The Small Business Administration (SBA)

Established by the federal government in 1953, the U.S. Small Business Administration, or SBA, has the task of attempting to make it easier for small and start-up businesses to gain access to funding from commercial lending sources. With the fundamental backbone of the nation’s economy being small enterprise, it has long been known that this vast and precious economic resource should be protected and cultivated. It has also been just as obvious that these entities have traditionally had the most difficulty in procuring operating capital with which to build and grow. Lenders, being generally “risk-averse”, have tended to view all small-business applicants, especially those of start-up enterprises, as somewhat less-than-desirable customers.

Enter the SBA, which doesn’t itself issues loans, to provide assistance to the small-business owner as well as security to the private lender. The agency gives help to the entrepreneur in the form of information, coaching, formulation of business plans, etc. It extends security to the lender by guaranteeing a portion of the loans that they make, thus limiting their risk of loss in the event of default by the borrower. This helps the lender to view small-business funding in a more favorable light, thereby making funds available to more entities.

The SBA operates various programs for different types of organizations. If you’re in the market for a small-business loan, study the articles of this section carefully, but don’t stop there. Gather all of the information that you can about the SBA and how their programs operate. Your prospective lender can be a good source of further information as well. The better prepared you are, the better your odds for receiving an approval on your loan application. Good luck!

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