What is the ‘Small Business Administration — SBA’
The Small Business Administration (SBA) is an autonomous U.S. government agency established in 1953 to bolster and promote the economy in general by providing assistance to small businesses. One of the largest functions of the SBA is the provision of counseling to aid individuals trying to start and grow businesses. On the agency’s website, (SBA.gov), there is a wealth of tools to assist small businesses including a small business planner and additional training programs. Localized SBA offices throughout the United States and associated territories offer in-person, one-on-one counseling services that include business plan writing instruction and assistance with small business loans.
The SBA was created by Congress in 1953 to help American entrepreneurs start, run, and grow successful small enterprises. Today there are SBA offices in every state, the District of Columbia, the U.S. Virgin Islands, Puerto Rico, and Guam. Among the services offered by the SBA are financial assistance in the form of loans to small businesses, state and local developers and victims of floods and other disasters; counseling services through Small Business Development Centers (SBDCs); management assistance through programs like SCORE; and low-cost publications.
Definition: The Small Business Administration (SBA) is an agency of the Federal Government that exists to serve, support and protect the interests of small businesses. The SBA offers educational resources to help entrepreneurs manage the complexity of growing a business.
What can the SBA do for small businesses?
The SBA offers service and support through four primary methods — many of which can help small businesses survive their first few years.
What They Do
Since its founding on July 30, 1953, the U.S. Small Business Administration has delivered millions of loans, loan guarantees, contracts, counseling sessions and other forms of assistance to small businesses. SBA provides assistances primarily through its four programmatic functions:
Access to Capital (Business Financing)
SBA provides small businesses with an array of financing for small businesses from the smallest needs in microlending — to substantial debt and equity investment capital (venture capital).
The SBA developed standards by industry type that define the maximum size that a firm, including all affiliates, must be to maintain eligibility as a small business entity for SBA programs. The two most widely used standards are number of employees (e.g., for most manufacturing and mining industries) and average annual receipts (e.g., for most non-manufacturing industries).
The SBA offers multiple different loan programs, including general small business loans, real estate and equipment loans, and disaster loans. The organization also provides technical assistance, with services in personal business counseling and training, and assists small businesses by helping them gain access to the federal procurement system, in which the federal government awards part of its purchases to small businesses.
The truth is that many small businesses fail and there are a variety of reasons for this — under-capitalization, lack of planning, or the person who owns the business is really good at one thing but bad another. For example, they may be good at baking cakes but maybe they don’t know how to read financial reports. But after the credit crisis that started in 2008, banks seized up on loans to businesses and individuals and, in general, were lending only to established large businesses that were already highly capitalized. In this climate, SBA-backed loans became all the more important as a lifeline to small businesses and the federal government acted to lower rates and increase the amount of small business loans they would guarantee for banks, from 75 percent to 90 percent in some cases.
The following step-by-step guide will outline how businesses qualify for SBA-backed loans, the different type of loans that the SBA guarantees, and how to be successful in securing an SBA-backed loan.
He added that SBA sources told him that, as of 2 p.m. Monday, the agency had approved more than $175 million in applications for loan guarantees on that day alone. On an average day, he said, his lenders will only receive around $75 million in approvals. SBA officials would not confirm the numbers.
Still, even at that grueling pace, it will leave many loan applications hanging in limbo, and according to Wilkinson, that could leave many entrepreneurs waiting for the capital they need to start, expand or perhaps salvage their businesses.