The Small Business Administration

n Established in 1953 n Government funded organization that helps small businesses to get started and to keep them well maintained n Mission Statement: –“Maintain and strengthen the nation’s economy by aiding, counseling, assisting, and protecting the interests of small businesses and by helping families and businesses recover from natural disasters.”

n 5 Main Areas of Assistance –Assistance with Starting Up a Small Business –Technical Assistance –Financial Assistance –Special Interests –Advocacy, Laws, and Regulations

Assistance with Starting Up a Small Business n SBA helps business owners plan for their small business n Asks questions that the owners need to answer –What is the product/service that the business offers? –Does the business have a niche? –What is your competition? –What are your business goals? –What are your personal goals? –Are you willing to put all of your time into the business? –Is entrepreneurship right for you? –How well are you at making decisions? –How are you with dealing with other personalities?

n Helps in the creation of a well-organized, informative business plan –SBA offers an outline for owners to go by when writing the plan n Introduction n Marketing of the business n Financial management of the business n Operations of the business n Conclusion –After the plan is written, the owner can use services offered by the SBA (SCORE or SBDC’s) to have an experienced business counselor read the plan and to help improve it

n SBA offers assistance on how to write a good loan proposal –Tells business owners what should be included in a proposal to successfully receive loans n General information about the type of loan needed n How much the loan needs to be n What the loan will be used specifically for n A business description n Management profile n Marketing information n Financial information that includes financial statements of the business, personal financial statements, and collateral the owner is willing to put up in order to secure the loan

Technical Assistance n Includes services that aid in training and counseling for small businesses n Service Corps of Retired Executives (SCORE) –Resource partner of the SBA that offers free counseling and training to small businesses –Over 10,500 SCORE volunteers all over the U.S. –Representatives of SCORE help in different ways n Answer questions that business owners have n Teach entrepreneurs how to write business plans and apply for loans n Help business owners improve their management skills –SCORE service also offers low cost workshops to small business owners

n Write business plans n Learn about importing/exporting n Small Business Development Centers (SBDC) –SBA’s largest resource partner –Over 1,100 lead and service centers all around the U.S. –Offers assistance with financial, marketing, production, organization, engineering, and technical problems –The centers provide special programs to women, minorities, and veterans

Financial Assistance n SBA offers assistance for small businesses financially to be established and to expand n Business Loan Programs and the Disaster Loan Program provide most of this financial assistance n Business Loan Programs –SBA does not dispense loans, it only guarantees loans by backing them by a certain amount if the business fails to pay the loan back –Loan Prequalification Program n SBA helps improve and strengthen business’s loan applications of $250,000 or less so they can be approved by the SBA prior to being sent to the actual lenders –Basic 7(a) Loan Guarantee Program n For starting up businesses and preexisting businesses n Primary business loan program offered by the SBA

n Purpose of the loan program is to help small businesses acquire the needed financing for their business that they could not get from normal lenders n Money obtained from this loan is used for working capital, machinery and equipment, furniture and fixtures, land and building, leasehold improvements, and debt financing –Certified Development Company (CDC) 504 Loan Program n Loan used for real estate, machinery, and equipment in order for a business to expand or modernize n This type of program involves trying to secure a loan from a private-sector lender with a senior lien that covers 50% of the project cost, a Certified Development Company with a junior lien that covers 40% of the loan, and a 10% equity contribution from the borrowing business owner n CDC Program is funded by a 100% guarantee debenture from the SBA up to $1 million (and sometimes $1.3 million) –Micro-Loan Program n Offered to small businesses and not-for-profit childcare centers to provide short-term loans of up to $35,000

n Money from the loan used for working capital and for purchasing inventory, supplies, furniture, fixtures, machinery, and/or equipment n Average loan goes for $10,500 n Not used for paying off debts or buying real estate

Disaster Assistance n Purpose of disaster loans is to bring the business back to the same state it was in before damage was done by the natural disaster n SBA offers loans of up to $1.3 million for physical damage done to the business

Special Interests n Office of Women’s Business Ownership (OWBO) –Aids in the growth of women owned businesses –OWBO offers programs that assist women with business training, technical assistance, and also provide credit and capital, federal contracts, and international trade opportunities to women’s small businesses n Minorities –SBA offers different programs to give minority individuals the opportunity to start their own businesses –8(a) Business Development Program n Small businesses that qualify for this program must have an owner who is socially or economically disadvantaged n This program teaches these businesses how to compete for Federal contracting and how to get subcontracting jobs through larger businesses

–Small Disadvantaged Business (SDB) Program n SBA helps small, socially and economically disadvantaged people’s businesses make special bidding benefits available to them n Similar to 8(a) Program but it is aimed more towards Federal Procurement to fight discrimination n SDB Program allows these businesses to take advantage of price adjustments of up to 10% when making bids on Federal contracts –HUBZone (Historically Underutilized Business Zone) Program n Also helps disadvantaged businesses compete for contracts n Purpose is to create jobs and build economic development in urban and rural communities in order to improve these areas –Native American Affairs Program n Aimed towards American Indians, Native Alaskans, and Native Hawaiians n Program ensures that these groups who want to create, develop, and expand a small business have access to programs for entrepreneurial development, lending, and procurement

Advocacy, Laws, and Regulations n Purpose is for SBA to assist small businesses in dealing with government regulations concerning small businesses n Office of Advocacy –Acts as a mediator between small businesses and the government in order to help small businesses –Takes concerns, views, and interests of small businesses to leaders in government (Congress) to make them aware of issues in small businesses –Doing this helps the government make regulations and standards of small businesses more to their needs –Office of Advocacy is a source to small businesses for statistics that they may want to know and be aware of

n The Ombudsman Program –Helps small businesses find out what regulations they need to abide by and to help with excessive, unfair regulatory enforcement by federal agencies n Such actions would be repeated audits and investigations, excessive fines, penalties, and retaliation –Ombudsman Program helps these small businesses and federal agencies come to terms where the federal agency becomes aware of their actions and can review the fairness of them