Introduction to the SBA
The Small Business Administration (SBA) is a U.S. government agency designed to bolster and promote the economy by assisting the country’s small businesses. Established in 1953, the SBA’s primary function is to counsel individuals who want to start and grow their own businesses. It provides a series of tools on its website to assist new and existing small business owners. The agency is headed by an administrator and deputy administrator and also has a chief counsel for advocacy, and an inspector general—all of whom are confirmed by the Senate. The SBA has at least one office in every state, the District of Columbia, and various American territories.
Key Takeaways
- The Small Business Administration, established in 1953, is a government agency designed to bolster and promote the economy by providing assistance to small businesses.
- The SBA is headed by an administrator and a deputy administrator who are confirmed by the Senate.
- The agency offers various resources to small businesses, including access to capital, entrepreneurial development, government contracting, and advocacy services.
- The SBA’s loan guarantee program is one of its most visible elements.
Understanding the SBA’s Services and Offerings
The SBA offers substantial educational information with a specific focus on assisting small businesses to develop and grow. Below are some of the key services provided by the SBA:
Access to Capital
The agency offers a variety of financial resources for small businesses, including microlending, or small loans that are issued to those who wouldn’t otherwise qualify for financing. Loans are issued by partner banks, credit unions, and other financial institutions.
Entrepreneurial Development
This is driven by counseling services and low-cost training provided by the SBA, available to both new and existing business owners in more than 1,800 locations across the United States. There’s also a mentor program that connects new business owners with retired and/or existing entrepreneurs.
Contracting
The SBA reserves 23% of government contracting dollars for small businesses with the help of other federal departments and agencies. The agency guarantees 5% of these contracting dollars for women and another 3% for business owners who are disabled and veterans.
Advocacy
The agency acts as an advocate by reviewing legislation and protecting the interests of small business owners across the country. The agency also advocates for business owners at state and federal government levels.
The SBA Loan Program Explained
The loan programs offered through the SBA are among the agency’s most visible offerings, providing longer repayment periods for small businesses. Though the SBA does not issue loans itself (except for disaster relief loans), loans are backed or guaranteed by the SBA and issued by lenders that meet the agency’s guidelines. Key loans backed by the SBA include:
- 504 Loan: Provides a small business with up to $5.5 million in financing to buy the fixed assets it needs to run its operations, including real estate.
- 7(a) Loan: The agency’s primary loan program, with a maximum loan amount guaranteed under this program of $5 million.
- Disaster Loan: Intended to help businesses and homeowners recover from declared disasters.
- Microloans: These loans offer up to $50,000 (average amount is about $13,000) to help small businesses and non-profit childcare centers start up or expand.
How the SBA Can Help You Start Your Business
The SBA has many resources available for people who want to start their own small businesses. If you have an idea for a business, the following resources can take you from start to finish:
Business Planning
This section of the SBA’s website outlines steps and provides resources related to the development of your business, including conducting relevant market research, developing a business plan, and securing funding. You will also learn about:
- Choosing a location for your business
- Selecting a suitable business structure
- Naming your business
- Registering your company
- Getting the appropriate tax documents, permits, and licenses
- Opening a business bank account
Launching Your Business
Launching your business is just as important as starting it. For instance, choosing your location will depend a lot on local zoning ordinances and laws. It will also affect the kind of incentives and taxes that apply to your organization. The SBA’s website also provides information on business insurance, crucial for safeguarding your business from unforeseen losses during normal operations.
How the SBA Can Help You Manage and Grow Your Business
The agency doesn’t just help people start and launch their businesses; it has resources to help manage and grow them:
Management Tips
You can learn practical tips on how to manage your finances, hire employees, and pay taxes. Other important information includes staying compliant with regulations, how-tos for purchasing assets, and marketing and sales strategies.
Cybersecurity
Given the increasing threats to businesses, the SBA provides essential tips to stay safe online. Business owners can learn to spot common scams like malware and ransomware and leverage best practices to avoid cyber attacks.
Growing Your Business
The SBA also provides resources to help business owners grow their enterprises by accessing additional funding, expanding operations, and navigating mergers and acquisitions. Agencies within the SBA encourage businesses to become federal contractors through an easy registration process.
Special Resources for Diverse Business Owners
The SBA offers tailored resources for businesses owned by women, Native Americans, veterans, minorities, members of the LGBTQ+ community, and rural businesses.
The History of the SBA
The SBA was established by President Dwight Eisenhower, signing the Small Business Act in the summer of 1953, replacing the Reconstruction Finance Corporation (RFC) established by President Herbert Hoover during the Great Depression. The SBA’s mandate is to support and protect small businesses, ensuring they receive a fair portion of government contracts and surplus property sales.
Despite facing numerous challenges, such as threats of elimination and budget cuts, the SBA has played a critical role in supporting small businesses, particularly during crises like the COVID-19 pandemic. The SBA provided crucial financial support through Economic Injury Disaster Loans (EIDL) and EIDL Advance Programs, helping countless businesses survive the economic downturn.
How the SBA Supports the Small Business Community
The Small Business Administration (SBA) provides a series of tools available for new and existing entrepreneurs, striving to achieve the following goals:
- Offering business owners access to capital
- Fostering entrepreneurial spirit
- Reserving contracting dollars for certain business owners
- Advocating on behalf of small business owners
Funding and Grants
The SBA receives an annual budget approved by the federal government, supporting salaries, grant and loan programs, and administrative costs. Note that grants are generally issued to organizations, including non-profits, that promote business ownership in communities rather than individual business expansions.
Conclusion
The SBA is a vital federal resource nurturing the growth of small businesses in the U.S. Beyond offering loans through third parties, it provides extensive programs aimed at enhancing your business knowledge and expertise from tax payments to marketing and cybersecurity. The agency also advocates on behalf of small business owners while ensuring dedicated funding and support during crises such as the COVID-19 pandemic. Local SBA offices in all 50 states, the District of Columbia, and American territories ensure personalized assistance is just around the corner.
Related Terms: business loans, entrepreneurship, government support, small business funding.
References
- U.S. Small Business Administration. “Organization”.
- U.S. Small Business Administration. “SBA Leadership”.
- U.S. Small Business Administration. “SBA District Offices”.
- U.S. Small Business Administration. “Start Your Business in 10 Steps”.
- Debt.org. “Small Business Administration”.
- U.S. Small Business Administration. “Isabella Casillas Guzman”.
- U.S. Small Business Administration. “Loans”.
- U.S. Small Business Administration. “504 loans”.
- U.S. Small Business Administration. “7(a) loans”.
- U.S. Small Business Administration. “Disaster Assistance”.
- U.S. Small Business Administration. “Microloans”.
- U.S. Small Business Administration. “10 Steps to Start Your Business”.
- U.S. Small Business Administration. “Launch Your Business”.
- U.S. Small Business Administration. “Manage Your Business”.
- U.S. Small Business Administration. “Strengthen Your Cybersecurity”.
- U.S. Small Business Administration. “Grow Your Business”.
- U.S. Small Business Administration. “Become a Federal Contractor”.
- St. Louis Business Journal. “Shutdowns, Staff Cuts Push SBA Loans Down 35% in ‘96”.
- Congressional Research Service. “Small Business Administration (SBA) Funding: Overview and Recent Trends”.
- Inc. “SBA Budget Cut—Again”.
- U.S. Small Business Administration. “COVID-19 Economic Injury Disaster Loan”.
- U.S. Small Business Administration. “About COVID-19 EIDL”.
- U.S. Small Business Administration. “Resource Partners”.
- U.S. Small Business Administration. “Grants”.
