The Small Business Association (SBA) is a federal agency that administers educational and financial assistance programs to guide and support small businesses and entrepreneurs interested in starting a business. The SBA also helps small businesses obtain financing and place federal contracting and subcontracting bids. In order to be fully prepared to start a new business, entrepreneurs should become familiar with the SBA, its loan programs, and its business development resources.
The primary purpose of the SBA is to assist small business owners in the creation, management and development of their business. The agency does this through educational courses, training programs, financial assistance programs and interactive tools available on its website. The SBA also helps small businesses acquire federal contracts by directly training business owners to prepare bids and comply with the Federal Acquisition Regulations System, and by publishing available federal contracting opportunities.
Although the SBA was not officially created until The Small Business Act of 1953, the economic condition of the country during the 1930s and immediately after World War II initially spurred the federal government to create a federal agency dedicated to advocating for and supporting small business growth. In 1932, President Herbert Hoover founded the Reconstruction Finance Corporation, charging it with the responsibility of providing loans to all businesses during the Great Depression. President Franklin D. Roosevelt continued the program during his time in office. During World War II, the federal legislature created a supplementary federal program aimed specifically at assisting small businesses that were interested in acquiring federal contracts to produce war materials. After the war, an additional office was added to the Department of Commerce, which was responsible for directly supporting small businesses. It was not until 1953, with pressure from President Dwight D. Eisenhower, that Congress passed legislation creating the SBA as it exists today.
With district offices throughout the country, the SBA offers several free resources to small businesses and prospective business owners, such as business planning tools, financial assistance and training. On its website, the SBA offers an interactive planning application that allows prospective business owners to develop a comprehensive business plan. Through its Small Business Investment Company Program (SBIC), the SBA also connects small business owners with investors. The SBA also offers structured guidance on applying to its low-interest loan programs and the SBA provides a notification service, called SUB-Net, listing available federal contracting opportunities. The SBA otherwise supports the development of small businesses by offering podcasts, training courses and publications relating to a wide variety of topics, including money management and marketing.
The SBA offers several programs geared toward business development, building capital and addressing SBA actions. An example of an SBA program promoting business development is the HUBZone program. This program helps eligible businesses obtain federal contracts on a preferred basis, encouraging job growth and economic stimulation in underrepresented and less affluent areas. The Small Business Investment Company Program (SBIC) is a program that supports small businesses through investment. Specifically, private organizations can apply for an SBIC license which allows them to receive funds from the SBA to invest into growing businesses. Another important SBA program is its independent Office of Hearings and Appeals. This office adjudicates appeals of SBA actions. Businesses may appeal the denial of a particular status classification, such as whether a business qualifies as "minority-owned," and other decisions regarding eligibility for loan programs.
Contrary to popular belief, the SBA does not provide start-up grants to small businesses. Business owners seeking financial assistance to start or expand a business can, however, apply for one of the SBA's low-interest loan programs. The SBA also provides loans to businesses that have suffered severe damage from a natural disaster. A private lending institution typically delivers the loan to the business, while the SBA guarantees the loan.
M. Wade is a licensed attorney and writer. She is a graduate of the University of Pittsburgh and University of Louisville and has been published in the University of Louisville Law Review, The Brand, and Blackline. She has been a writer for Demand Studios since August 2008.