The Small Business Administration (SBA) is an independent agency of the federal government dedicated to helping American small businesses. The mission of the SBA is to “counsel, assist and protect the interests of small business concerns, to preserve free competitive enterprise and to maintain and strengthen the overall economy of our nation.”
SBA History: How It All Began
Although the SBA wasn’t officially established until the 1950’s, it’s evolution dates back to 1932 when the Reconstruction Finance Corporation (RFC) was created under President Hoover as a lending program to assist businesses during the Great Depression. Considered by the SBA as the “grandparent” of the agency today, the RFC continued under President Roosevelt, but as concern grew for small businesses that were unable to compete with large enterprises for defense contacts during World War II, Congress decided more needed to be done to help small businesses.
In response, Congress created the Smaller War Plants Corporation (SWPC) in 1942, which supported small businesses in three important ways: provision of loans to entrepreneurs, small business advocacy to federal procurement agencies, and petitioning financial institutions to provide credit to small business owners.
The SWPC’s lending and contract powers were absorbed by the RFC when the SWPC was dissolved after the war. The Office of Small Business (OSB) also began providing support to small business owners in the form of counseling services and information, as it believed lack of education and expertise were the reasons behind the failure of most small businesses.
During the Korean War, Congress founded a new organization called the Small Defense Plants Administration (SDPA). The SDPA was responsible for certifying eligible small businesses for government contracts, although all lending activities continued to be the responsibility of the RFC until the agency was abolished in 1952, spurring the creation of the Small Business Administration.
The SBA was founded on July 30, 1953 by to support small business concerns and ensure a “fair proportion” of government contracts and surplus property sales. The SBA began making direct small business loans and guaranteeing bank loans, helping small businesses with government contracts, and providing training and support.
It established the Small Business Investment Company (SBIC) Program under the Investment Company Act of 1958, which saw the SBA get involved in licensing, regulation and lending for private venture capital investment companies. The SBA also created the Equal Opportunity Loan (EOL) Program in 1964, which relaxed the credit requirements for loan applicants living below the poverty line. The SBA also founded the SBA Office of Advocacy in 1976 to protect agency programs.
Despite an attempt by the House of Representatives to eliminate the agency in the late nineties and an expenditure freeze in 2004, the SBA has received much support in the last decade, particularly through the American Recovery and Reinvestment Act of 2009 and the Small Business Jobs Act of 2010 under President Obama.
SBA Today: How the SBA Can Help Small Businesses & Entrepreneurs
The Small Business Association can help new and seasoned business owners alike. For starters, the SBA oversees the effort for federal agencies to meet the target of 23% of all federal contracts going to small businesses. They also help small businesses access capital, advocate on behalf of small business, and provide training, counselling and educational resources.
The SBA can help small businesses bid on federal contracts through a number of programs that not only ensure contracts reach the small business sector, but also businesses owned by women, service-disabled Veterans, and those owned by socially and economically disadvantaged people.
Programs currently provided by the SBA include:
- Women-Owned Small Business Federal Contracting program
- Service-disabled Veteran-Owned Small Business program
- 8(a) Business Development program
- All Small Mentor-Protégé program
- Natural Resource Sales Assistance program
You can learn more about each of these programs on the SBA federal contracting page. There is also a comprehensive guide to finding and winning contracts and resources for accessing counselling or other assistance.
The SBA partners with banks and other lenders to help make loans accessible to small businesses that are struggling to secure capital. With an SBA loan, a portion of the loan is guaranteed by the government, typically from 50-80%. This lessens the risk for the bank and therefore increases the likelihood of an approval.
There are also other funding programs offered, including:
- A lender matching program
- Investment capital through the Small Business Investment Company (SBIC)
- Disaster assistance in the form of low-interest loans
- Surety bonds (sometimes required on contracts to guarantee that work will be completed)
- Grants for small businesses and entrepreneurs
Education & Training
The SBA offers a huge range of training opportunities from business development to mentoring and educational workshops, both online and in person at one of their locations. Many of the services are completely free of charge.
There are hundreds of locations across the country including district, regional and disaster field offices. They also work with a number of partners to provide Women’s Business Centers, SCORE Business Mentors, Veteran’s Business Outreach Centers, Small Business Development Centers and others. You can find out more about what is available in your area on their local assistance page.
The SBA website is also a great starting point for learning if you’d rather begin online. There is a comprehensive business guide that takes you through all stages of the business journey from planning to launch, managing your business and growth. Topics range from market research and estimating startup costs to licenses and permits, hiring and marketing, and funding, exporting and expansion. There is also an extensive library of courses that cover many more aspects of starting, managing and growing a business.
Wherever you are in your small business life, the SBA may be able to help you get to the next level. For any entrepreneur or small business owner looking to learn more or secure assistance with any aspect of their business, the resources provided by the Small Business Administration are worth looking into.