Small Business Administration History

The history of The Small Business Administration (SBA) dates back to 1953. It was created as a replacement for Reconstruction Finance Corporation (RFC), an independent US government agency whose primary objective had been dealing with the depression. The RFC had come under intense criticism from people in the banking sector because it would take the best loan assets of the bank as collateral.

While the RFC helped provide liquidity, most people in the banking sector felt the price banks were being made to pay was way too steep. Instead of simply disbanding the RFC, the then President Eisenhower decided to create a smaller body to help small businesses with their financial needs.

The SBA was created as an independent US government agency tasked with providing support to small business owners and entrepreneurs. The government of the day hoped the SBA would help maintain the US economy by helping entrepreneurs set up small businesses.

• The US economy and the Great Depression - Economic impact of the Great Depression and the search for relief that birthed the Reconstruction Finance Corporation.
• The RFC before the creation of the SBA - The history of the RFC from its formation in 1932 until its replacement by the SBA in 1953.
• The RFC shortcomings - The consistent failings of the RFC that led to its disbandment. It was dissolved amidst allegations of corruption and fraud.
• The Small Business Act - Originally enacted in 1953, this is the Small Business Act code as it presently reads.
• An infographic of the origin of the SBA - The roots of the SBA from the Hover administration to the present day.

Why the SBA was started

After the RFC was dissolved, President Eisenhower saw the need to help small businesses survive the tough economic climate that the Great Depression had created across the nation. Through an act of Congress, the SBA came into existence. On July 30 in 1953, President Eisenhower signed into law the Small Business Act.

The Small Business Administration was expected to encourage banks and other private lenders to agree to lend money to small business owners and aspiring entrepreneurs. It would achieve this by offering government loan guarantees. From inception, the SBA was also mandated to offer direct loans to people who had been hit by a disaster, thereby helping them through their journey to recovery. In addition, the SBA was also intended to help small businesses get government contracts that were, until then, largely a reserve of big businesses.

• The economics of funding a small business (PDF) - an article that examines the economics of financially supporting small businesses and the sources of funding for small businesses.
• Understanding the way the SBA operates - get a clear understanding of how you can benefit from the SBA as a small business owner or entrepreneur.
• The SBA disaster assistance - Learn how the SBA helps disaster victims through their path to recovery.
• The SBA government contracting changes - learn how the 2015 changes to small business government contracting is affecting business owners and entrepreneurs.
• Getting government contracts - What small business owners need to know to get government contracts.

Positive Outcomes of the SBA

At the present, the SBA's primary function is to guarantee loans for small business owners from banks and other private lenders. Through these guarantees, small businesses can get access to credit to buy business property, build facilities and even run operations. Without this help from the SBA, many small businesses would be forced to operate under extremely unfavorable terms to get credit from private lenders. Other small business owners and entrepreneurs would never get financing from these lenders without the helping hand of the SBA.

There have been several attempts to dissolve the SBA in the past. Back in 1996, a plan by the Republicans in the House of Representatives to do away with the agency almost succeeded. During the Bush Administration, government officials tried to end the program. However, the plan was opposed by Congress. Though it survived, its budget was significantly and severely cut. The Obama Administration has, however, supported the SBA. Some of the concerns presented by the proponents of the campaign to eliminate the SBA include allegations that some of its loan money has funded businesses of the rich as well as an apparent failure by the agency to clearly explain the positive impacts the program has had on the economy.

• Small businesses' big impact on US economy - how small businesses remain the engine of the growth of the U.S. economy, contributing 75% of all new jobs.
• The SBA loan guarantee - What loan guarantees by the SBA mean for small businesses and what opportunities this guarantees present.
• Rethinking the SBA - Questions that have been raised concerning SBA funding to small businesses and why some believe the SBA should be reviewed with fresh eyes for possible restructuring or to be closed down.
• The case against the SBA - facts and figures of running the SBA and why some people believe it would be prudent to get rid of the agency.
• A study on the impact of SBA Lending on economic performance (PDF) - This study found that SBA loans recorded positive outcomes on the growth of small business ventures.

The SBA considered successful overall

The Small Business Administration continues to help small businesses and small business owners. It also does special outreach to minority groups, women and even veterans from the US armed forces. As a small business owner or an aspiring entrepreneur, the SBA can give you specialized advice or assistance in getting into trade beyond the US borders. The SBA has succeeded in helping many small business owners get access to finances to boost their businesses. While there have been concerns and even push for it to be closed down, there is no denying that many small businesses are still standing because the SBA helped their owners get the financial help that they needed to take the business into profitability.

• The government's effort to help small businesses via the SBA - Learn the various steps the US federal government has taken to ensure small business owners and entrepreneurs benefit from the help available to them through the SBA.
• Programs at the SBA - learn about the different programs that the SBA runs, including lending programs, investment, surety bonds, federal procurement, international trade, disaster recovery assistance, among others.
• What to do to access SBA support for a loan - Learn the steps to take in the process of getting a loan from the SBA. Find out what you need to have and what information your lender might need you to provide before giving you the loan.
• The SBA Organizational Structure - An overview of the Small Business Administration and its organizational structure, including its different offices and office locations.
• The SBA Website - Get in touch with the Small Business Administration via the agency's website. Also, get resources, and latest updates on loans and all other programs of the agency.