What is Small Business Administration ?
The term Small Business Administration (SBA) refers to a US government agency designed to strengthen and boost the economy by assisting small businesses in the country. Founded in 1953, the Small Business Administration's largest function is to provide counseling to individuals who wish to develop or start their own business. The SBA offers a range of tools on its website to assist existing or new small business owners. Every state has at least one Small Business Administration office. The agency is headed by an administrator and deputy administrator. The SBA agency also has an Inspector General and a Chief Counsel for Advocacy, all of whom are confirmed by the Senate.
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SBA Agency
Details |
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Acronym |
Small Business
Administration (Independent Agency) |
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Website |
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Main Address |
409 3rd St., SW, Washington, DC 20416 |
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Contact |
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Toll Free No. |
1-800-827-5722 |
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TTY |
1-704-344-6640 |
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Email |
answerdesk@sba.gov |
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Forms |
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History of the Small Business Administration
The SBA was established by President Dwight Eisenhower in the summer of 1953 when he signed the Small Business Act. It replaced the Reconstruction Finance Corporation (RFC) created in 1932 under President Herbert Hoover after the Great Depression. The mandate of the newly formed Small Business Administration was to protect and assist the country's small businesses and ensure that they received their fair share of surplus asset sales and government contracts.
The agency was in danger of being terminated by the House of Representatives in 1996, however, the agency escaped this threat and the agency went on to achieve a record budget in 2000. The SBA's loan program was cut repeatedly between 2001 and 2004 because of much resistance to the program. That was when some SBA expenses were completely frozen.
Small business owners were some of the hardest hit during the COVID-19 pandemic. The SBA offers two different types of funding to help these small business owners. These included the following funding :
1) EIDL Advance Programs :
Funds are given to people who file for EIDL assistance by meeting certain criteria. Funds sanctioned through the EIDL Assistance Program need not be repaid.
2) Economic Injury Disaster Loan (EIDL) :
The Economic Injury Disaster Loan program was designed for businesses to use approved funds for other day-to-day expenses and working capital, but this capital must be repaid. The SBA has stopped accepting applications, but loan enhancements will be approved until the funds run out.
Understanding the SBA
The SBA provides ample educational information with a specific focus on helping small businesses grow and thrive. The agency has a number of tools for businesses, which can be accessed on its website. The agency includes a small business planner and additional training programs for businesses. The agency has helped small businesses across the country gain access to contract loans, loan guarantees and other services.
SBA provides the following services to small businesses :
1) Capital Access :
The agency provides a variety of financial resources for small businesses. Financial resources include small loans or micro-lending, issued to people who would not otherwise qualify for financing. Loans are issued by credit unions, partner banks and other financial institutions.
2) Development of Entrepreneurship :
Consulting services are driven by low-cost training provided by the SBA. The service is available to both existing and new business owners in more than 1,800 locations across the United States. There is also a mentoring program that connects new business owners with existing entrepreneurs and retirees.
3) Contracting :
The SBA, with the help of other federal departments and agencies, reserves 23% in government-contracted dollars for small businesses. The agency guarantees 5% of these contracted dollars to women and another 3% to business owners (who are veterans or disabled).
4) Advocacy :
The agency acts as an advocate by protecting the interests of small business owners nationwide and reviewing legislation. The agency is also representing business owners at the federal government and state level advocates.
Where Does The SBA Get Funding ?
The SBA receives an approved annual budget by the federal government. This money goes toward grants, salaries and some loan programs as well as administration costs. Most loans issued to small business owners through SBA programs are agency-guaranteed and issued by other lenders and approved financial institutions. This capital helps individuals to start their business.
Key Features of Small Business Administration
- The SBA Agency was established in 1953.
- The SBA is a government agency designed to support and promote the economy by providing assistance to small businesses.
- The Small Business Administration is headed by a Senate-approved administrator and deputy administrator.
- The agency provides a variety of resources to small businesses, including access to capital, government contracts, advocacy services, and entrepreneurial development.
- The loan guarantee program is one of the most visible elements of the SBA.
Services and Programs Provided by the Small Business Administration
The Small Business Administration provides a variety of services to small business owners are as follows :
1) Loans, Grants and Funding Programs :
The SBA offers a variety of financial resources, including small loans for business owners. The SBA lends money to nonprofit lenders under the micro-loan program, who, in turn, provide loans of up to $50,000 to small business owners. The program also includes other services like marketing, management guidance and technical support for the borrowers.
The SBA works with a network of financial institutions in the loan guarantee program. The SBA offers partial guarantees so under the loan guarantee program, the business owner gets access to better loan terms than if they went directly through their bank. The agency does not guarantee the entire loan, it can cover up to 85% of the total amount.
2) Disaster Assistance :
If a business is affected by a declared disaster, the business owner
May be eligible for a long-term, low-interest loan to help replace or repair machinery, real estate, inventory, equipment and business assets. To take advantage of this program, the small business must be a sole proprietorship or non-profit organization and have 500 or fewer employees. Loans under this program can be sanctioned within 21 days of the disaster.
3) Training and Information :
Small Businesses Administration offers entrepreneurship development programs. It has 900 small business development centers in the US where it can get help. Women who are starting a small business are eligible for specialized resources at one of the Business Centers, those women partly funded through SBA grants. This program provides mentoring and vocational training to replace service members, National Guard members, and military spouses who wish to start and grow businesses.
4) Tools and Assistance :
The Small Business Administration has a suite of tools and services to help small business owners, including those in the U.S. Includes government contract options, business plan assistance and one-on-one consultations. Small business owners can use the tools on the SBA website to receive online training, create a business plan, and find local seminars or workshops. The SBA reserves 23% of government contracted funds to protect and support small businesses.
The Small Business Administration (SBA) Loan Program
Loan programs offered through the Small Business Administration are one of the most visible elements the agency offers, and these programs come with longer repayment periods for small businesses. The agency does not actually issue loans, with the exception of disaster relief loans. Loans are guaranteed or backed by the SBA and issued directly by lenders that meet the agency's guidelines.
Small businesses more easily qualify for loans when they are guaranteed by the SBA. The agency also allows entrepreneurs to pay less for a longer period. Despite several attempts to eliminate the SBA altogether, many political officials and offices continue to support the agency. The SBA's lending ability has also been significantly strengthened by the American Recovery and Reinvestment Act (ARRA) of 2009 and the Small Business Jobs Act of 2010.
Loans backed by the Small Business Administration include the following :
- Micro Loans and Disaster Loans
- 504 loan (or growing loan), which provides small businesses with financing of up to $5 million to purchase the fixed assets needed to run their operations, including real estate.
- 7(a)Loan which is the agency's primary loan program, the maximum loan amount guaranteed under this program is $5 million.
Note :
The SBA has local offices throughout affiliated regions and in the United States, offering more personalized special programs for small business owners. The offices offer in-person, counseling services, including help with small business loans and business plan writing instruction.
How Can The SBA Help You Start Your Business ?
The SBA has many resources available for those looking to start their own small business. If you're looking to start your own small business, this SBA highlights some of these resources that can take you from start to finish.
Not only does the agency help people start and launch their own businesses, but they also have the resources to help them manage and grow.
4 Business Topics to Browse SBA Website :
1) Plan Your Business :
The Plan Your Business portion of the website includes resources related to the development of your business. This includes developing a business plan, getting funding, calculate your startup costs, establish business credit and conducting relevant market research.
You can also find out what you need to do to choose one :
- Business name
- Location for your business
- Suitable business structure
2) Launch Your Business :
Starting your business is as important as starting it, which is why you'll find some of the same resources from the Launch Your Business section.
For example, choosing your location will depend a lot on laws and zoning ordinances. This will also affect the taxes that apply to your organization. There is more information on the SBA's website, it also provides information on business insurance, which is a very important part of protecting your interests. The SBA helps protect your business from any unforeseen losses that may occur in the course of normal operations.
This include, Pick your business location, Choose a business structure, Choose your business name, Register your business, Get federal and state tax ID numbers, Apply for licenses and permits, Open a business bank account and Get business insurance.
3) Manage Your Business :
You can learn valuable tricks and tips on how to pay your taxes, hire employees, and manage finances. You will cover sales and marketing strategies as well as compliance, how to buy a property. Cyber security is a major threat to many businesses, so the SBA also offers some common sense tips for staying safe.
Manage Your Business include, Manage your finances, Hire and manage employees
Pay taxes, Stay legally compliant, Buy assets and equipment, Marketing and sales, Stay safe from cyber threats, Prepare for emergencies, Recover from disasters, Close or sell your business and Hire employees with disabilities.
The Manage Your Business section includes helping business owners understand and assess their risk by detecting some of the most common scams (such as ransomware and malware). This section also deals with certain circumstances such as the hiring of people with disabilities.
4) Grow Your Business :
It is not enough just to learn how to start your own business. That's why the SBA also has resources to help you grow your business. Some of the help in the Grow Your Business section includes how to expand, how to use additional funding, and what to expect from mergers and acquisitions.
Grow Your Business section includes Get more funding, Expand to new locations, Merge and acquire businesses, Become a federal contractor, Export products, Women-owned businesses, Native American-owned businesses, Veteran-owned businesses, LGBT-owned businesses, Rural businesses and Minority-owned businesses.
Per the agency's mandate, it guarantees small business owners a certain percentage of federal contracts. The SBA encourages businesses to become federal contractors. You can also get the resources you need to connect with partners to help you export your services and products. You can find a variety of useful information, such as women-owned and LGBT-owned.
Who is Eligible for an SBA Grant ?
The SBA generally does not issue grants. But it happens to some organizations (those who promote entrepreneurship in communities). These include organizations providing training and funding to communities, non-profit organizations, and educational organizations. The grant is not provided to the owners who want to start up or expand the existing business.
Contact SBA in Your Area
You can contact your nearest SBA district office for assistance regarding COVID-19 relief programs.
Contact SBA's Answer Desk at 800-827-5722 or answerdesk@sba.gov.
If you are deaf, hard of hearing, or have a speech disability, please dial 7-1-1 to access telecommunications relay services.