The Small Business Administration is an agency of the federal governmentthat is tasked with ensuring the small businesses are able to have access tocredit, do business with the federal government, and maintain employment amongsmall businesses. Although major corporations dominate the headlines offinancial news – it is the small businesses within the United States that makeup for almost 80% of employment. Additionally, almost 90% of the companieswithin the United States are considered small businesses under the definitionsof the SBA.

The primary role of the Small Business Administration is to ensure thatlending banks are able to provide financing for their small business customers.As we have discussed in previous articles, the primary method of how this iscompleted is by providing guarantees to banks on behalf of small businessowners throughout the country. Again, the most popular and flexible of theselending programs is the 7a SBA Loan.

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Historically, the SBA was established in mid 1953 via the passing of theSmall Business Act. Prior to the SBA, the primary agency in charge of providingsupport to small businesses was the Reconstruction Finance Corporation. Sinceits inception, the SBA has prompted an entire sub-industry in the world offinance. There are several banks, finance companies, and other organizationsthat deal solely with SBA loans. Additionally, there are also several types offirms including business planning companies and loan brokerages thatexclusively assist small business owners with obtaining the 7a SBA loan andother loan programs offered by the administration.

Prior to the SBA, it was very difficult for small businesses (especiallystartup companies) to receive the financing that they needed. However, sinceits inception, the SBA has been instrumental with the rapid propagation ofsmall business ownership within the United States. This trend is expected tocontinue as the role of the SBA has continued to expand over the past fiftyyears. The SBA has taken an active role in ensuring that small companies areable to successfully bid on and receive federal government contracts whileconcurrently ensuring that they have the financing they need to service thesecontracts.

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