The United States Small Business Administration is a United States Government agency that provides support to small businesses.

The SBA was officially established in 1953. The United States Congress passed the Small Business Act of July 30, 1953, creating the Small Business Administration (SBA). The SBA's function was to "aid, counsel, assist and protect, insofar as is possible, the interests of small business concerns." The charter also stipulated that the SBA would ensure small businesses a "fair proportion" of government contracts and sales of surplus property.

The SBA already makes direct business loans and guarantees bank loans to small businesses, as well as makes loans to victims of natural disasters, works to get government procurement contracts for small businesses and helps business owners with management and technical assistance and business training.

Nearly 20 million small businesses have received direct or indirect help from one or another of those SBA programs since 1953. In fact, SBA's current business loan portfolio of roughly 219,000 loans worth more than $45 billion makes it the largest single financial backer of United States businesses in the nation.

Challenges facing the SBA

Criticism of the SBA has grown in recent years. The SBA stipulates that a business applying for a loan must first have been turned down by at least two banks. This provision was intended to ameliorate potential discrimination and to avoid distorting financial markets; however, with the most promising projects picked over by the private sector, the risk assumed by the government is greater and the share of non-performing SBA loans is substantially higher. Others have attacked the SBA as a fount of corporate welfare. Critics point out that despite its expenditures, the SBA aids only 0.4% of the entrepreneurs in the United States.

For fiscal year 1996, the newly Republican-controlled US House of Representatives was to have eliminated the agency, but it survived and in fact received its record high budget in 2000. The George W. Bush Administration has renewed efforts to end the SBA loan program. Congress resisted this move, but has cut the SBA's budget repeatedly, and in 2004 froze all new commitments to venture capital and private equity funds channelled through the program, citing projected losses of as much as US$2 billion.

Sources

• The Times,December 11, 2004
• Congressional Budget Office, "Reducing the Deficit: Spending and Revenue Options," March 1997, Section 9
• Government Accountability Office, "Small Business: Expectations of Firms in SBA's 8(a) Program Are Not Being Met," July 20, 2000
• Overview and History of the SBA This work is in the public domain.