The Small Business Administration (SBA) is best known for its loan guarantee programs. However, this is certainly not the only thing they do. In general, what the Small Business Administration does can be broken into three basic categories: the SBA loan programs, education, and disaster relief. We’ll discuss how each one works, briefly, in today’s article.
First, we should discuss the SBA loan guarantee program. Although the Small Business Administration is not a direct lender, they do offer loan guarantees. The percentage of each loan that is protected is up to the individual private capital investor. Essentially, it’s a balancing act between leveraging more loans and protecting themselves from defaulted loans. The Small Business Administration has been running these programs pretty much since their inception in 1953.
What type of education and training does the Small Business Administration provide? Mostly, they educate new business owners in how to obtain funding, how to write a proper business plan, and they offer some tips on controlling financing during the early years of your company. This free advice is pretty useful, if you decide to take them up on it.
Finally, there is the SBA disaster relief program. Unlike their other programs, much of this involves direct funding to companies in disaster-hit areas. This funding falls into two categories. The first is funding to rebuild your business, that is, buying equipment, fixing water damage, etc. The other is to help you pay for your daily operating expenses while you rebuild. This is to help you pay your lease payments, your employees, etc. to maintain constant operation.