What Is the Small Business Administration?

Dominique W. Brooks
small business owner

If you are trying to start your own business, the Small Business Administration (SBA) can be a vital resource to help you get on your feet. The SBA offers services for entrepreneurs and small business with branches located in each state and several territories of the US.

Get to Know the SBA

The Small Business Administration is an independent agency of the Executive Branch of the federal government created in 1953 to help entrepreneurs start, manage and grow their businesses. This organization has four mechanisms to provide services for you and your new business - entrepreneurial training, business financing, government contracting, and advocacy.

Entrepreneurial Training

One of the Small Business Administration's goals is to help you succeed when you start a new venture. The SBA offers low-cost training for entrepreneurs and small businesses as well as free counseling at almost 2000 SBA locations. The SBA's Office of Entrepreneurial Development offers support and training through programs like Small Business Development Centers, Women's Business Centers, Entrepreneurship Education, and SCORE.

SBDC and SCORE

Two of the better known SBA programs are the Small Business Development Centers and SCORE. Small Business Development Centers (SBDC) are collaborations between the SBA, state and local organizations, and private sector funding. These centers can help you with writing business plans, managing finances, and obtaining government contracts. Find a SBDC close to you.

SCORE is a non-profit organization that offers low cost services and mentoring to small businesses. Established businessmen and women volunteer to be mentors to fledging business owners through SCORE; this is a great way to take advantage of the knowledge and experience of people who have already been in your shoes.

While the SBA has training programs for all types of entrepreneurs, there is additional interest in encouraging specific groups like women, minorities, veterans, people over 50, and teenagers to start businesses too. If you fall into one of these categories, you can get more information about programs and assistance to help you get your idea off the ground.

Business Financing

A big obstacle to getting started with any new business is finding the money to pay for supplies, salaries, advertising, and other expenses associated with a company.

Loan Programs

The SBA offers a number of loan programs to help small businesses obtain funding. Some of these loans are short-term while other loans give you longer to pay the money back. The SBA does not directly lend the money, but the Administration may guarantee part or the entire loan amount for the lending institutions. This guarantee makes banks more likely to lend the money since they know that they will get it back.

The SBA also works with companies in the private sector to increase the amount of venture capital available for new businesses. One way to do this is through the Small Business Investment Center (SBIC) program. SBICs are privately owned and managed investment funds - which are regulated by the SBA - that use their funds to make investments in qualified small businesses. PRIME (Program for Investment in Micro-Entrepreneurs) is another program that aims to assist low-income entrepreneurs who may not have the training and education to gain access to enough money to get their business started.

Surety Bonds

If you want to bid on certain types of contracts with your new business, you may need a surety bond. These bonds are guarantees that a contract will be fulfilled. Examples include:

  • Bid bonds which insure that a company bidding on a contract intends to enter into the contract if they win
  • Payment bonds which promise that suppliers and subcontractors will be paid for their work
  • Performance bonds which guarantee that the contractor will fulfill the terms of the contract

These bonds are required for federal contracts over $100,000; many states and city contracts may require these bonds as well. It may be difficult as a new company to get these bonds, which means it could be difficult for a small business to bid for these potentially large contracts. The SBA tries to even the playing field to allow small businesses to have a better shot at these lucrative contracts.

Export Financing

If you are interested in selling your goods in other countries, the SBA can help with export financing. There are several additional steps and funds that are needed to sell your products overseas; these can be expensive and hard to obtain if you are a new, cash-poor organization. Three export financing programs - Export Express, Export Working Capital Programs, and the International Trade Loan Program - can help streamline the process for financing and obtaining lines of credit to so you can expand into international business.

Government Contracting

After getting your new business financed, you will need to find clients. For some types of small businesses, getting a government contract is an important way to build a reputation and earn some money. While many large and established companies get these types of contracts, the government wants small business to have the same chances and to receive federal contracts. The SBA helps small businesses qualify for these opportunities with training and outreach through several projects.

Technology

One project, the Technology Program Office, runs programs ensuring small, innovative companies get to play a role in governmental technology and development plans. Through these programs, your small high-tech company can receive grant funds and contracts.

Goaling Program

The SBA works with the federal government to determine contracting goals and how to increase the odds of small businesses winning federal contracts. There are specific percentages of small businesses, women-owned businesses, and veteran-owned businesses that get contracts each year.

HUBZones

The Historically Underutilized Business Zones (HUBZone) program assists rural and urban small businesses in getting access to government contracts. To qualify for this program, you need to be a small business, to have employees that live in a designated area, and to have a principal office in one as well. If you qualify, you can apply for HUBZone status; you also have to regularly recertify with the SBA to maintain your status.

Advocacy

Even though your small business may be busy and have clients, there are other outside issues that may impact your organization. New rules, regulations, and taxes can make it challenging to run your business or to expand into other areas. Small businesses can use the SBA to have a voice about legislation and regulations that affect them. The Office of Advocacy serves as an independent voice for small business. The advocacy staff presents information to Congress, the White House, federal agencies, federal courts, and state agencies and courts. The SBA also works to sponsor legislation - at a state and federal level - that benefits small businesses.

Office of Disaster Assistance

Another SBA service is the Office of Disaster Assistance (ODA). Disasters - either man-made or natural - tend to impact small businesses more because of they don't have the money to rebuild or buy new supplies if needed. The ODA offers long-term, low-interest loans for repair and rebuilding after a loss. The ODA also helps small businesses learn how to be better prepared in case disaster strikes so they can recover faster.

Using the SBA

There are a number of programs offered by the Small Business Administration that may be able to help you with your new business idea; many of its legislative actions may also affect your business as well. If you want to start your dream company, the Small Business Administration is a good place to start. The SBA has been helping entrepreneurs achieve their goals for years and it may be able to help you too.

What Is the Small Business Administration?