Small Business Administration

Small Business Administration

General Introduction

The U.S. Small Business Administration (SBA) has provided capital, contracts, and counseling to small business owners since 1953. The agency's website presents in-depth guidance on business planning, start-up, management and exit strategies, SBA services, useful tools, and local resources. With the links provided here, this wealth of information is just a few keystrokes away.

Starting and Managing a Business

The SBA has all the information and resources you need to launch and run a successful small business. From writing a business plan, to finding a mentor, to learning about financing and business regulations, a novice entrepreneur can get a great start by accessing tools on this site. Resources are also provided for successful management and growth.

Of particular interest is the Small Business Readiness Assessment Guide, designed to help novice entrepreneurs learn if they are ready to start a small business. Responses are scored automatically, followed by a brief analysis.

The Starting a Business section covers the following topics to help the small business hopeful get going: how to start a business, business plans, business structure, registration, location, equipment, licenses and permits. Information also addresses business law, financials, tax issues and hiring/managing employees.

The Managing a Business section offers tips and resources on how to successfully run an established business. Topics include running, leading and growing your company, industry specific business guides, laws and regulations, health care, cybersecurity, exporting, business forms, and closing a business.

Both sections feature expert blogs on all phases of startup and management.

Loans, Grants and Other Funding Programs

When you are ready to consider financing products for your small business, the SBA will guide you through the best options available for your company and location. Subjects include financing through SBA loan programs, government grants, bond options, and venture capital or other financing options.

7(a) Loan Program

The 7(a) Loan Program – SBA’s most common model – provides financial help for businesses with special requirements. The specific terms of all loans are negotiated between a borrower and an SBA-approved lender.

An applicant’s eligibility is based on the nature of the company and its principals, how it earns income, the owners’ character and company location. While SBA does not determine eligibility per se, it does require certain universal criteria. A business must:

  • Meet the SBA definition of small business
  • Demonstrate a need
  • Be for-profit
  • Engage in – or plan to conduct – business in the S. or its possessions
  • Demonstrate reasonable invested equity
  • Utilize other financial resources, including personal property, before applying for financial support assistance
  • Use loan revenues for sound business reasons
  • Be in good standing regarding all debt obligations to the S. government

There is a long list of ineligible businesses, as well. These include most financial companies, insurance firms, government-owned entities, foreign-owned businesses and many more.

Special 7(a) Loans

The 7(a) Loan Program delivers financial help to businesses with special requirements, such as those impacted by NAFTA. They likewise offer financial assistance to Employee Stock Ownership Plans, as well as loans to implement pollution controls.

Other 7 (a) Loan models include:

  • CAPLines, structured to help small companies meet their short-term and cyclical working capital requirements.
  • SBA Export Loan Programs assist small business exporters with several loan programs engineered to help develop or expand export activities. These include the Export Express Loan Program, Export Working Capital Program, and International Trade Loan Program.
  • Advantage Loans are SBA guaranteed programs. These 7(a) business loans include the Small/Rural Lender Advantage Loan, the Community Advantage Loan and the Small Loan Advantage.

    The Small/Rural Lender Advantage initiative addresses and accommodates the unique loan management needs of small community/rural-based lenders.

    Community Advantage is an SBA pilot loan program addressing the credit, management and technical assistance needs of small businesses in underserved markets.

Microloan Program

SBA's Microloan Program provides small, short-term loans to small businesses to help with working capital and the purchase of inventory, supplies, furniture, fixtures, machinery or equipment. SBA provides funds to intermediary lenders, specifically designated community-based organizations providing business training and technical assistance to applicants. Certain microloans are also available to qualified not-for-profit child-care centers. Loans can go up to $50,000, but the average microloan is about $13,000.

CDC/504 Loan Program

The CDC/504 Loan Program offers small businesses another avenue for business financing, at the same time promoting business development and job creation. The 504 Loan Program provides approved small applicants with long-term, fixed-rate financing used to acquire fixed assets for expansion or modernization.

504 loans are made available through Certified Development Companies (CDCs), SBA's community based partners for providing 504 Loans. Loan proceeds can be used for the purchase of fixed assets such as land and buildings, improvements, and for long-term machinery and equipment. Qualifying businesses must have less than $2.5 million in net income, and other restrictions also apply.

A Certified Development Company (CDC) is a nonprofit corporation set up to contribute to the economic development of its community. CDCs are located nationwide and operate primarily in their state of incorporation (Area of Operation). CDCs work with SBA and private-sector lenders to provide financing to small businesses through the CDC/504 Loan Program, which provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings.

Typically, a 504 project includes:

  • A loan secured from a private sector lender with a senior lien covering up to 50 percent of the project cost;
  • A loan secured from a CDC (backed by a 100 percent SBA-guaranteed debenture) with a junior lien covering up to 40 percent of the total cost;
  • A contribution from the borrower of at least 10 percent equity.

Disaster Loans

SBA provides low-interest disaster loans to businesses of all sizes, private non-profit organizations, homeowner, and renters. These long-term loans may be for physical or economic damage, home or personal property, or business property. In addition to Fact Sheets for each category of disaster assistance, which delineate loan limits and application procedures, the website also lists current disaster declarations by state.

All SBA loan programs require specific application procedures. These programs offer either online application functions, downloadable forms, or both. Questions typically address credit, financial needs, and corporate information. The SBA likewise provides checklists to help you gather the required documentation.

Grants

The federal government provides grants only to non-commercial organizations, such as non-profits and educational institutions in areas such as medicine, education, scientific research and technology development. The federal government also provides grants to state and local governments to assist them with economic development.

To identify what government financing programs may be available for your business, take a look at the Access Financing Wizard from BusinessUSA.

Surety Bond

SBA offers surety bond guarantees for businesses that meet certain eligibility requirements. All federal construction contracts valued at $150,000 or more require a surety bond during the bid process or as a condition of contract award. Most state and municipal governments as well as private entities have similar mandates, as do service contracts and some supply contracts. Bond applications and other filing documents are available online.

Tax-Exempt Industrial Revenue Bond (IRB)

These state and local government-issued bonds offer longer terms but may incur higher fees than traditional loans. Resembling standard loans, tax-exempt IRBs may be a good option for small manufacturing companies who are creating jobs or otherwise improving economic conditions in a local area.

Sold in the open market or purchased by investors or financial entities, interest income earned by the bond purchaser is exempt from state and local taxes. This allows the lender to pass on savings to the company via lower interest rates. Requirements and application procedures vary by municipality.

Venture Capital

For entrepreneurs who have been unsuccessful in locating financing through traditional methods, venture capital financing may be the solution. This type of equity financing is usually made in exchange for shares in the invested business and an active role in its management.

SBA offers the Small Business Investment Company program, or SBIC, a multi-billion dollar program founded in 1958. While the SBA does not directly invest into small businesses, the SBIC provides funding to qualified investment management firms with expertise in certain sectors or industries. Hence, SBICs are privately owned and managed investment funds. SBA-licensed and regulated, they use their own capital plus funds borrowed with an SBA guarantee.

Government Contracting

Contracting with the Federal government is a great way to help your small business grow – and many programs are available that give preference to small businesses. The SBA is there to help you every step of the way, from certification, to registration, to finding contracting opportunities, and finally, to contract support. This enables you to not only decipher the complex procurement process, but also to prosper from it.

Here are some of the highlights:

  • The Getting Started section provides information on criteria to qualify as a small business contractor, as well as details regarding SBA standards to register for government contracting as a small business concern.

    The site also provides information on all the steps needed to register as a federal contractor, such as obtaining a Data Universal Numbering System (DUNs) number, which is a unique identification number for your business; registering with the Central Contractor Registration (CCR), the database for vendors doing business with the federal government; and certifying to your business information and statements with the Online Certifications and Representations Application (ORCA).

  • Government Contracting Programs summarizes prime contract opportunities such the HUBZone Program, for businesses located in Historically Underutilized Business Zones; the 8(a) Business Development Program, for businesses owned by socially and economically disadvantaged individuals; the Service-Disabled Veteran- Owned Small Business Concerns; and the Women-Owned Small Business Federal Contract Program.

    Small Business Set-Asides are a powerful tool for helping small businesses compete for and land federal contracts. The Small Disadvantaged Business Program assist firms in this category to access selected federal contracting opportunities.

  • SBA’s Contracting Resources for Small Businesses operates a Government Contracting Classroom, which addresses dozens of topics such as contracting basics for women-owned businesses, non-manufacturer enterprises, and much more.

    The SBA likewise offer local, state, and regional resources to provide the help you need to continue to fulfill your obligations and to continue to land new contracting opportunities. Located at SBA local offices, Commercial Market Representatives (CMRs) are federal government contracting staff available to counsel small businesses on obtaining contracts and assist with compliance and training. The website provides direct links to each location.

    The SBA employs Procurement Center Representatives (PCRs) in six area offices to assist small businesses in government contracting by increasing the small business share, initiating set-asides for small businesses, and providing resources and counseling. Links to these offices are available on an interactive map.

  • Finding Government Customers is one job SBA can help with. In most cases, sub-contracting to a prime government contractor is the most viable way to start. SBA programs such as the 8(a) Mentor - Protégé Program and the 8(a) Business Development Program, are useful resources for small business sub-contractors.

    SBA also provides links to federal business opportunities and to state government procurement agencies, as well as information on various agency contracting guides.

SBA Learning Center

Since its inception, the SBA Learning Center has provided counseling and training programs for small businesses. In today's global economy, continued education, counseling, and training are not only important for your business' continued economic success, but also necessary to ensure ongoing employee satisfaction.

The Learning Center’s free courses number in the dozens. Ranging from basic accounting and writing business plans to minority businesses and franchising, information is easy to access, clear and individually paced. Tools include podcasts, videos, spread-sheets and calculators to assist small business owners and prospective entrepreneurs. Courses do require registration but include most of the necessary information required to successfully start and run a small business.

For example, under the Starting a Business category, courses include Young Entrepreneurs, Strategic Planning, Buying a Business, Business Development Growth for Native American Businesses, Encore Entrepreneurship for Women, and many more.

The Finance category covers Finding and Attracting Investors, Saving Plans for Small Businesses and How to Prepare a Loan Package, among others. Government Contracting lists more than two dozen courses including Taking Your High-Tech Product to Market, Certificate of Competency, and Market Research – A Guide for Contracting Officers.

Additional video resources are available, too. Like the courses, the videos cover subjects ranging from start-up to management and government contracts to marketing. SBA also hosts an Online Business Chat Room, whereby questions from the small business community are answered monthly by experts.

Local Resources

Closer to home, SBA provides counseling and mentoring to small businesses through a variety of local programs and offices – with direct links posted in the Local Resource section.

SBA District Offices are located across the country. In addition to counseling and mentoring assistance, these offices help implement SBA programs and offer free or low-cost business development support.

SBA also partners with colleges and universities at Small Business Development Centers. These centers are designed to provide management support to eligible small business owners and future entrepreneurs at no cost. Educational services range from assistance with starting a business, to managing a business, to resolving production or operational problems.

Another resource partner of the SBA is SCORE (Service Corps of Retired Executives). This nonprofit resource is comprised of volunteers who offer free and confidential business counseling services to small businesses. With over 300 offices across the country SCORE's resources also include mentoring services, templates and tools, local and online workshops, as well as networking events.

For assistance with government contracting, SBA provides local Procurement Technical Assistance Centers. These centers provide low or nominal cost technical assistance, including counseling and training to small businesses who want to start selling their products or services to the government.

For those small businesses needing help to enter global markets, the SBA provides U.S. Export Assistance Centers. Located in major metropolitan areas, these centers are staffed by experts from SBA, the U.S. Department of Commerce, and the U.S. Export-Import Bank, among others.

Resources for veterans exist through SBA's partnerships with numerous other organizations to provide Veterans Business Outreach Centers. These centers support veterans, especially service-disabled veterans, with entrepreneurial assistance including development of business plans, strategic planning, and follow-up on-site visits.

About 100 Women's Business Centers are located around the country to provide educational assistance to women entrepreneurs, especially those who are economically or socially disadvantaged. Designed to “level the playing field,” these SBA resource centers offer business management, technical training, and counseling to assist women in starting and growing small businesses.