SBA Information
SBA
Small Business Administration
SBA or The U.S. Small Business Administration, is a federal agency started in 1953 for the purpose of helping U.S. small businesses become successful. The logic behind creating the SBA is that most employees in the U.S. actually work for small businesses. So by default, helping small business in turn helps the U.S. economy. A whopping 53% of Americans are employed by a small business. Interestingly, 99% of all businesses registered in the United States are considered small businesses, defined by the SBA as companies with 500 or fewer employees.
SBA PROGRAMS
So how does the SBA help small businesses? The Small Business Administration was formed by congress under the Small Business Act to "aid, counsel, assist and protect" the interests of small businesses. The SBA currently does this by providing some really helpful resources and programs in several key areas:
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Disaster Loans
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Federal Government Contracting
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Guaranteed Business Loans
Disaster Loans
Covid-19 EIDL loans are SBA disaster loans
The SBA provides low interest loans to both businesses and homeowners (renters too) in certain situations of declared disasters. These loans can be very helpful if a disaster causes you to suffer losses in real estate, personal property, equipment, machinery, inventory or economic injury. The caveat is that your insurance (or FEMA) was unable to cover a portion of your losses. The SBA publishes and updates a master list of qualified disasters on their website. You can find the list here.
Federal Government Contracts
Minority-owned business, 8(a) receive set asides
Most everyone has heard of federal government programs that provide certain preferential treatment for businesses owned 51% by minorities. Certain eligible businesses may compete for these lucrative contracts through several programs. SBA programs for disadvantaged or minority businesses include 8(A) (the 8a Business Development Program), WOSB (the Women-Owned Small Business Development Program) and HUBZone (the Historically Underutilized Business Zone Program).
Guaranteed Business Loans
Business Loan Guarantee $500 to $5,000,000
The coveted SBA programs that we often think about are the SBA Guaranteed Business Loan Programs. As the name suggests, the SBA does not directly make the loans, it simply guarantees the loans. The program allows a small business to borrow $500 to $5,000,000 from approved SBA lenders. These loan are partially guaranteed by the SBA, up to 85%. An SBA loan guarantee significantly reduces a lender's risk so that marginal loans, that may otherwise be denied, get approved.
DISASTER LOANS
The Coronavirus or Covid-19 stimulus package is partly covered under SBA's disaster loan category. Since the Covid-19 disaster loan is a relatively new loan program, its dynamics are still being discovered.
FEDERAL GOVERNMENT CONTRACTS
Most everyone has heard of federal government programs that provide certain preferential treatment for businesses owned 51% by minorities. And yes, being a women qualifies. The federal government is the largest purchasing entity on the planet, and through the SBA, these contracts are available for bidding.
GUARANTEED BUSINESS LOANS
Under this program, qualified businesses may apply through an approved SBA lender for business loans ranging from $500 to $5,000,000. The three most notable programs include:
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SBA Microloan
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SBA 7(a) Loan
SBA COUNSELING PROGRAMS
the SBA provides free business counseling through partnerships with organizations like SCORE (Service Corps of Retired Executives) and ASBDC (America's Small Business Development Center), a network of over 1,000 centers found in every major city in the U.S.