Small Business Administration (SBA)

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What is the Small Business Administration (SBA):

The Small Business Administration (SBA) is an independent agency of the United States government with the mission to assist and protect the interests of small businesses. 

Detailed Explanation:

The Small Business Administration’s mission statement summarizes its objective to “aid, 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 Mission Statement)

The Small Business Administration helped many large companies get started and grow. These include Apple, Ben and Jerry’s, Federal Express, and Nike. However, most of the SBA’s customers are entrepreneurs who need assistance in starting and managing their small, local companies. Help is provided in four areas: raising capital, consulting, government contracts, and disaster relief.  Most SBA loans are not made directly by the SBA. Instead, the SBA facilitates securing the financing. It provides assistance in writing a business plan, which is essential when making a loan application. The SBA may act as the guarantor of a loan, where it guarantees up to 90 percent of the loan. The bank makes the loan, but the guaranty reduces the bank’s exposure and makes the bank more likely to approve a loan. For example, assume Sylvia is opening a small restaurant and needs $100,000 in capital. She is able to provide $10,000 and would like to borrow the remaining $90,000. She has visited several banks and all have denied her loan request. One bank specializes in providing SBA backed loans. They are willing to lend Sylvia $90,000 if the SBA guarantees $72,000. The SBA’s guaranty reduces the bank’s exposure from $90,000 to $18,000.

Educating small business owners and those interested in starting their own business is an important service rendered by the Small Business Administration. The SBA has approximately 900 development centers in the United States and its territories which provide many useful tools to educate would-be small business owners, including an online education center, workshops, and mentors. For example, SCORE is an association supported by the Small Business Administration that offers free counseling to small businesses from experienced retired executives. 

The SBA also assists small businesses in securing large government contracts, particularly if a business is owned by a woman or a disabled veteran.

When a natural disaster hits, it can be devastating for a small business. The SBA offers emergency funds to qualifying businesses that need financial assistance to reopen. 

Learn more by visiting SCORE and the SBA’s websites.

Small Business Administration
SCORE

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