The Government’s Blessing For Small Businesses

The Government’s Blessing For Small Businesses

From Mathew Philip

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The US Small Business Administration, popularly known as the SBA, is a government initiative undertaken in order to promote and protect small businesses. The SBA helps them with the three Cs: counselling, contracting and capital. A part of the latter are the SBA unsecured loans.


A brief history of the SBA


The SBA was established by President Eisenhower on July 30th, 1953. It was created in order to protect the interests of small businesses. It has had an interesting history with the House of Representatives planning to dissolve it one year and giving it a record high budget the next. Nevertheless, it has survived to this day and is fulfilling its promise of safeguarding small businesses especially those headed by women entrepreneurs.


The structure of the SBA


The SBA is comprised of an Administrator and a Deputy Administrator as well as Associate Administrators or Directors for its various offices including Business Development, Capital Access, Credit Risk Management and others.


The lending programs of the SBA


The SBA Unsecured Loans help keep businesses afloat in very tough times including the recent pandemic. The 7 (a) Loan Programme is the most commonly offered loan, designed to help entrepreneurs start or expand their businesses. The maximum size of these loans was increased from $2 to $5 million in 2010.


These loans can be used for anything a small business may desire from operating activities to refinancing debt. Lending institutions like banks, real estate businesses and dealers of rare coins and stamps cannot avail of this loan.


The 504 Loans are extended through Certified Development Companies which are in turn regulated and certified by the SBA. 504 loans are long term, fixed-rate and can extend up to $5 million for assets that promote expansion and job creation. 504 loans can be used for the modernization of existing facilities or new ones but they cannot be used as working capital or to refinance debt.


Homeowners and renters can request the Disaster Loan programme to restore their properties to their previous conditions and so can businesses. These loans tend to be both long term and low interest. Generally, these days a loan is processed within 21 days which is a marked improvement over the previous 74 days waiting period.


Under its Microloan program, it provides a direct loan to non-profit intermediaries which provide small loans of up to $50,000 to small businesses. It also provides other assistance in the fields of marketing and management to these borrowers. The average microloan is $13,000. Interest rates vary according to lender but are generally between 8 and 13%.


The importance of the SBA for the American economy cannot be understated. The SBA unsecured loans have acted as a raft for many a sinking small business. During COVID, the SBAs programs like the Paycheck Protection Program, the Restaurant Revitalization Fund and the COVID 19 EIDL helped save many livelihoods.


We understand that being a small business owner comes with many stresses. We only implore you to take advantage of helpful programs such as this one to make your lives easier.


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