Small Business Administration

Small Business Administration

General Introduction

Since 1953, the U.S. SmallBusiness Administration (SBA) has provided capital, contracts, and counseling to small business owners. The agency's Web site presents in-depth guidance on business planning, start-up, management and exit; SBA services; useful tools; and local resources. With the summaries and links provided here, this wealth of information is just a few keystrokes away.

Starting and Managing a Business

This section provides an introduction to all of the information and resources needed to begin and run a successful small business. From writing a business plan, to finding a mentor, to learning about financing and business laws and regulations, the novice entrepreneur can get a great start by following these links. Once the business has been launched, resources are also provided for successful management and growth.

Of particular interest is the Starting-up Assessment Tool, which is designed to help the novice entrepreneur understand if he or she is ready to start a small business. Responses are scored automatically, and an assessment profile is created, along with suggested next steps.

The Starting a Business section includes the following sub-topics to help the small business hopeful connect to all there is to know about the initial stages of starting a business: Thinking About Starting; Find a Mentor or Counselor; Writing a Business Plan; Establishing a Business; Preparing Your Finances; Loans, Grants & Funding; Business Law & Regulations; Marketing a New Business; Local Resources; and Licenses & Permits.

Once the new small business has been formed, the Managing a Business section offers tips and resources on how to successfully run the business, including the following sub-topics: Leading Your Company; Growing Your Business; Exporting and Importing; Running a Business; Business Law & Regulations; Business Guides by Industry; Local Resources; and Forms. If the new business does not work out, or it is time to retire, a chapter on “Getting Out” will help you find the appropriate exit strategy.

Loans, Grants and Other Funding Programs

When you are ready to consider financing options for your small business, the Small Business Administration will guide you through the best options available for your type of business and your location such as financing through its specialized loan programs; how to obtain government grants; bond options; and venture capital or other financing options.

7(a) Loan Program

SBA-backed small business loans are loans that are not issued by the SBA, but rather are guaranteed by them. This debt-financing is provided by commercial lenders and guaranteed by the SBA, so as to reduce the risk to the lender and provide loans for small businesses who would not necessarily qualify for other financing. The 7(a) Loan Program includes financial help for businesses with special requirements, such as those operating in rural or underserved areas, or exporting to foreign countries.

As part of its 7(a) Loan Program, SBA participates in specific loan programs for eligible purposes or business types. For example, the Special Purpose Program offers loans for working capital; to help businesses impacted by NAFTA; and for Employee Stock Ownership Plans.

Another 7(a) initiative is the SBA Express program, which provides accelerated loan review procedures and lower interest rates to applicants. The Community Express loan program assists borrowers located in underserved or distressed areas; and the Patriot Express is a pilot loan program for veterans and members of the military community.

For small business exporters, SBA offers an Export Express Loan Program; an Export Working Capital Program; an International Trade Loan Program, and a SBA and Ex- Im Bank Co-Guarantee Program.

For rural communities and lenders, SBA has a Small/Rural Lender Advantage initiative, which helps promote economic development in those communities by offering simplified and streamlined loan application procedures.

SBA has recently inaugurated two new 7(a) initiatives, designed to emphasize its commitment to small businesses and entrepreneurs in underserved areas. Both the Small Loan Advantage program and the Community Advantage programs will offer streamlined procedures. While the Small Loan Advantage will encourage lenders to offer lower dollar amounts to better serve small businesses in these areas, the Community Advantage program will target community-based mission-focused lenders.

Microloan Program

SBA's Microloan Program provides small, short-term loans to small businesses for help with working capital and the purchase of inventory, supplies, furniture, fixtures, machinery or equipment. SBA provides funds to intermediary lenders, who are specifically designated community-based organizations. These organizations also provide business training and technical assistance to the small business loan applicants. Certain microloans are also available to qualified not-for-profit child-care centers. Although loans are limited to $50,000, the average amount of a microloan is usually around $13,000, and the maximum term is six years.

CDC/504 Loan Program

In contrast to the microloan program, SBA's CDC/504 Loan Program provides long-term financing for small businesses. Loans are made through private Certified Development Companies (CDCs), which have been set up to assist in the economic development of a community. Loan proceeds can be used for the purchase of fixed assets such as land and buildings, for improvements, and for long-term machinery and equipment. Qualifying small businesses must have less than $2.5 million in net income. Borrowers are subject to a $1.5 million maximum loan amount, and must retain or create a specific number of jobs for every $65,000 of loan proceeds. Higher loan amounts are available for borrowers meeting certain public policy goals, such as expanding exports, revitalizing a business district, expansion of minority, veterans or women-owned businesses, or increasing productivity and competitiveness. Small Manufacturers are also eligible for higher loan limits, along with increased job creation requirements.

Disaster Loans

SBA's Office of Disaster Assistance helps individuals and businesses of all sizes with low-income loans for losses ensued in “declared disasters,” These long-term loans may be for physical or economic damage, for home or personal property, or for business property. In addition to Fact Sheets for each category of disaster assistance, which delineate loan limits and application procedures, the Web site also lists current disaster declarations by state. The SBA now accepts Electronic Loan Applications (ELA) for Disaster Loans. These online submissions ensure increased simplification and a speedier delivery of assistance.

Loan Applications

For any of the SBA loan programs, specific procedures must be followed. This section provides answers to credit questions; questions to assist you in determining your financial needs; checklists for small business loan applications , with a list of the documentation needed and the questions a lender will ask you; an application checklist for SBA-guaranteed loans, with links to SBA forms; and an explanation of credit scores and other factors in acquiring financing.

Grants

The Federal government only provides grants to certain non-profit or scientific organizations, and to state and local governments for economic development. Grants to businesses are occasionally available through state and local programs or through private organizations to further a specific policy, such as increasing energy efficiency or tourism. SBA has a loans and grants search tool that can assist a small business in locating financing.

Bonds

Bonds are another financing option for small businesses. SBA offers surety bond guarantees for businesses that meet certain eligibility requirements. They must be classified as small businesses; unable to obtain a bond without such an SBA guarantee; and the size of the contract must be less than $2 million. Application procedures are explained on SBA's Web site, and the requisite forms are available for download.

A second type of bond is a Tax-Exempt industrial revenue bond (IRB). These state and local government-issued bonds offer longer terms but may incur higher fees than traditional loans. Tax -exempt IRBs may be a good option for small manufacturing companies who are creating jobs or otherwise improving economic conditions in a local area. Requirements and application procedures vary by municipality, so interested small businesses should contact their state or local Economic Development Office for more details.

Venture Capital

For entrepreneurs who have been unsuccessful in locating financing through traditional methods, venture capital financing may be the solution. This type of equity financing is usually made in exchange for shares in the invested business and an active role in its management. SBA has two such venture capital partnership programs. The New Markets Venture Capital (NMVC) program is a public/private partnership between the SBA and newly formed private investment funds designed to promote economic development, wealth and job opportunities in locations that are deemed to be Low-income Geographic Areas ( for example, poverty level above 20 percent, or within a HUBZone, or in an Urban or Rural Enterprise Community). The NMVC companies must provide operational assistance and comply with SBA rules on the size of the Smaller Enterprises that they are allowed to invest in (usually defined as less than $2 million in after tax profits and/or less than $6 million in net worth).

Another SBA venture capital program is the Small Business Investment Company (SBIC) program. These SBICs are private investment companies that are licensed and regulated by the SBA. The SBA Web site provides a directory by state of all SBICs that have been licensed by the SBA, along with information on their investment requirements.

Government Contracting

Contracting with the Federal government is a great way to help your small business grow and many programs are available that give preference to small businesses. The SBA is there to help you every step of the way, from certification, to registration, to finding contracting opportunities, and finally, to contract support, so that you can not only decipher the complex procurement process, but also prosper from it.

Getting Started

First, your business must qualify as a Small Business and adhere to standards set by the SBA in order to register for government contracting as a small business concern.

The SBA Web site provides information on all the steps needed to register as a federal contractor, such as obtaining a Data Universal Numbering System (DUNs) number, which is a unique identification number for your business; registering with the Central Contractor Registration (CCR ), the database for vendors doing business with the federal government; and certifying to your business information and statements with the Online Certifications and Representations Application (ORCA) .

Working with the Government

Small Business Certification also qualifies your business to be eligible for additional SBA procurement programs, such as those for businesses located in Historically Underutilized Business Zones (HUBZones); the 8(a) Business Development Program, for businesses owned by socially and economically disadvantaged individuals; the Service-Disabled Veteran- Owned Small Business Concerns; and the Women-Owned Small Business Federal Contract Program. Additionally, small business entrepreneurs engaged in emerging technologies may be eligible for the Small Business Innovation Research Program (SBIR), whereby a percentage of federal agency R&D funds are reserved for qualifying small businesses.

Once you have registered and qualified your small business as a government contractor, SBA will help you with all the support you need to successfully fulfill your obligations, and continue to be awarded new contracting opportunities. Commercial Market Representatives (CMRs) are federal government contracting staff who are located at SBA local offices, and are available to counsel small businesses on obtaining contracts, and assist with compliance and training. The SBA also employs Procurement Center Representatives (PCRs) to assist small businesses in government contracting by increasing the small business share, initiating set-asides for small businesses, and providing resources and counseling.

SBA's Web site contains valuable information on contracting rules and regulations, including an easy to understand explanation of government contract terms, features, and expectations, as well as a summary of the Federal Acquisition Regulations (FAR).

Contracting Opportunities

The opportunities for government contracting abound for small businesses, and the SBA wants to help you find them. Sub-contracting to a prime government contractor is often the most viable way to start, and SBA programs, such as the Mentor- Protégé Program and the SUB-Net Database, are useful resources for the would-be small business sub-contractor. SBA also provides links to FedBizOpps (Federal Business Opportunities); to state government procurement agencies; and information on various agency contracting guides, such as with the Department of Defense, and the GSA Schedules Program. Other contracting opportunities include those for sellers of “green” or energy efficient products and small business manufacturers.

Counseling and Training

Since its inception, the SBA has provided counseling and training programs for small businesses. In today's global economy, continued learning, counseling and training are not only important for your business' continued economic success but also necessary to ensure ongoing employee satisfaction.

Counseling, Training and Mentoring Programs

SBA provides counseling and mentoring to small businesses through a variety of local programs and offices. Local SBA District Offices are located across the country. In addition to counseling and mentoring assistance, these offices help implement SBA programs, and offer free or low cost business development support.

SBA also partners with colleges and universities at Small Business Development Centers. These centers are designed to provide management support to eligible small business owners and future entrepreneurs at no cost. Educational services range from assistance with starting a business, to managing a business, to resolving production or operational problems.

Another resource partner of the SBA is SCORE (Service Corps of Retired Executives). This nonprofit association is comprised of over 13,000 volunteers who offer free and confidential business counseling services to small businesses. Score's resources also include templates and tools, local and online workshops and networking events.

For assistance with government contracting, SBA provides local Procurement Technical Assistance Centers. These centers provide low or nominal cost technical assistance, including counseling and training, to small businesses who want to start selling their products or services to the government.

For those small businesses needing assistance with entering global markets, the SBA provides U.S. Export Assistance Centers. Located in major metropolitan areas, these centers are staffed by experts from SBA, the U.S. Department of Commerce, and the U.S. Export-Import Bank, among others.

Resources for veterans exist through SBA's partnerships with numerous other organizations to provide Veterans Business Outreach Centers. These centers support veterans, especially service-disabled veterans, with entrepreneurial assistance including development of business plans, strategic planning and follow-up on-site visits.

About 100 Women's Business Centers are located around the country to provide educational assistance to women entrepreneurs, especially those who are economically or socially disadvantaged. Designed to “level the playing field,” these SBA resource centers offer business management, technical training and counseling to assist women in starting and growing small businesses.

Online Training

In addition to all of the local resources available for counseling and training, SBA also offers dozens of podcasts, videos, and online training courses to assist small business owners and prospective entrepreneurs. The self-paced and easy to understand online courses require registration, but are free, and include most of the basic information required to successfully start and run a small business

The Starting a Business section includes podcasts such as “Is Entrepreneurship for You?” and “Checklist for Starting a Business.” Free online courses cover the following topics: How to Start and Grow an Online Business; How to Prepare a Business Plan ; Franchising Basics; Technology 101: A Small Business Guide; and Native American Business Planner.

The Managing Your Business section includes podcasts on such subjects as intellectual property, taxes and disaster preparedness. Online courses on management include such topics as Green Business Opportunities and Take Your Business Global. Among the free marketing courses in this section are Strategic Marketing: How to Win Customers in a Slowing Economy and Marketing for Small Business.

The Financing chapter has podcasts on the various SBA loan programs and free online courses on Introduction to Accounting; Finance Primer: Guide to SBA's Loan Guaranty Programs; and How to Prepare a Loan Package.

The Government Contracting podcasts cover marketing, certification and surety bonds. Online courses in this area include Business Opportunities: A Guide to Winning Federal Contracts; Insight: Guide to the 8(a) Business Development Program ; as well as courses with specific application to women and veteran entrepreneurs.

Additional training resources include videos of interviews with successful entrepreneurs through the SBA/Dell Strategies for Growth series; the Delivering Success series in partnership with the U.S. Postal Service; and the America's Best videos in partnership with ADP.

SBA also hosts an Online Business Chat Room, whereby questions from the small business community are answered monthly by experts on various topics.

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