What's in the Small Business Act?

The purpose of the Small Business Act is to aid the development of small business in America. This is largely done with the establishment of the Small Business Administration, whose responsibilities and aims are outlined in the Small Business Act. Though the act is quite lengthy, its main goals and purpose can be broken down as follows:

Establish the Importance of Small Business

The first paragraph of the Small Business Act discusses why small business is important to the American economy. The main purpose of this paragraph is to justify the remainder of the Small Business Act by showing it is small businesses who largely carry the responsibility of development of the nation's economy. It is common for laws and acts in the United States to start with a discussion of why the law has been established, and this is the point of the first paragraph of this particular act.

Establish the Small Business Administration

The next several paragraphs in the Small Business Act go on to establish the Small Business Administration (SBA). The act defines the role of the SBA and how it will interact with the Department of Commerce. It establishes the major loan programs of the SBA in section 7. 

Aim to Spread Capital Among Larger Groups

After establishing the SBA, the Small Business Act goes on to discuss the importance of encouraging the spread of capital to groups with limited opportunity. For example, the act puts forth that women and minorities hold a relatively small amount of the existing small business capital in the country today. As a result, the SBA will aim to spread loan programs and capital to these groups. However, the SBA does not have specific minority loan programs. Instead, according to the Small Business Act, it is the role of the SBA to seek out and encourage these groups to take part in and apply for the programs available from the SBA.

Assist in Times of Catastrophe

After establishing the importance of spreading capital, the Small Business Act continues by discussing the SBA's role in times of catastrophe. Here, the act sets up the programs for flood and natural disaster assistance. The role of the SBA is to help businesses with continuing value recover from these times of great need with loan programs and grants. 

Eligibility for Government Contracts

This portion of the act discusses the role of the federal government in fostering small business development. Generally, these paragraphs ask the government to give due consideration to small businesses when seeking the fulfillment of government contracts. The SBA may further help a small business gain contracts by lending specifically for this purpose.

Definition of Small Business

Finally, the act continues by outlining the qualifications for assistance through the SBA. These final paragraphs put into place limits on revenue and size to determine which businesses are actually "small" by definition. These same standards are used today in determining whether a business is eligible for each loan program the SBA offers.

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