Small Business Administration
|Formed||July 30, 1953;|
|Preceding agency||Small Defense Plants Administration, Reconstruction Finance Corporation|
|Jurisdiction||Federal government of the United States|
|Headquarters||409 Third Street, SW, Washington, D.C., U.S.|
- The U.S. Small Business Administration (SBA) is a United States government agency 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.
- Lending programs
- Loan Guarantee Program
- The 7(a) 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 SBA website, it can be used for working capital, both short and long term, refinancing debt, and purchasing furniture, fixtures, and supplies.
- There are some businesses that are ineligible for this program, such as real estate investment firms (where property is held for investment purposes), dealers of rare coins and stamps, and lending institutions like banks.
- Disaster Loan Program
- SBA opens Disaster Loan Center in Austell, GA, October 26, 2009 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.
- If a business with a Disaster Relief Loan defaults on the loan, and the business is 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.
- Loan Guarantee Program