Legal Definitions - Small Business Administration

The Small Business Administration (SBA) is a federal agency in the United States dedicated to supporting and advocating for small businesses. Its primary mission is to help small businesses grow, succeed, and recover from challenges by ensuring they receive a fair share of government contracts, facilitating access to capital through loan guarantees or direct lending, and providing crucial assistance following disasters.

Here are some examples of how the SBA assists small businesses:

• Imagine a small, minority-owned construction firm in Arizona that wants to bid on a federal project to renovate a government building. The firm might struggle to compete against much larger, established contractors. The SBA can help this firm by certifying it as a small business, providing guidance on the federal contracting process, and potentially setting aside a portion of the contract specifically for small or disadvantaged businesses, giving them a better chance to secure the work.

  This illustrates how the SBA helps small businesses gain access to government contracts, ensuring they get a fair opportunity to compete for federal work.

• Consider a new bakery owner in Oregon who needs a loan to purchase specialized ovens and expand her storefront, but traditional banks are hesitant to lend to her due to her limited operating history and lack of collateral. The SBA can step in by guaranteeing a significant portion of a loan made by a private bank. This guarantee reduces the risk for the bank, making them more willing to provide the necessary funding to the bakery owner, allowing her business to grow.

  This example demonstrates the SBA's role in helping small businesses access necessary funding when conventional financing might be difficult to obtain, often by guaranteeing loans from private lenders.

• After a severe wildfire sweeps through a California town, a local hardware store suffers extensive damage to its building and inventory, forcing it to close temporarily. The owner is overwhelmed by the cost of repairs and lost income. The SBA can provide low-interest disaster loans directly to the hardware store owner to help repair the damage, replace lost inventory, and cover operating expenses until the business can reopen and recover financially.

  This shows the SBA's function in providing critical financial aid to small businesses impacted by natural disasters, helping them rebuild and recover their operations.