What is the SBA?
The SBA is a U.S. government agency that offers online tools, training programs, one-on-one counseling services and funding to help small business owners start and grow businesses.
Services and programs provided by the SBA
The SBA provides a variety of services to small business owners, including:
Loans, grants and funding programs
The Small Business Administration offers a variety of financial resources, including small loans for business owners who would not otherwise qualify for a loan. In the microloan program, the SBA loans money to nonprofit lenders, who, in turn, provide loans of up to $50,000 to the small business owners. This program includes other services as well, such as technical help, marketing and management guidance for borrowers.
In another loan program, the loan guarantee program, the SBA works with a network of financial institutions, usually banks, to offer loans for small business owners. Using this program, the business owner typically gets access to better loan terms than they would get if they went directly through their bank, as the SBA offers a partial guarantee. The lender knows that even if the small business owner cannot pay back the loan, they will get back the income that the SBA guaranteed. While the SBA does not guarantee an entire loan, it can cover up to 85% of the total amount. In 2010, the Small Business Jobs Act increased the maximum size of these loans to $5 million.
If a business is impacted by a declared disaster, the business owner may be eligible for a long-term, low-interest loan to help repair or replace real estate, machinery, equipment, inventory and business assets. To be eligible, the small business must have 500 or fewer employees or be a sole proprietorship or nonprofit organization. These loans may be approved within 21 days of the disaster, although the time can vary if there is a large number of small business owners seeking relief.
Training and information
The SBA offers a variety of entrepreneurial development programs and has 900 small business development centers across the U.S. where entrepreneurs can receive support. Women who are starting or own a small business are eligible for specialized resources at one of the Women’s Business Centers, which are partially funded through SBA grants.
Small business owners have access to experienced mentors through SCORE, a network of volunteer professionals who offer guidance to new business owners through free mentoring or low-cost workshops. The SBA also has resources available specifically for veterans through the Veteran Business Outreach Center. This program provides business training and counseling to transitioning service members, members of the National Guard and military spouses who want to start and grow a business.
Tools and assistance
The SBA has a suite of tools and services to help small business owners throughout all stages of business ownership, including one-on-one counseling, business planning assistance and U.S. government contracting options. Small business owners can use the tools on the SBA website to create a business plan, get online training or find local seminars and workshops.
The SBA also offers online tools to help small business owners determine whether they qualify for government contracting opportunities. The SBA reserves 23% of government contracting funds to support and protect small businesses.
How the SBA can help small businesses plan, launch, manage and grow
The Small Business Administration has online resources and free, in-person mentoring, business counseling and training opportunities to help small business owners plan, launch, manage and grow their businesses. They help business owners:
1. Create a business plan
A business plan is an important part of the process of starting a business, as it requires you to plan revenue sources, start-up costs, marketing strategies and potential problems. It requires you to evaluate future growth opportunities and identify the financing needed to launch your business. The SBA’s business plan tool takes you through the process of creating one for yourself.
2. Perform market research and competitive analysis
The SBA offers resources to help you succeed in business, including how to conduct in-depth market research and competitive analysis. Using the SBA’s resources, you can fully develop your idea prior to launch.
Related: How to Grow Your Business
3. Locate funding
The SBA makes it easy to identify the local, state and federal financing resources available for your business. There are specific opportunities available for women, minorities and veterans that are easily accessible using the SBA’s tools.
4. Understand tax obligations
The SBA helps you better understand how state and local tax laws differ and provides resources for learning about tax credits and other resources you’re eligible for.
Frequently asked questions about the SBA
Here are three of the most frequently asked questions that small business owners have about the SBA:
What is the purpose of the SBA?
The SBA, or Small Business Administration, is an agency within the U.S. government that helps small businesses launch and grow.
Who qualifies for SBA loans?
To qualify for an SBA loan, your business must be located and operated in the U.S. and run by a U.S. citizen or someone with permanent U.S. residency. The business must be for-profit, in an eligible industry and the business owner must have equity invested in the business and be financially stable. Finally, you must own a small business. Size requirements depend on the industry and are mostly based on the average number of employees or average annual receipts.
How do I apply for an SBA loan?
To apply for an SBA loan, you need to complete a loan application, personal financial statement and statement of personal history. You will also need to prepare a number of financial statements for your business, including a profit and loss statement, projected financial statements, income tax returns and resumes for each principal.