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What is the SBA?

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  • Written By: Sherry Holetzky
  • Edited By: Lindsay D.
  • Last Modified Date: 30 November 2016
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SBA stands for the Small Business Administration of the United States, which was founded in July, 1953. The vision for the Small Business Administration actually began to take form a number of years before that time, largely in response to economic turmoil created by the Depression and World War II.

The Small Business Act of 1953 outlined the mission of the SBA as a program to help and protect small businesses. It also made clear that the SBA must guarantee a fair percentage of government owned contracts to small business owners. The stated mission of the SBA is to "Maintain and strengthen the nation's economy by aiding, counseling, assisting and protecting the interests of small businesses and by helping families and businesses recover from national disasters."

Today's SBA initiatives also include loans, advice, and government contracts for women, minorities, and veterans. The Administration is structured to offer loans, to back loans from other lenders, and to counsel small business owners with the help of several resource partners. These partners include SCORE -the Service Corps of Retired Executives, Small Business Development Centers, Women's Business Centers, the Veterans' Business Outreach Program, and many SBA lenders. Counseling, training programs, and other resources are provided by the SBA in conjunction with these institutions.

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From its inception through the turn of the century, the SBA has provided nearly twenty million loans along with various other forms of help for small business owners. Today, the Administration even offers online classes for small business owners and has at least one office in every state. While some people complain that the SBA is unnecessary, because they believe small companies cannot compete with large corporations, SBA is a thriving program. It is not only the "largest single financial backer" of businesses in this country; it is also one of the government's most cost efficient agencies.

Small businesses create local jobs, revenue, and exciting innovations brought to life by ambitious entrepreneurs. The Small Business Administration's three thousand employees and many resource partners are behind them to make sure they are afforded the opportunity to achieve the American dream.

To learn more about the inner workings and finances of the Small Business Administration, review its Performance and Accountability Reports. You can locate a link on the SBA website.

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Crispety
Post 3

@Sunshine31 - Unfortunately anything that the government does is going to take longer because of the bureaucracy.

They also can’t freely approve loans to everyone. There has to be a criteria in place because many business ventures fail especially in the first three years which causes the likelihood of default to increase.

Another option for people looking for money to start a business is to consider angel investors. These people give grants to entrepreneurs that they believe in and most look to receive a percentage of ownership in the process.

This is a great idea if you have a solid business plan but don’t have the capital to make the business happen. This might be better than getting a business loan.

sunshine31
Post 2

I was looking at the SBA loan rates and the best rates tend to hover around 6%. Also, I was reading that about 90% of these loans offer a variable rate that gets reset quarterly.

There are some fixed rate loans that are usually for three to five years in duration but they are hard to get. A lot of the banks seem to want more liquid assets in the form of collateral as part of the SBA loan approval process.

Some banks are asking business owners to put up their business as collateral which many business owners do not want to do. I think that the SBA backed loans do help small businesses, but some say that it still takes a lot time to get approved.

Sunny27
Post 1

Great article- I just want to add that SBA also offers what it calls SBA express which is a program that guarantees an acceptance or denial of a loan within 36 hours.

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