What Is the SBA and How You Can Benefit from It

“Small business people are people with goals and values that can't be calculated on a profit and loss statement.”

That’s a quote from SBA Administrator Linda McMahon. She was appointed to head up the Small Business Administration in 2017 and is continuing its rich history of helping small businesses across the United States strengthen and grow. Here’s background on the government agency and how it fosters entrepreneurial development.

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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.

Here are ways the SBA is fulfilling its mission to help Americans start, build and grow businesses.

Business Financing

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.

  • 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.
  • 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.

For a more detailed dive into the SBA loan programs available for small business owners, review this article from SmartBiz University: SBA Overview and History.

 

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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 here.

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 below.

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 What you need to know: The information provided through SmartBiz® University and the articles contained therein are for educational purposes only. Use of this information is not a replacement for personal, professional advice or assistance regarding your finances or credit history.