Small Business Administration

SMALL BUSINESS ADMINISTRATION

In 2005 small businesses represented 97 percent of all U.S. exporters and 99.7 percent of all employers, created about 75 percent of new jobs, and provided arenas for technological innovation. During the early 1950s, the value of small businesses in providing stability for the U.S. economy was realized.

Prior to that time, big business and industry promises of career success too often proved to be empty, and many disillusioned U.S. workers began to embrace the concept of self-employment. As the number of business entrepreneurs increased, it quickly became apparent that such entrepreneurial endeavors needed a protective umbrella if they were to survive normal start-up difficulties common to small business, not to mention competitive pressures generated by larger organizations.

To address the problem, in 1953 the U.S. Congress approved the Small Business Administration Act, which created the Small Business Administration (SBA). As an independent federal agency, the SBA's mission is to provide postdisaster recovery assistance to communities and to maintain and enhance the national economy by aiding, counseling, assisting, and protecting small-business interests based on two principles: quality-focused management and customer-driven outreach.

Throughout its ten regions, the SBA has seventy district offices across the country and program offices in every state, as well as the District of Columbia, the Virgin Islands, Guam, and Puerto Rico. The SBA is considered the government's most cost-effective economic-development engine, with a 2005 loan portfolio of approximately $45 billion, expected to be dispersed to about 219,000 entrepreneurs to foster small-business development and growth. Further, from fiscal year 1999 to fiscal year 2000, the SBA assisted in obtaining loans of approximately $94.6 billion that went to about 435,000 small businesses, and in 2004 lent about $2.5 billion to almost 18,000 women-owned businesses.

The SBA also assists small businesses recover from catastrophic disasters, such as wildfires, hurricanes, and terrorist attacks. While the fiscal year 2005 budget requested $792 million for such disaster recovery funding, since 2001 disaster relief assistance exceeding $3.3 billion has been provided.

The SBA provides financial assistance in the form of loan guarantees, rather than direct loans, through specialized programs that help entrepreneurs attain the appropriate financial position to initiate their business and overcome the first few lean years of infancy. It also provides counseling and training assistance to female, minority, veteran, and socially and/or economically disadvantaged business owners.

The Office of Women's Business Ownership, for instance, has established a women's business owner representative network in every district office, an Online Women's Business Center accessible through the Internet, and nearly seventy women's business centers in forty states; and the Minority Prequalification Loan Program assists qualified minority-owned, for-profit companies to obtain preapproval for a 7(a) loan guaranty. The 7(a) Loan Guaranty Program assists small businesses unable to secure reasonable funding terms through normal lending channels to obtain funding (i.e., microloans) through private-sector lenders on loans guaranteed by the SBA.

The SBA does not provide grants to start or expand a business, but it does coordinate and disseminate information about resources to facilitate awareness of business initiatives, on consulting or mentoring opportunities for managerial novices, and regarding entrepreneurial success strategies. Further, it provides disaster assistance and has established a unit to coordinate and facilitate technology transfer conferences for small businesses. In an effort to centralize access to a full range of technical and financial assistance for small-business owners located in empowerment zones and enterprise communities, the SBA developed One-Stop Capital Shops. These partnerships between the SBA and a local community offer comprehensive small-business assistance from a unique, easy-to-access retail site located in a distressed area, and they generally target underserved communities or the SBA's new markets.

More information is available from the U.S. Small Business Administration Office of Marketing and Customer Service, 409 Third Street SW, Suite 600, Washington, DC 20414; 202-205-6744 or 1-800-8ASK-SBA; or, http://www.sba.gov.

see also Entrepreneurship

bibliography

Office of Management and Budget. (2005). Small Business Administration. Retrieved January 31, 2006, from http://www.whitehouse.gov/omb/budget/fy2005/sba.html

Re: Invention. (2004, October.) Re: Ladies—Go long for a loan. Retrieved January 31, 2006, from http://reinventioninc.blogspot.com/archives/2004_10_01_reinventioninc_archive.html

Service Corps of Retired Executives. (2005). Ask SCORE for business advice. Retrieved January 31, 2006, from http://www.score.org

Small Business Administration. http://www.sba.gov

Mary Jean Lush

Val Hinton