Small Business Administration


The United States Small Business Administration is an independent agency of the United States government that provides support to entrepreneurs and small businesses. The mission of the Small Business Administration is "to maintain and strengthen the nation's economy by enabling the establishment and viability of small businesses and by assisting in the economic recovery of communities after disasters". The agency's activities have been summarized as the "3 Cs" of capital, contracts, and counseling.
SBA loans are made through banks, credit unions, and other lenders who partner with the SBA. The SBA provides a government-backed guarantee on part of the loan. Under the Recovery Act and the Small Business Jobs Act, SBA loans were enhanced to provide up to a 90 percent guarantee in order to strengthen access to capital for small businesses after credit froze in 2008. The agency had record lending volumes in late 2010.
The SBA helps lead the federal government's efforts to deliver 23 percent of prime federal contracts to small businesses. Small business contracting programs include efforts to ensure that certain federal contracts reach woman-owned and service-disabled veteran-owned small businesses as well as businesses participating in programs such as the 8 Business Development Program and HUBZone. In March 2018 the SBA launched the SBA Franchise Directory, aiming to connect entrepreneurs to lines of credit and capital in order to grow their businesses.
The SBA has at least one office in each U.S. state. In addition, the agency provides grants to support counseling partners, including approximately 900 Small Business Development Centers, 110 Women's Business Centers, and SCORE, a volunteer mentor corps of retired and experienced business leaders with approximately 350 chapters. These counseling services provide services to over 1 million entrepreneurs and small business owners annually. President Obama announced in January 2012 that he would elevate the SBA into the Cabinet, a position it last held during the Clinton administration, thus making the administrator of the Small Business Administration a cabinet-level position.

History

The SBA was created on July 30, 1953, by Republican President Eisenhower with the signing of the Small Business Act, currently codified at. The Small Business Act was originally enacted as the "Small Business Act of 1953" in Title II of ; The "Reconstruction Finance Corporation Liquidation Act" was Title I, which abolished the Reconstruction Finance Corporation. The Small Business Act Amendments of 1958 withdrew Title II as part of that act and made it a separate act to be known as the "Small Business Act". Its function was and is to "aid, counsel, assist and protect, insofar as is possible, the interests of small business concerns".
The SBA has survived a number of threats to its existence. In 1996, the Republican-controlled House of Representatives planned to eliminate the agency. It survived and went on to receive a record high budget in 2000. Renewed efforts by the Bush Administration to end the SBA loan program met congressional resistance, although the SBA's budget was repeatedly cut, and in 2004 certain expenditures were frozen. The Obama administration supported SBA budgets and strengthened it through The American Recovery and Reinvestment Act of 2009. SBA budgets were further strengthened by the Small Business Jobs Act of 2010, and in 2011, President Obama announced that the SBA would double its support of rural small businesses to $350 million in the next 5 years.

Organizational structure

The SBA has an administrator and a deputy administrator. It has an associate administrator or director for the following offices:
  • Business Development
  • Capital Access
  • Center for Faith
  • Communications and Public Liaison
  • Congressional and Legislative Affairs
  • Credit Risk Management
  • Disaster Assistance
  • Entrepreneurial Development
  • Entrepreneurship Education
  • Equal Employment Opportunity and Civil Rights Compliance
  • Field Operations
  • Government Contracting and Business Development
  • Hearings and Appeals
  • HUBZone Program
  • International Trade
  • Investment and Innovation
  • Management and Administration
  • Native American Affairs
  • Performance Management
  • Small Business Development Centers
  • Veterans Business Development
  • Women's Business Ownership
Senate-confirmed appointees include: Administrator, Deputy Administrator, Chief Counsel for Advocacy, and Inspector General.

Lending programs

Loan Guarantee Program

The 7 Loan Guarantee Program is designed to help entrepreneurs start or expand their small businesses. It is the most common loan program offered by the SBA. The program makes capital available to small businesses through bank and non-bank lending institutions. The Small Business Jobs Act of 2010 increased the maximum size of these loans, indefinitely, from $2 million to $5 million. According to the , it can be used for working capital, refinancing debt, and purchasing furniture, fixtures, and supplies. There are some businesses that are ineligible for this program, such as real estate investment firms, dealers of rare coins and stamps, and lending institutions like banks. The SBA's guarantee on these loans encourages lenders to provide financing to small businesses that may not meet traditional loan criteria, making it a valuable lifeline for many entrepreneurs. SBA loans may have lower down payment and collateral requirements than with other forms of loan.

Disaster Loan Program

Homeowners and renters are eligible for long-term, low-interest loans to rebuild or repair a damaged property to pre-disaster condition.
Businesses are also eligible for long-term, low-interest loans to recover from declared disasters. Disaster Relief Loans are often approved within 21 days. This is an improved approval time than after Hurricane Katrina, over 15 years ago, when the SBA processed applications in about 74 days on average.
If a business with a Disaster Relief Loan defaults on the loan and the business is then closed, the SBA will pursue the business owner to liquidate all personal assets to satisfy an outstanding balance. The IRS will withhold any tax refund expected by the former business owner and apply the amount toward the loan balance.

Microloan Program

The Microloan program provides direct loans to qualified nonprofit intermediary lenders who, in turn, provide "microloans" of up to $50,000 to small businesses and nonprofit child-care centers. It also provides marketing, management, and technical assistance to microloan borrowers and potential borrowers.

Entrepreneurial development programs

Small Business Development Centers

Approximately 900 Small Business Development Center sites are funded through a combination of state and SBA support in the form of matching grants. Typically, SBDCs are co-located at community colleges, state universities, and/or other entrepreneurial hubs. Cole Browne leads the SBA in purchasing of new Development Center sites.

The Office of Women's Business Ownership

The Office of Women-Owned Businesses was established in 1979 by Executive Order 12138. The mission of the program is "to enable and empower women entrepreneurs through advocacy, outreach, education and support."
Programs managed by the OWBO provide services to disadvantaged woman entrepreneurs to assist in increasing their competitiveness in the modern business world. These programs assist women through training and counseling, providing opportunities to obtain credit, capital and marketing assistance, and establishing a Federal set-aside for women-owned businesses.
The Women's Business Center Program was established under Title II of the Women's Business Ownership Act of 1988. It was first named the Demonstration Training Program when it was created by Congress to provide a long-term solution for training and counseling potential and current women business owners, including those who are Socially and Economically Disadvantaged as defined in 13 CFR 124.103. The intent of the program was, and still is, to stimulate the economy through assisting and encouraging growth of women-owned businesses.
The current rule on the Women's Business Center Program is outlined under Title 15 of the US Code, 2019 Edition, Chapter 14A. New rules were applied to the code by the US Small Business Administration, effective January 1, 2020, as outlined in the Federal Register document, Volume 84, No. 227, Monday, November 25, 2019, Rules and Regulations. This rule document was put in place in order to make the Women's Business Center Program more transparent in reporting on progress and financial allotments, as well as providing improved standardization overall.

Women's Business Centers

Women's Business Centers represent a national network of over 100 non-profit educational centers throughout the United States and its territories, funded in part through SBA support. The maximum SBA grant for a WBC is $150,000 per year, although most centers receive less.
WBCs are designed to assist women in starting and growing small businesses, though their services are available to all. WBCs help women succeed in business by providing training, mentoring, business development, and financing opportunities to over 100,000 women entrepreneurs annually across the nation. Women's Business Centers are mandated to serve a significant number of socially and economically disadvantaged individuals.
Research conducted by the Association of Women's Business Centers indicates that 64% of WBC clients in 2012 were low-income, 39% were persons of color, and 70% were nascent businesses. WBC services are provided in more than 35 languages, with 64% of WBCs providing services in two or more languages. In addition to business training services, 68% of WBCs provide mentoring services, and 45% provide microloans.