The U.S. Small Business Administration, or SBA, is an independent federal agency dedicated to serving the needs of small business owners and entrepreneurs. The SBA was created in 1953 to “aid, counsel, assist and protect the interests of small business concerns, preserve free competitive enterprise and maintain and strengthen the overall economy of our nation.” It’s the only cabinet-level agency of its kind.
Today, the SBA has evolved to provide:
– Access to financing via SBA loans and more
– Free counseling and affordable training for entrepreneurs
– Government contract opportunities
– Legislative advocacy and impact analysis on behalf of small businesses
The SBA is well-known for helping small businesses access financing. The agency offers five main SBA loan programs, as well as other forms of financing.
1. General Small Business Loans - 7(a): This is the SBA’s flagship loan program.
2. Microloan Program: The SBA also offers small, short-term loans directly to small businesses and certain types of not-for-profit childcare centers.
3. Real Estate & Equipment Loans - CDC/504: The 504 loan program offers capital for major fixed assets, such as equipment or real estate.
4. Disaster Loans: During national emergencies and disasters, the SBA also offers low-interest disaster loans to a wide range of entities: businesses, private non-profits, homeowners, and renters.
5. Paycheck Protection Program (PPP): PPP loans emerged in response to the COVID-19 pandemic. The program was designed to help businesses keep their workforces employed.
During the five-year period between 2015 to 2019, the SBA approved an average of approximately 66,500 loans per year. The number of SBA loans skyrocketed in 2020 to more than 5.5 million as a result of the PPP loan program. In 2021, the SBA approved more than 7 million loans, more than 6.9 million of them PPP loans.
Among the SBA loan programs, the Paycheck Protection Program was unique. While the SBA guaranteed PPP loans, partner financial institutions actually extended the credit.
SBA loan data provides financial institutions essential insight into a small business’s financial health. The presence of an SBA loan can signal that the business is creditworthy, because it has already met SBA standards. In addition, the business may be lower risk because of demonstrated willingness or ability to pay back a loan. Knowing if and when a business received an SBA loan may also indicate a business’s resiliency.
Since its founding, the SBA has been a critical resource and voice for small businesses and those who would serve them.