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Evaluation of Government Financing Assistance Programs.

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Final rept.,

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By FY93, DOD budget outlays in constant dollars had declined by 17 percent from their FY89 peak. The current budget projects a further decline of 26 percent between FY93 and FY99. As a result, many companies involved in defense work are seeking to expand their business base by converting products, processes, and technologies developed for military applications to commercial applications. Many of those companies will require additional financing to support development of their dual-use applications, those with both military and commercial uses. The activities that need financing are diverse they include product development, handling inventory and receivables, providing plants and equipment, and marketing and sales. Companies that have heretofore focused on defense may need to build an entire commercial marketing organization from the ground up. Small businesses have particular difficulty in acquiring capital, because they do not have access to many sources available to large companies and they do not have the flexibility to choose among the available types of financing. Small defense-oriented businesses may suffer an additional penalty in the capital markets as a result of their ties to a declining part of the industrial base. This report provides a qualitative method for evaluating the effectiveness of a variety of government programs for providing financial assistance to businesses. We developed a set of criteria organized into three parts structural and programmatic issues that deal with implementation and administration of the program from DoDs point of view economic issues that assess the economic efficiency of the program and acceptability issues that examine whether the program fulfills the objectives of the interested parties. We describe eight financing assistance programs and evaluate them based on the criteria. AN

Subject Categories:

  • Administration and Management
  • Economics and Cost Analysis

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