SBA stands for the Small Business Administration. You’ve probably heard of their funding programs but this government agency offers much more, especially during the 2020/2021 novel coronavirus pandemic which continues to devastate the small business landscape.
Whether you’re a new entrepreneur or an established one, the SBA can guide you through business ownership. Their assistance includes helping business owners secure government contracts, find business funding, learn about operations, and build their professional network.
History of the Small Business Administration
Congress created the Small Business Administration in 1953 to "aid, counsel, assist and protect, insofar as is possible, the interests of small business concerns.”
By 1954, SBA already was making direct business loans and guaranteeing bank loans to small businesses. The SBA was also working to get government procurement contracts for small businesses and helping business owners with training, management assistance and technical help.
Today, SBA programs support small businesses in all areas. Those include specialized programs for women, minorities, and veterans. SBA also provides loans to victims of natural disasters like flooding and wildfires along with specialized help in international trade.
Entrepreneurial development
The SBA’s Office of Entrepreneurial Development is fulfilling their mission to help small businesses start, grow, and compete in global markets by providing quality training, counseling, and access to resources. The programs and services offered include:
Small Business Development Centers (SBDCs)
The SBDC program offers management and business counseling services. The SBDC are the SBA’s largest non-financing program and is a collaboration of SBA funding along with state and private resources. Currently, more than 950 service centers handle counseling and training needs of roughly 650,000 clients annually.
Manufacturing, procurement, technology transfer, disaster recovery, technology, market research and international trade are emphasized. To learn more about the SBDC program or to locate an SBDC near you, visit the SBA's website.
Office of Women's Business Ownership
The Office of Women’s Business Ownership’s mission is to enable and empower women entrepreneurs. Economically or socially disadvantaged women are offered training and counseling in many languages to help them start and grow their own businesses.
Office of Entrepreneurship Education
Here’s the mission statement of this office:
“The Office of Entrepreneurship Education's mission is to provide entrepreneurial information and education, resources and tools to help small businesses succeed. The office is an integral component of Entrepreneurial Development's network of training and counseling services.”
Visit their information page.
It’s clear that the SBA has the small business owner’s interests front and center. For more insight into the SBA, check out our “Key Facts the SBA” infographic.
Minority-owned business certification
Becoming certified as a minority-owned business allows you to access certain government and private-sector programs that can help support your business growth. The SBA has a program for ‘socially and economically disadvantaged’ businesses which minority-owned businesses are typically classified as. The program is referred to as the 8(a) Business Development Program.
Andrew Magnus, Owner/President of the successful BTC Envelopes and Printing, LLC, shares why he received a minority-owned business certification. “I only knew one minority business owner. A big part of my push was to create a greater minority presence in a multi-billion dollar industry.”
If you're not certified, you may be missing out on things like marketing opportunities or access to a reduced-competition contract. The SBA can help.
SBA Lending Programs
The most prominent assistance program that the SBA offers is a guarantee on loans made through banks, credit unions, and other lenders they partner with. By securing a portion of the loan in the case of the borrower defaulting, the lenders are presented with less risk so they are more likely to offer an affordable loan. Since 2009, the SBA has backed over $150 billion through its various programs. Here are the loan programs currently offered by the SBA.
PPP Loans
The 2020 Paycheck Protection Program (PPP), part of the CARES Act, provided forgivable loans of up to $10 million to businesses with fewer than 500 workers and the self-employed. The intent of the Act is to help U.S. entrepreneurs keep employees on the payroll after their business was impacted by the coronavirus pandemic. The second round of PPP funding has been extended through May 31st, 2021 but business owners should apply ASAP in case the funds run out before that date. Start a streamlined application on the SmartBiz website before that date here: Apply for a 1st or 2nd PPP Loan.
7(a) Loans
The SBA 7(a) Loan Guarantee program is one of the most popular loan programs offered by the agency. Known as the “gold standard” in small business funding, the SBA loan guarantee makes banks more willing to lend to small businesses. SBA 7(a) loans have low rates, long terms, very low monthly payments and no prepayment penalties. To learn more about 7(a) loans including requirements and cost specifics, visit the SmartBiz Loans website.
Special 7(a) loan deferment as part of the coronavirus debt relief efforts
The SBA will pay 6 months of principal, interest, and any associated fees that borrowers owe for all current 7(a), 504, and Microloans in regular servicing status as well as new 7(a), 504, and Microloans disbursed prior to September 27, 2020. This relief is not available for Paycheck Protection Program loans or Economic Injury Disaster loans. Borrowers do not need to apply for this assistance. More information can be found here. Borrowers should contact their lender if they have any questions regarding this payment relief.
- SBA Express Loans The SBA Express process offers borrowers an expedited turnaround time so that they can get a faster decision. Borrowers should expect to hear back on the loan decision in just 36 hours.
- CDC/504 Loans The 504 Loan Program was created to give small businesses low cost funds for expansion or modernization. Typically, up to 50% of project costs are funded by a lender backed by the SBA. CDCs (Community Development Corporations) typically fund up to 40% of the project cost. The final 10% is a cash down payment expected to come from the small business owner.
- CAPLines of Credit The CAPLines Program allows small businesses to acquire lines of credit, fixed or revolving, to help meet short term working capital needs. For example, it can help businesses cover expenses during slow times. CAPLines of credit are offered by SBA approved lenders and guaranteed in part by the SBA.
- Disaster Loan Program The SBA offers low-cost loans to businesses of all sizes, private non-profit organizations, homeowners and renters in disaster affected areas. Funds from an SBA disaster loans can be used to repair or replace an approved list of items damaged or destroyed in a declared disaster. Visit the SBA website to review their disaster loan program facts sheet.
Additional Resources from SmartBiz
The SmartBiz Loans Small Business Blog is a rich resource for business owners across the U.S. Topics covered include financial management, credit scores, marketing strategies, staffing, and more. Visit the blog here to find valuable information to help you rebuild and grow. Read More SBA Articles for additional details about this government agency.
