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Small Business Administration: A Primer on Programs

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Publication Date: January 2006

Publisher(s): Library of Congress. Congressional Research Service

Series: RL33243

Topic: Business (Business and business enterprises)


The Small Business Administration (SBA) was created to aid small businesses because they are viewed as important sources of job creation and economic growth, but are typically disadvantaged in competing against large firms. Many minorityowned small businesses are even more disadvantaged, and they can apply to join programs that provide limited competition contracts and technical assistance to help them to grow and gain experience to compete successfully against larger businesses.

The SBA has many programs that affect every state and congressional district. The disaster loan programs are the subject of frequent congressional and media attention because of complaints about slow processing of loan applications. The SBA does not view these programs as immediate assistance, but the public frequently is looking for a rapid response.

Most Members of Congress receive many constituent inquiries about SBA loans, the loan guarantee programs, and special contracting programs. Except for disaster loans, the SBA does not directly make loans to businesses. Instead it provides guarantees for private business loans that lenders would not otherwise be willing to make under desirable terms such as maturity and interest rate.

The SBA also provides funding to selected financial intermediaries that invest in and otherwise support small businesses. The SBA reviews loan and guarantee applications to assure that there is a reasonable probability that a loan will be repaid. In the event of default on a loan, the SBA uses all available avenues to obtain repayment, including seizing income tax refunds.

This report summarizes the major SBA programs. It will be updated if new programs are added or existing programs phased out.