant to no more than 20% compared to the prior fiscal year's grant amount. Exceptions are made for overall program appropriation reductions (where the 80% floor is adjusted proportionally), for states that expend less than 80% of their prior year's grant (leading to a reduction based on unspent funds), and for situations where an increase in grantees leads to insufficient funding (allowing pro-rata reductions). A state can also receive less than the minimum if found in significant violation of program rules.
Section 2(d), inserting a new paragraph (5) after paragraph (4) of Section 22(l).
Formulaic Grant Allocation Based on Performance and Outreach
This provision establishes a new funding formula for STEP grants, applicable when appropriations are $30,000,000 or more for two consecutive fiscal years. It sets minimum allocations for territories (0.5% of total appropriation) and states (0.75%). Remaining funds are allocated based on six metrics, each accounting for 15-20% of the remaining funds: export sales value, total activities, first-time participants, first-time exporters, new markets reached, and participation by small businesses in underserved communities (low-income, rural, HUBZone, women-owned, etc.). There's a limitation that no state's metric ratio can be more than 10 times another state's lowest non-zero ratio. It also includes a "hold harmless" clause for states not to receive less than their grant amount before the enactment of this Act, and provisions for states to return funds and for redistribution of those funds.
Section 2(c) redesignates paragraphs and inserts a new paragraph (8); Section 2(e) amends redesignated paragraph (9).
Annual Survey and Detailed Performance Reporting
The bill mandates the Associate Administrator to conduct an annual survey of states that received grants to solicit feedback and develop best practices. It also significantly expands the annual report to Congress, requiring analysis of performance metrics (total concerns assisted, export sales, first-time participants, new markets, new jobs, foreign trade mission participation, disaggregated by economically distressed, women-owned, and rural concerns). It also requires the SBA to establish a streamlined reporting process for grantees, minimize manual data entry, accommodate data uploads, and process reimbursement requests in a timely manner (within 21 days or provide an estimated timeline). A monthly obligations report to Congress is also mandated.
Section 2(f), amending Section 22(l)(1) of the Small Business Act.
Definition of Economically Distressed Small Business Concern
This provision adds a new definition for "economically distressed small business concern," which includes businesses located in low-income or moderate-income areas, HUBZones, empowerment zones, enterprise communities, promise zones, or qualified opportunity zones. It also removes a previous limitation on eligible small business concerns related to having been in business for at least one year, but reintroduces a similar limitation specifically for participation in foreign trade missions.
Section 2(h), amending paragraph (11) of section 22(l) of the Small Business Act.
Program Reauthorization
This provision reauthorizes appropriations for the State Trade Expansion Program (STEP) for fiscal years 2027 through 2031. The bill text does not specify an exact dollar amount for these appropriations, only the reauthorization period.
This provision limits the SBA's ability to collect personal information (beyond name, position, contact) about state, territory, or commonwealth officials or employees, unless that individual is the designated staffer managing a grant or their salary is part of the non-Federal share or paid by grant funds. Exceptions are made for investigations into mismanagement, fraud, or malfeasance, or to comply with Federal grant requirements.
Section 2(g), adding new subparagraph (G) to Section 22(l)(3) of the Small Business Act.
Why it matters:This seems to be a specific administrative detail, likely addressing past concerns or practices regarding data collection from state partners, rather than an attempt to hide a controversial policy. It's a technical amendment to administrative procedures.
Case for: Supporters would argue this provision protects the privacy of state employees and limits potentially intrusive or unnecessary data collection by the federal government, fostering better working relationships between the SBA and state agencies. It ensures the SBA only collects information directly relevant to grant management and oversight.
Case against: Critics might argue that overly strict limitations on data collection could hinder the SBA's ability to conduct thorough oversight, evaluate program effectiveness, or identify potential conflicts of interest, especially if "relevant to any investigation" is narrowly interpreted.
Estimated impact: Minor administrative impact on SBA's data collection practices; potentially improves state-federal relations by addressing privacy concerns.