Seal of the SBA
Logo of the SBA
|Formed||July 30, 1953|
|Jurisdiction||Federal government of the United States|
|Headquarters||409 Third Street, SW, Washington, D.C., U.S.|
|Annual budget||$710 million USD (2015)|
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. The agency had record lending volumes in late 2010.
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(a) 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.
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 (often located at colleges and universities), 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.
The SBA was created on July 30, 1953, by President Eisenhower with the signing of the Small Business Act, currently codified at 15 U.S.C. ch. 14A. The Small Business Act was originally enacted as the "Small Business Act of 1953" in Title II (67 Stat. 232) of Pub.L. 83–163 (ch. 282, 67 Stat. 230, July 30, 1953); The "Reconstruction Finance Corporation Liquidation Act" was Title I, which abolished the Reconstruction Finance Corporation (RFC). The Small Business Act Amendments of 1958 (Pub.L. 85–536 , 72 Stat. 384 , enacted July 18, 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 will double its current rate in rural small businesses to $350 million in the next 5 years. The Trump Administration has supported the SBA budget. Significant supplemental appropriations for the agency strengthened SBA lending through the American Recovery and Reinvestment Act of 2009, the Small Business Jobs Act of 2010, and the CARES Act of 2020.
The SBA has an Administrator and a Deputy Administrator. It has an associate administrator or director for the following offices:
Senate-confirmed appointees include: Administrator, Deputy Administrator, Chief Counsel for Advocacy, and Inspector General.
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The 7(a) Loan Guarantee Program is designed to help entrepreneurs start or expand their small businesses. 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.
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. However, after Hurricane Katrina the SBA processed applications, on average, in about 74 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.
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.
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.
Women's Business Centers (WBCs) 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.
SCORE, the nation's largest network of volunteer, expert business mentors, was founded in 1964as a resource partner of the U.S. Small Business Administration. SCORE has since educated more than 10 million current and aspiring U.S. small business owners through its free mentoring and free and low-cost workshops. In 2016, SCORE’s more than 10,000 volunteer mentors helped their 125,000 clients create 54,072 small businesses, adding 78,691 non-owner jobs to the U.S. economy.
SCORE’s core service offering is its mentoring program, through which volunteer mentors (all experienced in entrepreneurship and related areas of expertise) provide free counsel to small business clients. Mentors, operating out of 300 chapters nationwide,work with their clients to address issues related to starting and growing a business, including writing business plans, developing products, conceiving marketing strategies, hiring staff, and more. Clients access their mentors via free, ongoing face-to-face mentoring sessions or through email or video mentoring services.
In addition to mentoring, SCORE also offers free and low-cost educational workshops each year, both online and in-person. In 2016, clients attended 119,957 online workshop sessions, while 237,712 local workshop attendees benefited from SCORE’s in-person educational programming.
SBA's Office of Veteran Business Development operates twenty-twoVeteran Business Outreach Centers through grants and cooperative agreements with organizations which provide technical assistance to businesses owned by veterans and family members. VBOCs also provide instructors for the SBA's program Boots to Business.
The SBA also supports regional innovation clusters across the country.
The 8(a) Business Development Program assists in the development of small businesses owned and operated by individuals who are socially and economically disadvantaged, such as women and minorities. Applicants must provide evidence of economic disadvantage (net worth under $250,000K), and must write a statement of personal experiences in combination with evidence to sufficiently demonstrate social disadvantage. The following groups are presumed socially disadvantaged through SBA policy and do not have to submit a social disadvantage narrative when applying for the program: Black Americans; Hispanic Americans; Native Americans (American Indians, Eskimos, Aleuts, or Native Hawaiians); Asian Pacific Americans (persons with origins from Burma, Thailand, Malaysia, Indonesia, Singapore, Brunei, Japan, China (including Hong Kong), Taiwan, Laos, Cambodia (Kampuchea), Vietnam, Korea, The Philippines, U.S. Trust Territory of the Pacific Islands (Republic of Palau), Republic of the Marshall Islands, Federated States of Micronesia, the Commonwealth of the Northern Mariana Islands, Guam, Samoa, Macao, Fiji, Tonga, Kiribati, Tuvalu, or Nauru); Subcontinent Asian Americans (persons with origins from India, Pakistan, Bangladesh, Sri Lanka, Bhutan, the Maldives Islands or Nepal).
The 8(a) Program opens the doors for disadvantaged firms to grow and develop for a period of 9-years. It has increased jobs for thousands of people across the Nation, and many of the successful firms had impacted their communities with internships, college funding, and more. Annually, of the government's $99B in small business contracts, 8(a) firms are awarded 5% of contracts.
In 2011, the SBA, along with the FBI and the IRS, uncovered a massive scheme to defraud this program. Civilian employees of the U.S. Army Corps of Engineers, working in concert with an employee of Alaska Native Corporation Eyak Technology LLC allegedly submitted fraudulent bills to the program, totaling over 20 million dollars, and kept the money for their own use.
The Office of Hearings and Appeals (OHA) is an independent office within the SBA established in 1983 to provide an independent, quasi-judicial appeal against certain SBA program decisions.
OHA is able to hear appeals regarding:
The OHA publishes unredacted final decisions within a few days of each decision being issued.
The Cato Institute has challenged the justification of the federal government in intervening in credit markets.Among other criticisms, Cato argues that "the SBA benefits a relatively tiny number of small businesses at the expense of the vast majority of small business that do not receive government assistance. SBA subsidies also represent a form of corporate welfare for the banking industry." Cato notes that the failure rate of all SBA loans from 2001 to 2010 is 19.4%, contributing to a cost to taxpayers of $6.2 billion in 2011.
In 2005, SBA Inspector General Report 5-15 stated, "One of the most important challenges facing the Small Business Administration and the entire Federal government today is that large businesses are receiving small business procurement awards and agencies are receiving credit for these awards."
In October 2009, the Government Accountability Office released Report 10-108 which stated, "By failing to hold firms accountable, SBA and contracting agencies have sent a message to the contracting community that there is no punishment or consequences for committing fraud."
Between 2009 and 2011, 7a Program guaranteed loans to Black-owned businesses declined by 47%.Black loans are 3% of 7a loans for fiscal years 2014-2019. The SBA report to Congress has minority loans at 23%, but fails to break out Black loans.
On April 17, 2020, the SBA approved $20 million in forgivable loans to Ruth's Hospitality Group, a publicly traded company, as part of the Paycheck Protection Program.While accommodation and franchise businesses were allowed by legislation to participate in the Paycheck Protection Program per its qualification requirements, the loan made to Ruth's Hospitality Group represents a departure from the SBA's mission to serve small businesses.
On May 21st, 2020 it was reported that Planned Parenthood improperly received Paycheck Protection Program fundings. In response, the SBA sent a demand letter to Planned Parenthood requesting that they return the improperly received funding.
In December, 2020, according to data released after a federal lawsuit filed by several news organizations under the Freedom of Information Act challenging the SBA’s refusal to release records on borrowers and loan amounts relating to the government's Paycheck Protection Program, it was revealed that more than half of the money from the Treasury Department’s coronavirus emergency fund for small businesses actually went to bigger businesses representing just 5 percent of the recipients.
The United States Department of Housing and Urban Development (HUD) is a Cabinet department in the executive branch of the U.S. federal government. Although its beginnings were in the House and Home Financing Agency, it was founded as a Cabinet department in 1965, as part of the "Great Society" program of President Lyndon Johnson, to develop and execute policies on housing and metropolises.
A sole proprietorship, also known as the sole trader, individual entrepreneurship or proprietorship, is a type of enterprise owned and run by one person and in which there is no legal distinction between the owner and the business entity. A sole trader does not necessarily work "alone"—it is possible for the sole trader to employ other people.
The Small Business Innovation Research program is a United States Government program, coordinated by the Small Business Administration, intended to help certain small businesses conduct research and development (R&D). Funding takes the form of contracts or grants. The recipient projects must have the potential for commercialization and must meet specific U.S. government R&D needs.
A micro-enterprise is generally defined as a small business employing nine people or fewer, and having a balance sheet or turnover less than a certain amount. The terms microenterprise and microbusiness have the same meaning, though traditionally when referring to a small business financed by microcredit the term microenterprise is often used. Similarly, when referring to a small, usually legal business that is not financed by microcredit, the term microbusiness is often used. Internationally, most microenterprises are family businesses employing one or two persons. Most microenterprise owners are primarily interested in earning a living to support themselves and their families. They only grow the business when something in their lives changes and they need to generate a larger income. According to information found on the Census.gov website, microenterprises make up 95% of the 28 million US companies tracked by the census.
Hector Vincent Barreto Jr. is an American public servant who served as the 21st Administrator of the U.S. Small Business Administration, confirmed on July 25, 2001. George W. Bush nominated him to the post. He resigned on April 25, 2006.
Steven C. Preston is currently president and CEO of Goodwill Industries International, the organization that works to help individuals achieve greater independence through employment, with programs for youth, seniors, and veterans, as well as people with disabilities, criminal backgrounds, and other specialized needs. He formerly served as the 14th Secretary of the U.S. Department of Housing and Urban Development from 2008 to 2009 and the 22nd Administrator of the U.S. Small Business Administration from 2006 until his appointment as HUD Secretary. Before entering public service, Preston spent nearly 25 years in financial and operational leadership positions in the private sector.
A supplier diversity program is a proactive business program which encourages the use of minority-owned, women owned, veteran owned, LGBT-owned, service disabled veteran owned, historically underutilized business, and Small Business Administration (SBA)-defined small business concerns as suppliers. It is not directly correlated with supply chain diversification, although utilizing more vendors may enhance supply chain diversification. Supplier diversity programs recognize that sourcing products and services from previously under-used suppliers helps to sustain and progressively transform a company's supply chain, thus quantitatively reflecting the demographics of the community in which it operates by recording transactions with diverse suppliers.
The United States Government sets aside contract benefits for companies considered to be "Service-Disabled Veteran-Owned Small Business" (SDVOSB).
Business.gov is sponsored by the U.S. Small Business Administration to provide small business owners with access to federal, state and local government resources from a single access point.
The New York State Small Business Development Center was created in 1984. The NYSSBDC is administered by theand is funded by the , the , and host campuses. The NYSSBDC is an accredited affiliate of the national network of Small Business Development Centers and a member of the .
The Accion U.S. Network is an American nonprofit microfinance organization headquartered in New York, NY. It is the largest and only nationwide nonprofit microfinance network in the U.S.
Karen Gordon Mills is an American businessperson and former government official who served as the 23rd Administrator of the U.S. Small Business Administration (SBA). She was nominated by President-elect Barack Obama on December 19, 2008, confirmed unanimously by the Senate on April 2, 2009, and sworn in on April 6, 2009. During her tenure, her office was elevated to the rank of Cabinet-level officer, expanding her power on policy decisions and granting her inclusion in the President's cabinet meetings. On February 11, 2013, she announced her resignation as Administrator and left the post on September 1, 2013.
Jovita Carranza is an American businesswoman who served as the Administrator of the Small Business Administration from 2020 to 2021. She previously served as the 44th Treasurer of the United States from 2017 to 2020 after being appointed by President Donald Trump. Before that she served as the Deputy Administrator for the United States Small Business Administration from December 2006 to January 2009. Appointed by President George W. Bush, Carranza was unanimously confirmed by the U.S. Senate. Prior to her first appointment to the SBA, Carranza served as Vice President of Air Operations for United Parcel Service (UPS) at its facility in Louisville, Kentucky.
In the United States, the MicroLoan Program is a program administered by the Small Business Administration (SBA). Since 1992, the MicroLoan Program has provided microloans to start-up, newly established, or growing small business endeavors.
The U.S. Small Business Administration's SBA 504 Loan or Certified Development Company program is designed to provide financing for the purchase of fixed assets, which usually means real estate, buildings and machinery, at below market rates. The program is so named because it was originally created by Section 504 of the Small Business Investment Act of 1958. Section 504 was subsequently codified at 15 U.S.C. § 697a.
A woman-owned business is a specific designation used by American government agencies and industry associations to set aside special programs to encourage and empower female business owners. Most definitions of this term involve a practical look at the legal and ownership structure, as well as the issue of control of the day-to-day operations of a business. The consideration of control of a business is meant to discourage the unethical practice of men placing wives, daughters, or low-level female employees in positions of ownership, when in fact she may have little to do with the day-to-day management of the company, for the sake of receiving some government benefits or other consideration.
Jeanne A. Hulit served as Acting Administrator of the Small Business Administration from September 2013 to February 2014.
A business loan is a loan specifically intended for business purposes. As with all loans, it involves the creation of a debt, which will be repaid with added interest. There are a number of different types of business loans, including bank loans, mezzanine financing, asset-based financing, invoice financing, microloans, business cash advances and cash flow loans.
The Paycheck Protection Program (PPP) is a $953-billion business loan program established by the 2020 US Federal government Coronavirus Aid, Relief, and Economic Security Act to help certain businesses, self-employed workers, sole proprietors, certain nonprofit organizations, and tribal businesses continue paying their workers.
Hannibal "Mike" Ware is the inspector general of the United States Small Business Administration. Ware was sworn into office on May 24, 2018.
This article incorporates public domain material from websites or documents ofthe Small Business Administration .
This article incorporates public domain material from websites or documents ofthe National Archives and Records Administration .