What Is The SBA And How Can It Help Small Businesses Flourish?
We get lots of comments wondering just what the Small Business Administration is and if it’s really good for the small business owner. In short, yes! The SBA helps entrepreneurs establish, operate and fund a small business. Given that small businesses create two of three net new jobs, the SBA is a vital driver of economic growth. Here’s what you need to know so you can take advantage of all that the agency offers.
What is the SBA?
The Small Business Administration (SBA) is a government agency founded in 1953. The SBA was created to support entrepreneurs and small business owners in the United States. The main purpose of the SBA is to encourage lending to small businesses through government loan guarantees. The SBA itself does not make loans, but guarantees those loans made to small businesses by preferred SBA lenders. A loan guarantee means that the SBA promises the bank to pay back a certain percentage of your SBA loan if you are unable to.
Advantage Loan Program
The SBA is probably best known for the SBA Advantage Loan Program, previously known as the7 (a) loan program. These loans are generally known as the “gold standard” and are the best bet for small business owners who want to save and grow. Why? Four words: Low rates, long terms. This means payments will be smaller and won’t impact cash flow as much as large monthly payments can. SBA loan proceeds can be used for a variety of purposes like working capital, equipment purchases, hiring employees and more. The SBA also offers low-cost Commercial Real Estate loans that help business owners save on rent, build equity and avoid balloon payments. Refinancing existing high-interest debt is another popular use of proceeds that can help small business owners lower monthly payments and shore up cash flow. SBA loans have a reputation of being difficult to obtain. However, that’s not true anymore. SmartBiz offers a fast and easy way to get an SBA loan through an online, streamlined application process. SmartBiz cuts the funding time significantly, from months to as little as a week after the application is complete. Additionally, every borrower is assigned a dedicated Relationship Manager who provides “white glove concierge service” to assist with the process.
Government Contracting
According to the SBA, the U.S. government is the largest single purchaser of goods and services in the world, awarding approximately $500 billion in contracts every year. The goal of the SBA Office of Government Contracting & Business Development is to level the playing field for small businesses competing for government contracts. This office works with federal agencies to award at least 23 percent of all prime government contract dollars to small businesses.
Disaster Loans
Another SBA activity is offering direct loans for disaster recovery. The SBA provides low-interest, long-term loans for damages caused by a declared disaster. Depending on the circumstances, disaster loans can cover home and personal property as well as business and economic losses.
Free Business Counseling
The SCORE Association , known as “Counselors to America's Small Business”, is a nonprofit that has 13,000+ volunteer business counselors. The counselors are all established, successful business owners that mentor aspiring entrepreneurs and those running small businesses in the US. From business plans to funding strategies, SCORE can help every entrepreneur.
Online Resources
The SBA website is a veritable treasure trove of information for the new and established small business owner. From blogs to webinars, their comprehensive site covers almost anything a small business owner needs to know. This agency has left no stone unturned while compiling resources. If you’re a small business owner who hasn’t taken advantage of the SBA website, take some time to review. There’s something for almost everyone.
Minority Support
In addition, to great resources, the SBA features information on its site that targets specific minority groups. Information is available for women, veterans, Native Americans and 50+ Entrepreneurs.
Legal Guidance
The SBA has a law library on their site that gives access to reports, statistics, records, studies and up-to-date information on the latest laws and regulations.
In Conclusion
The SBA offers fantastic resources for the entrepreneur who wants to venture into small business ownership. Their guides, checklists and webinars are well researched, well written and specifically targeted. An SBA loan is the best way for business owners to save money and expand. Let the Small Business Administration give you inspiration, ideas, resources and funding to help you reach your long and short-term goals.
For additional information on SBA loans and how you can maximize your chances of qualifying for one, check out our FREE SBA Loan Guide.