The U.S. has more than 33.2 million small businesses, accounting for 99.9% of all businesses in the country. A huge driver of this business-friendly environment is the U.S. Small Business Administration, or SBA for short. The SBA encompasses various programs, from free education to affordable financing and disaster relief.
Key Points
• The Small Business Administration (SBA) provides loans, grants, and counseling to small businesses.
• SBA 7(a) loans offer flexible terms for various business needs, including working capital and equipment.
• SBA 504 loans fund long-term, fixed assets like real estate and machinery.
• SBA disaster loans assist businesses recovering from declared disasters.
• SBA resources include training, mentorship, and access to government contracts.
What Is the Small Business Administration?
The Small Business Administration (SBA) is a federal agency designed to support and promote small businesses in the U.S., largely by making guaranteed SBA loans. There are local district offices across the country that offer development and training for growing businesses.
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History and Mission
The SBA’s definition was formed in 1953 and is strongly rooted in the mission the agency created then. It began making guaranteed business loans from its early days, along with focusing on natural disaster victims and connecting businesses with federal contracts.
Over the years, the SBA has expanded to provide additional resources for women, minorities, and veterans. It also recognizes the growing global economy and has grown to include support for businesses dealing in international trade.
SBA’s Role in the Small Business Ecosystem
How does the SBA fuel small business growth in the U.S.? The agency focuses on four core service areas.
• Free business counseling: The SBA has its own offices in each state, as well as partner organizations like Small Business Development Centers, SCORE mentors, and Veterans Business Outreach Centers.
• SBA-guaranteed business loans: In 2024, SBA-backed capital totaled $56 billion, a 22% increase from the previous year.
• Home and business disaster loans: The SBA helped 17,900 homeowners and renters in recovering from natural disasters in 2024, along with 9,500 disaster loans to small business owners.
• Federal government contracting: The SBA issued $9.2 billion in surety bond guarantees on small business bids and final contracts.
Major SBA Programs and Services
Here’s a more in-depth look at what defines the Small Business Administration, especially regarding guaranteed loans and federal contracts support.
SBA Loan Programs
The SBA has three types of business loans provided by third-party lenders and partially guaranteed by the agency.
• 7(a) loans: The largest SBA loan program, it provides up to $5 million of funding. Loan uses include acquiring or approving real estate, working capital, business debt refinancing, machinery and equipment, furniture, or change in ownership.
• 504 loans: Made through Certified Development Companies (CDCs), 504 loans can be used to purchase, build, or improve facilities, long-term machinery and equipment, or consolidate debt. The maximum loan amount is $5.5 million.
• Microloans: These startup loans go up to $50,000 for new businesses that may not meet eligibility requirements for the other loan programs.
SBA-approved lenders may also offer SBA Express loans, which reduce the decision-making process to 36 hours. The maximum loan amount for this program is limited to $500,000.
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Federal Contracting Assistance
The SBA oversees multiple programs that help small businesses win more than 26% of federal contracting budgets each year. Programs include:
• Small Disadvantaged Business
• Women-Owned Small Business Federal Contract program
• Veteran contracting assistance programs
• 8(a) Business Development program
• SBA Mentor-Protégé program
• Joint Ventures
• HUBZone program
• Natural Resource Sales Assistance program
The SBA also offers counseling through procurement center representatives and commercial market representatives, with regional offices across the country.
Entrepreneurial Development Resources
The Office of Entrepreneurial Development oversees the SBA’s counseling network and resources. This includes Small Business Development Centers (SBDCs), which have 900 service centers that help small business owners.
There are also over 100 Women’s Business Centers that provide resources specifically for female founders and owners on topics like federal contracts and access to credit.
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How the SBA Benefits Small Businesses
The SBA helped over 103,000 small businesses in 2024 alone.
Access to Capital and Resources
In addition to guaranteeing small business loans, the SBA guarantees surety bonds on contracts up to $10 million. It will reimburse up to 90% of losses if a contractor defaults on the contract deliverables, making it easier for small businesses to qualify for these larger projects.
It also oversees credit risk management, which helps lending partners assess their portfolio performance and risk level. These insights help make the most of the SBA’s lending programs for borrowers and lenders.
Disaster Recovery Support
The SBA provides low-interest loans to individuals and businesses affected by declared disasters. Recent eligible events include Kentucky floods, California wildfires, Hurricane Milton, and Hurricane Helene.
The four types of disaster loans include:
• Physical damage loans to help repair or replace assets.
• Mitigate assistance to help prevent future damage in similar events.
• Economic Injury Disaster Loans to provide businesses with operating expenses.
• Military reservist loan for businesses with employees on active duty leave.
How to Access SBA Resources
The SBA has a large online library of resources for every stage of business, including planning, launching, managing, and growing a new venture. There are also online training sessions with free courses, discussion guides, and more.
Working with Local SBA Offices
Search for local SBA offices to get localized expertise on your business questions. Plus, district offices host online and in-person events on popular topics so you can grow your business acumen at no cost.
The Takeaway
Whether you’re looking for business support resources, financing, or disaster relief, the SBA is a wide-reaching federal agency that makes a big impact. Looking for faster funding opportunities? Explore multiple small business loan options from SoFi.
If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.
FAQ
What types of businesses qualify for SBA assistance?
There are a few SBA loan eligibility requirements including being an operating business, operating for profit, being located in the U.S., and remaining under the size requirements.
How do I apply for an SBA loan?
You must apply directly with third-party lenders that offer SBA loans. For 504 loans, you must apply with a community development corporation.
What’s the difference between SBA loans and traditional bank loans?
SBA loans tend to have more flexible eligibility criteria than bank loans because the federal government guarantees them.
Does the SBA provide grants to small businesses?
No, the SBA only provides grants to nonprofits, resource partners, and educational organizations.
How can the SBA help during economic crises or natural disasters?
The SBA offers low-interest loans after declared disasters. These are available for business owners, homeowners, and renters.
Photo credit: iStock/jacoblund
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