Small Business Administration (SBA)

The SBA was created in 1953 by Congress in an effort to assist America's entrepreneurs establish successful small business enterprises. Today SBA offices are located in every state offering financing, training, and advocacy for small companies.

The SBA enables lending institutions to provide financing to small businesses when funding would otherwise be unavailable by guaranteeing major portions of the loans made to small businesses. When a small business applies to a lending partner for a loan, the lender reviews the application and decides if it merits a loan on its own or if it requires additional support in the form of a SBA guaranty. In guaranteeing the loan, the SBA assures the lender that, in the event the borrower defaults on the loan, the government will reimburse the lending partner for a portion of its loss. The SBA does not provide direct loans or grants itself.

To qualify for a SBA guaranteed loan, a small business must meet the SBA's criteria and the lender must certify that it would not provide a loan without the SBA guaranty.